Liew to gradually sell off stake by 2015

KUALA LUMPUR: S P Setia Bhd president and CEO Tan Sri Liew Kee Sin, who now holds a 5.63% equity interest in the company, will gradually sell off his entire stake by 2015.

“I am under contract up to March 2015, and I have an agreement with Permodalan Nasional Bhd (PNB) to pare it down,” he said after announcing a set of good results for the group for the financial year ended Oct 31, 2012 (FY12).

PNB holds 51.5% of S P Setia, which has benefited from Liew’s long stewardship as well as the strong financial position of PNB and its group of companies.

S P Setia, incorporated in 1974, was listed on the Second Board of the Kuala Lumpur Stock Exchange in 1993 and was transferred to the Main Board in 1996. Liew has built the company into one of the biggest property developers in Malaysia.

PNB has been accumulating

S P Setia’s shares since March 2008, and the group has within its stable two other major property developers — Sime Darby Property Bhd and Island & Peninsular Bhd. Other major shareholders of S P Setia are the Employees Provident Fund and Kumpulan Wang Persaraan.

S P Setia registered record sales of over RM4 billion for the first time in FY12, and now aims for RM5.5 billion sales for FY13, said Liew.

He said although the group has set an ambitious target, it is confident of achieving another record-breaking year for FY13 because S P Setia has done its homework.

“Of the RM4.23 billion [sales] this year, RM700 million came from overseas and the rest was from Malaysia. So going forward, a minimum of RM3.5 billion [out of the RM5.5 billion target] will come from Malaysia.

“Whatever we do, we go through a serious process of understanding the market, analysing each division and how it contributes to our overall group objective,” Liew said.

The property group posted a net profit of RM393.82 million compared with RM327.97 million on RM2.53 billion in revenue from RM2.23 billion a year ago.

For FY12, S P Setia’s sales contributions came primarily from its major developments — KL Eco City, Setia Alam Setia Eco Park and its townships in Johor Baru — each contributing about RM1 billion.

The group has several projects in progress that will boost earnings in the long term.

“Come January we are launching Battersea Power Station (BPS) officially. We will launch Battersea in London on Jan 10, followed by Malaysia on Jan 12, then in Singapore, Hong Kong the Middle East and so forth,” Liew said.

BPS is targeting sales of 800 units in the first six months, of which 75% to 80% will likely come from the international market.

“For the Malaysian market, we are only targeting 400 units. We can sell more than 400, but we want to create phase one as an international community,” Liew said.

Last week, the UK government announced that it would lend £1 billion (RM4.93 billion) for the construction of the underground northern line extension.

“At the time of acquisition, there had been concerns that the line would not link to BPS, so the biggest risk factor for BPS has been removed,” said Liew.

BPS has a total gross development value (GDV) of about RM5 billion, including retail space which will not be sold yet, as S P Setia expects the space to appreciate in value.

Excluding this retail space, BPS has a GDV of RM4 billion, of which 40% will contribute to S P Setia’s earnings by virtue of its 40% stake in BPS.
However, these earnings will not boost S P Setia’s balance sheet until the project is completed in 2016.

Liew (left) and S P Setia group chairman Tun Zaki Tun Azmi announcing the group’s FY12 results yesterday.

Similarly, the group’s developments in Australia, such as Fulton Lane and Parque Melbourne are only due for completion in 2017.

“So in 2016 and 2017, there will be a quantum leap in terms of profits,” said Liew.

On the local front, S P Setia last month sealed a share swap deal for prime land in Jalan Bangsar, Kuala Lumpur.

A luxury residential development, Setia Federal Hill, is being planned on the land. The project has an estimated GDV of RM8 billion and is slated for launch in 2014.
The swap deal required S P Setia to develop and construct the 1NIH complex in Setia Alam for the Health Ministry.

“We will concentrate on 1NIH first and complete it as far as possible hopefully within three years after which we can have full ownership of the land in Bangsar. The key point of 1NIH is that it will make Setia Alam boom,” said Liew.

He said about 800,000 people visit the Setia Convention Centre and Setia City Mall in Setia Alam per weekend.

“The next thing for Setia City Mall will be a hotel and performing arts centre. So Setia City Mall itself will be a catalyst for there-rating of S P Setia,” Liew said.

Yesterday, there was heavy trading in the stock, rising 12 sen to close at RM3.15 with some 82.7 million shares done.

S P Setia warrants gained 14.5 sen, closing at 22 sen on a large volume of 429.81 million shares.

This article first appeared in The Edge Financial Daily, on Dec 13, 2012.