SPSETIA: Strategic Focus on Industrial Development Underpins Buy Rating for Property Sector

A recent briefing note from TA Securities highlights a major property developer’s strategic initiatives, particularly its pivot towards industrial development and the unlocking of value from existing townships. The firm has set an ambitious sales target for the current fiscal year, supported by significant planned launches.

Sales Performance and Future Launches

The developer has set a new sales target of RM4.8 billion for FY2025. As of July 2025, it has already recorded RM1.9 billion in new sales, representing 40% of its target. Management expressed confidence in achieving the full-year target, backed by planned launches with a gross development value (GDV) of RM5.4 billion for FY2025. Currently, 20 projects with a GDV of RM2.68 billion have been launched, with an additional 30 projects totaling RM3.1 billion GDV slated for the second half of FY2025. These upcoming launches primarily consist of township projects in Malaysia, complemented by a project in Vietnam.

Industrial Segment as Key Growth Driver

The industrial segment is identified as the next significant growth driver for the next five years. Key projects like Setia Fontaines Industrial Park, Setia Alaman Industrial Park, and Tanjung Kupang Industrial Park are expected to anchor this growth. Notably, the Setia Alaman Industrial Park in the central region spans 399 acres with a GDV of RM4 billion. A strategic collaboration with Ally Logistic Property Co Ltd (Taiwan) aims to develop a smart warehouse campus within Setia Alaman Industrial Park, targeting a GDV of RM2.5 billion. The warehouses will operate on a built-to-lease structure, with construction set to commence in FY2026, and a potential future injection into a Real Estate Investment Trust (REIT) is being explored. The developer is also actively pursuing joint ventures and strategic collaborations for its existing and new industrial land.

Maximizing Value in Established Townships

Residential projects remain the primary sales contributor, with central region projects accounting for 61% of total new sales in Malaysia during 1HFY2025. The developer plans to unlock the significant potential value of its matured Bandar Kinrara township in Klang Valley, which includes 37.6 acres of undeveloped land. Initiatives include the redevelopment of the Malaysian Cricket Ground into a built-to-lease international school for recurring income, and the rezoning application for Kinrara Golf Club is in its final stages of approval. The outlook for sales in these matured townships, particularly for landed homes in Klang Valley, is expected to remain stable due to high demand.

Investment Recommendation

TA Securities maintains a “BUY” recommendation for the property developer. The valuation is considered attractive, trading at a steep discount to its latest net tangible asset (NTA) per share. The increasing exposure to industrial development is anticipated to bolster earnings growth, while the planned listing of investment properties into a REIT is expected to unlock value and manage gearing.