SP Setia’s FY18? Launching RM7 billion and hitting RM5 billion sales. Where?

For the property market, is 2018 start to become brighter or dimmer when compared to 2017? If we are to ask SP Setia Bhd, it looks bright. In its announcement featured in TheStar article, it says that it will launch RM7.07bil in projects for FY18. It has also set a sales target of RM5bil, of which 80% is expected to come from local projects. It is also saying that the focus is to leverage on the Group’s established townships and roll out more mid-priced landed properties where the demand for these staple products have proven to be strong. There would be limited launches on high rise properties for Malaysia. Internationally, it will be launching the RM1.14bil – GDV UNO Melbourne in the central business district of Melbourne and the RM1.45bil-GDV Daintree Residence in Singapore. Results wise, it posted a lower earning of RM932.86mil versus RM955.82mil last year. Revenue has dropped by 21% to RM4.52bil from RM5.71bil a year earlier.
SP Setia said that moving forward, it has positive expectations because of unbilled sales pipeline of RM7.72 billion as well as effective remaining land banks of 9,605 acres and a GDV of RM128.37 billion as at Dec 31 2017. With acquisition of I&P, the group would have an additional 4,276 acres in prime locations. The article concluded with this statement. “Most are synergistically located within the growth areas of Klang Valley and Johor Bahru, where the “Setia” brand has established a stronghold. This will entrench the Group’s position as the leading township developer in Malaysia and propel the Group to greater heights.” The group also declared an interim dividend of 11.50 sen a share, which brings total dividend for the year to 15.50 sen a share. Here’s that full article for reference again. 
When we look at a longer term, it does seem that this may be a stock to buy and hold. According to i3investor.com, the target prices from most of the banks would indicate that there’s an upside potential of over 23 percent from its current closing price of RM3.22 / unit. Look at the image as reference. The beauty about investment is this. If we love the properties that they are selling, like my friend who bought in Setia Alam, we can buy one for own stay. Note that they are pushing for landed ones currently and these are not the best for rental type of investments. If we do not have enough money to buy some of their properties, we can choose to buy the stock of the company itself. This will still allow us to enjoy some potential capital appreciation because if they are showing good results even in a slow market, then perhaps their results in a good market would be better. Note, with stocks, it’s always based on expectations and there’s no such thing as historical performance okay. Buy with our eyes wide open and well, it’s a calculated risk. Happy getting involved with SP Setia, somehow. Nope, as at today, I do not own a SP Setia property or its stock. Cheers.
written on 5 March 2018
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