PUBLIC: Land Disposal to Bolster Capital, Analyst Maintains Neutral Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A prominent Malaysian developer, SP Setia (SPSB), has announced the disposal of 275 acres of land in Semenyih, Selangor, for RM273.5 million, translating to approximately RM22.80 per square foot. The buyer for this significant parcel is Mah Sing Group Bhd, which had previously acquired an adjacent 500-acre plot from SP Setia in 2024. Public Investment Bank, an analyst firm, has reviewed the transaction and maintained its “Neutral” rating for the developer, albeit with an adjusted target price.
Strategic Land Disposal
The land sale is viewed positively by Public Investment Bank, primarily for its potential to generate capital. This capital is earmarked for strategic project developments and debt repayment, aligning with the Group’s broader objective to optimize and rebalance its land bank. The disposal is expected to enhance SP Setia’s cash flow and strengthen its balance sheet. The acquired land is strategically located in the southern corridor of the Klang Valley, enjoying accessibility via the Kajang-Seremban Highway (LEKAS), and is surrounded by a mix of existing residential and commercial developments.
Financial Implications and Outlook
While the disposal is projected to yield an estimated gain of approximately RM34.5 million upon its anticipated completion in the second half of 2026, Public Investment Bank noted that the immediate material effect on SP Setia’s earnings per share and net assets per share would be minimal. Consequently, the bank has opted to keep its earnings forecasts unchanged for the near term, pending the transaction’s completion. The strategic move is seen as a proactive step towards long-term financial health and operational efficiency.
Analyst Rating and Target Price
Public Investment Bank has reiterated its “Neutral” recommendation on SP Setia. The target price (TP) for the developer has been adjusted downwards to RM0.93 from the previous RM1.20. This revised target price is based on an ascribed discount of approximately 65% to the company’s book value, reflecting the analyst’s current market considerations and valuation methodology.
