Monday, September 13, 2010

OSK Research upgrades SP Setia to Buy

KUALA LUMPUR: OSK Research is positive on SP Setia's plan to acquire 259.1 acres of freehold land within the Tebrau Corridor in South Johor, Malaysia, from a private developer called Kelana Ventures SB. The acquisition is expected to be completed in late 2011.

SP Setia has been present in Johor for more than 13 years and is currently involved in the development of four ongoing projects, namely Bukit Indah Johor, Setia Indah Johor, Setia Tropika and Setia Eco Gardens. With Setia Indah Johor at the tail-end of its development, this new land acquisition in Tebrau Corridor will replenish Setia Indah's landbank.

OSK Research said on Monday, Sept 13 that it upgraded SP Setia to a BUY in its Sept 3 property sector report 'A Brewing Real Estate Mania' on the basis that it believes SP Setia will be buoyed by the coming property upcycle which will be primarily led by mid-to-high end landed properties.

"Leaving our earnings forecasts unchanged for now, we continue to value SP Setia at RM6.31 based on 2.8 times CY11 P/NTA, which is approximately 2.5 times above its 11-year historical mean. This land acquisition and its development prospects may further strengthen the developer's foothold to capitalize on this boom in mid-to-high end landed properties in Malaysia. SP Setia remains as our top pick for the property sector for the next 12 months," it said.

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