SPSETIA: Robust Sales and Strategic Land Disposals Boost Developer’s Outlook
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A prominent property developer reported core net profit for the first nine months of fiscal year 2025 (9M25) at RM256.0 million, aligning with market expectations. This figure represents 69% of the full-year forecast and 67% of consensus estimates, signaling a steady performance within the sector.
Performance Review
Despite the inline 9M25 core net profit, the company experienced a year-on-year (YoY) decline in both revenue and core net profit, which fell by 39% and 46% respectively. This contraction was primarily attributed to lower land sale contributions and the absence of significant project handovers in Australia and Vietnam, which had bolstered earnings in the previous fiscal year (2024).
On a quarter-on-quarter basis, core net profit for the third quarter of 2025 (3Q25) decreased by 32% to RM76.4 million. This was largely due to the second quarter of 2025 (2Q25) having benefited from a one-off land sale recognition at Taman Pelangi, creating a higher base for comparison.
However, new property sales showed robust growth, surging 77% YoY and 34% quarter-on-quarter (QoQ) to RM1.6 billion in 3Q25. This strong performance lifted 9M25 sales to RM3.5 billion, representing a 9% YoY increase. Domestic projects continue to be the primary driver, accounting for 83% of total sales, while international projects contributed 17%.
Unbilled sales expanded to RM4.1 billion as of September 2025, up from RM3.9 billion in June 2025, providing approximately one year of earnings visibility.
Future Outlook and Strategy
The company remains on track to achieve its fiscal year 2025 sales target of RM4.8 billion, with 9M25 sales already at 73% of the target. Analysts anticipate a stronger fourth quarter (4QFY25) performance, bolstered by significant land sale recognitions, including those from Alam Damai (RM134 million), Bandar Setia Alam/PG Resort (RM101 million), and a partial recognition from the RM650 million Setia Alaman disposal.
Further supporting 4Q sales will be the recent RM273.5 million land disposal in Semenyih to Mah Sing, complemented by steady take-up rates from ongoing launches.
Medium-term growth is expected to be anchored by a robust pipeline of catalytic township developments, eco-industrial parks, and strategic partnerships. Key projects highlighted include the RM1.3 billion Setia MF EcoHill JV with Mitsui Fudosan, slated for a maiden launch in 2026, and the USD81 million Setia Edenia development in Ho Chi Minh City, with completion expected in 2027.
The group is also actively focused on strengthening its balance sheet through the ongoing monetisation of non-core land and the active clearance of completed inventory. These initiatives have helped maintain gearing at a comfortable level of approximately 0.35x and will support future capital deployment into higher-value developments.
Investment Recommendation
TA SECURITIES maintains its “Buy” recommendation on the company, with an unchanged target price of RM1.26 per share, implying a significant upside from its last traded price of RM0.785.
