PETALING JAYA: The property sector is poised to be one of the sectors which show good recovery post-Covid-19, and S P Setia Bhd, being one of the largest property companies, is set to benefit.
In a research note to clients, AmResearch said it believed S P Setia was well-positioned to ride on a likely post-pandemic sector recovery, underpinned by a diversified portfolio in both local and international markets.
“We expect the group’s financial year 2021 (FY21)-FY23 earnings growth to be supported by its strong unbilled sales of RM10.3bil which translates to 2.4 times its forecast FY21 sales, together with improving overseas contribution and inventory clearing efforts,” said AmResearch which maintained its “buy” call on the stock.
S P Setia on Wednesday said it registered sales of RM2.71bil in the first half of its current FY ending Dec 31, 2021, in spite of the adverse impact of the pandemic on the local property sector.
Local projects contributed RM2.07bil or 77% of total sales during the period, while the remaining RM639mil or 23% was contributed by international projects, mainly from Daintree Residence in Singapore.
The property developer said demand for residential properties across the causeway had gained traction following the lifting of the circuit breaker and opening up of the economy.
The group achieved a revenue of RM2.14bil and pre-tax profit of RM301.4mil in the two quarters under review.
For the second half of its current financial year, S P Setia said it will be offering new launches worth RM2.47bil in its various townships.
This will include Setia Alam, Setia Ecohill 2, Setia Eco Park, Setia Eco Glades, Setia Mayuri, Temasya Glenmarie, Bandar Kinrara, Setia Alam Impian and Kota Bayuemas in the central region, Setia Fontaines in Penang, and Taman Rinting, Taman Industri Jaya and Setia Tropika in the southern region.
In its report to clients, Kenanga Research said it expected S P Setia to incur losses in the third quarter (Q3) of FY21 on the back of slower construction works. “That said, we expect earnings to rebound in Q4 of FY21 when economic activities gradually re-open as lockdown rules ease on the back of higher national vaccination rates,” it said.
“S P Setia’s staff are about 80% vaccinated while the construction workers at the sub-con level are about 50% vaccinated.
“Management is guiding higher operational productivity by September 2021 as workers within their sites surpass the 60% vaccination rate – which would allow the capacity ceiling to increase to 80% from 60%,” it added.
“Being the largest developer in the country, we view S P Setia as a proxy to the sector’s outlook which appears challenging in the near-to-medium term, plagued by affordability, oversupply and policy issues.”
At last look, the property company’s shares were at RM1.07 apiece, valuing the entire group at some RM4.43bil.
In the past 52 weeks, the stock has traded between 66 sen and RM1.23.