SP Setia to be selective in launches

Property giant SP Setia Bhd will be selective in launching new projects this year as buyers take a cautious approach.

Backed by a massive unbilled sales of RM11.1bil, SP Setia will look towards delivering properties sold in the past and launch more mid-ranged products, said acting president and chief executive officer Datuk Khor Chap Jen.

“We will be selectively launching projects with product types that will fare well in 2015. These launches will be focused in areas with established infrastructures and amenities. The demand for property is still very strong as proven by our recent almost sold-out launches of Caffra and Serrata,” said Khor in a e-mail reply to StarBiz.

The launch saw 100% and 95% take-up rate of Caffra and Serrata on the first day of launch.

“For SP Setia, our focus for this year is on delivery. With a total unbilled sales of RM11.1bil as of Oct 31 2014, we are kept busy this year in ensuring we deliver our products according to the standard that is expected of the brand. Fulton Lane in Melbourne and 18 Woodsville in Singapore will be completed by mid-2015, two months and four months ahead of schedule respectively,” said Khor.

The large amount of SP Setia’s unbilled sales is expected to deliver fundamental support to the company’s financial performance and share price, which over the past few months has been trending upwards.

Analysts said talk of a takeover of SP Setia in a corporate exercise involving Sime Darby Bhd has seen a wave a buying for the stock, which in recent years has been underperforming its peers in the property index.

Buying of SP Setia’s stock underpinned by the corporate exercise recently lifted its shares to close to an 18-month high. Its shares have dipped a little since then but are up about 26% over the past one year compared with the Bursa Malaysia Property Index, which is 5.25% higher over the same period.

Shares of SP Setia hit a recent high of RM3.64 on Jan 20 after a report that the property arm of Sime Darby was in the midst of taking over SP Setia.

The report said the proposal was mooted by a few senior management of SP Setia about a couple of months ago and conveyed to the top brass of Permodalan Nasional Bhd (PNB) and Sime Darby. PNB is the major shareholder of SP Setia as well as Sime Darby.

Analysts said news of the corporate exercise was lifting the shares of SP Setia but noted that a wave of buying calls were made after the lauch of the second phase of the Battersea project in London.

“People are also waiting to see what they are going to do regarding the management of SP Setia,” said an analyst.

There has been a number of changes at the top management of SP Setia after founder and former president and CEO Tan Sri Liew Kee Sin left the group. Khor assumed his current position starting this year after his predecessor Datuk Voon Tin Yow opted to leave the company earlier than planned.

Analysts said that while the takeover and management issues dominate the company’s newsflow to some extent, the fundamental position of SP Setia gives investors comfort in the current soft property market in Malaysia.

SP Setia has projected sales of RM4.6bil this year, which is about the same as registered last year after missing its previous target of RM5bil.

“Going into 2015, management has set a flat sales target of RM4.6bil, and plans to roll out more mid-range products, given the challenging market conditions ahead. These include some apartments at Setia Alam (gross development value or GDV: RM250mil), terraces and superlink homes in EcoHill (GDV: RM250mil), and the maiden launch of Eco Templer (GDV: RM190mil),” said RHB Research Institute in a note.

It said unbilled sales would remain steady at RM11.1bil.

Khor said certain products offered, depending on type, location and pricing such as mid-range landed properties and affordable priced high-rise units, would fare well this year.

“Our recent launches of Caffra, 3-storey terrace houses, and Serrata, 3-storey semi-detached homes, in Northern Setia Alam, Shah Alam, received overwhelming responses from the home buyers,” he said.

“The Malaysian market will still continue to be resilient this year although buyers will take a cautious approach and a wait-and-see attitude in view of the impending goods and services tax and global economic volatility. This is underpinned by young demographics and rising affluence. On the international front, we foresee the Australia and UK markets will maintain its current demand and pricing for this year.” - By The Star