Thursday, September 29, 2011

#Flash* CIMB Research downgrades SP Setia to Neutral

KUALA LUMPUR: CIMB Equities Research said Permodalan Nasional Bhd's (PNB) conditional offer for the SP Setia shares that it does not own is positive in the short term.

The research house said on Thursday, Sept 29 that the RM3.90 price is 11% above Tuesday's close and SP Setia's board is seeking alternative bids while asking PNB to raise the offer.

'However, the longer-term implications are more complex, hinging on the amount of independence that SP Setia's management would have. The outcome could be relatively positive or very negative,' it said.

CIMB Research said although this offer is likely to push SP Setia's share price close to the offer price, it limits the upside to its RM4.73 target price.

'In view of this and the uncertainties associated with the offer, we downgrade SP Setia from Outperform to NEUTRAL. We make no changes to our earnings forecasts or target basis of 10% premium over its RM4.30 RNAV,' it said.

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