S P Setia beats FY2025 sales target with RM5.11b; pivots to industrial growth and de-gearing

PETALING JAYA (March 2): S P Setia Bhd has officially concluded its 2025 financial year, reporting to Bursa Malaysia that it surpassed its annual sales target to reach RM5.11 billion. The results highlight a strategic shift toward balance sheet consolidation and a growing footprint in the industrial sector.

Bursa Malaysia financial highlights

According to the audited results for the financial year ended Dec 31, 2025:

*Revenue: Recorded at RM4.22 billion, a decrease of 20.3% from RM5.29 billion in FY2024. This was primarily due to a high base in the previous year from major land disposals and international project handovers.

*Profit before tax (PBT): Stood at RM969.1 million, down 13.6% compared to RM1.12 billion in FY2024.

*Net profit (attributable to shareholders): Reported at RM509.9 million, representing an 11.5% decline year-on-year.

*Earnings per share (EPS): Decreased to 8.56 sen from 10.16 sen in the preceding year.

*Dividend per share: Declared at 2.55 sen, compared to 2.88 sen in FY2024.

*Quarterly momentum: Despite the annual dip, 4QFY2025 PBT surged 75% to RM471 million (versus RM268.6 million in Q4 FY2024). This was driven by strong domestic performance and strategic land transactions.

*Net asset value (NAV): Net assets per share improved to RM2.70, up from RM2.66 at the end of the preceding financial year.

Core performance: Sales and industrial expansion

S P Setia closed the year with total sales of RM5.11 billion, exceeding its RM4.8 billion target. Domestic developments remained the primary driver, contributing RM3 billion (59%) of total sales. The Central and Southern regions provided RM2 billion and RM0.9 billion, respectively.

*Industrial pivot: The Setia Alaman Industrial Park delivered a strong inaugural performance. It contributed 11% of total development revenue in FY2025.

*International presence: Overseas projects contributed RM0.7 billion (14%) to total sales. Setia Edenia in Vietnam (GDV US$81 million) remains on track for 2027 completion.

*De-gearing progress: Disciplined land monetisation and cost management improved the net gearing ratio to 0.33x. This is down significantly from previous years.

Research house reports: The “Value & Recovery” play

Analysts maintain a unanimously positive outlook on S P Setia, characterising it as a compelling “Value & Recovery” play. The bullish sentiment is driven by a deep valuation discount. The stock trades at 73% below its NTA, offering significant upside as the group moves toward its potential Setia REIT listing in 2026.

Key research highlights include:

*Financial strengthening: Maybank IB and HLIB underscore a successful de-leveraging phase. With net gearing dropping to 0.33x, the group has moved past its debt-reduction peak into steady value creation.

*Strategic diversification: The "Industrial Pivot", specifically the success of Setia Alaman Industrial Park, is viewed as a structural shift. This move targets higher-margin, faster-turnaround projects.

*Operational discipline: Kenanga Research applauds the group's aggressive inventory monetisation and strategic joint ventures (Setia Federal Hill/EcoHill). These efforts have significantly bolstered cash flow.

*Policy support: Analysts anticipate tailwinds from Budget 2026 incentives and a stable interest rate environment. These factors are expected to sustain domestic property demand.

Individual house ratings

*MIDF Research (Maintain BUY | TP: RM1.26): Highlights that the stock trades at a deep 73% discount to NTA (RM2.70). It identifies the potential Setia REIT listing as a major re-rating factor.

*Maybank IB (Maintain BUY | TP: RM1.35): Focuses on the group's improved financial health. It notes S P Setia is a primary beneficiary of Budget 2026 incentives.

*HLIB Research (Maintain BUY): Views the industrial pivot as a structural shift toward better margins. It suggests the group is entering a steady value-creation period.

*Kenanga Research (Maintain OUTPERFORM | TP: RM1.43): Applauds the discipline in clearing completed inventories. It points to strategic partnerships as key medium-term earnings drivers.

Management insight and 2026 outlook

Commenting on the results, Datuk Zaini Yusoff, president and CEO of S P Setia, stated: "This quarter’s performance reflects Setia’s disciplined execution, resilient operating model and continued focus on delivering quality developments. While we remain mindful of prevailing market challenges, the group’s fundamentals remain sound."

Looking ahead, the group has set a 2026 sales target of RM4.6 billion. The strategy focuses on accelerating catalytic township developments and eco-industrial parks. It will also leverage supportive policy measures under Budget 2026 Malaysia Madani, such as stamp duty exemptions.

On the shift toward the industrial sector and debt reduction, Zaini noted: "We are cautiously optimistic as we continue to strengthen our footprint across targeted high-growth segments. This helps in building sustainable long-term value for our stakeholders."

Executive leadership team

S P Setia has strategically refreshed its core leadership to transition into a "future-ready" organisation. This "New Guard" blends seasoned internal veterans with high-calibre external experts.

The team is led by Zaini and he is supported by deputy CEO Tan Hwa Min, whose background at IJM and TRX City is critical for large-scale transformations. Chief operations officer Datuk Yuslina Mohd Yunus, a township expert, is tasked with maximising operational efficiency.

Together, this leadership trio is mandated to execute the RM4.6 billion sales target for 2026. They will prioritise lean operations and the integration of PropTech to enhance construction quality.

In this context, PropTech refers to adopting data-driven digital tools like Building Information Modelling (BIM) and automated Industrialised Building Systems (IBS). These technologies shift construction from labour-intensive methods to a precise, factory-standard manufacturing approach.

This serves as a strategic lever to minimise costly reworks. It also ensures high QLASSIC quality scores. Ultimately, these digital integrations protect profit margins against inflationary pressures.

Editor’s Note: The financial data in this report is based on S P Setia Bhd’s audited results for the financial year ended Dec 31, 2025, filed with Bursa Malaysia on Feb 27, 2026.

Management attributes the annual revenue dip to a high base effect from significant land disposals in FY2024. Notably, the "New Guard" leadership team officially assumed their roles in the final quarter of 2025 to lead the Group's 2026 strategic pivot.

No advice: Analyst views are for informational purposes only; they do not constitute financial advice.

Due diligence: Readers are advised to perform independent research before making investment decisions.

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