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Annualised Earnings Fall Short
SP Setia’s 1HFY10 annualised results came in 17% below our expectation and 11% below that of consensus. Although the pace of progress billings on its high unbilled sales continues to pick up, we prefer to leave our earnings forecasts unchanged for now. 1HFY10 y-o-y turnover and net profit improved significantly by 19% and 25% respectively on the back of much improved new property sales and higher progress
billings. An interim dividend of 6.0 sen (an improvement from 5 sen in 2QFY09) has been declared for 2QFY10. Maintain Take Profit with a CY10 target price of RM3.59 based on 1.69x CY10 P/NTA.
Below expectation but earnings are catching up. SP Setia’s 1HFY10 y-o-y turnover and net profit improved significantly by 19% and 25% respectively on the back of much improved new property sales and higher progress billings. However, the 1HFY10 annualised results were 17% below our expectation and 11% below that of consensus. We are however unfazed by this as we believe that earnings will eventually catch up with our full-year projections as progress billing continues to pick up steam. This was, in fact, reflected in the much improved q-o-q results, with turnover and net profit improving by 12% and 34% respectively.
Earnings forecast maintained. Although the annualized earnings were below our expectation and that of consensus, we believe that progress billings from the recent impressive improvement in new property sales will pick up in momentum in the later quarters of FY10. Therefore, we maintain our earnings forecast for now. Currently, its unbilled sales total RM2.47bn, which is equivalent to 1.75x FY09’s total turnover.
Sales target close to our forecast. New property sales in 2QFY10 totaled RM598m while for cumulative sales for 1HFY10 was about RM1,206m, with both eclipsing the previous highs achieved in 2QFY09 and 1HFY09 respectively by 42%. The continuously strong improvement in recent sales was supported by the improving economic outlook and household confidence, as well as by the company’s 3rd innovative housing financing scheme called ‘Invest Setia Homes Scheme’ (which, in many ways, is similar to the 5/95 Home Loans which expired last year). The management continues to maintain its full-year sales target of RM2.0bn, which is rather close to our forecast amount of RM1.86bn.
Valuation still lofty; maintain Take Profit. We continue to maintain our CY10 target price of RM3.59 on SP Setia based on 1.69x CY10 P/NTA. Based on its current share price, the stock’s valuation remains lofty. As such, we continue to maintain our Take Profit call on the stock.
SP Setia’s 1HFY10 annualised results came in 17% below our expectation and 11% below that of consensus. Although the pace of progress billings on its high unbilled sales continues to pick up, we prefer to leave our earnings forecasts unchanged for now. 1HFY10 y-o-y turnover and net profit improved significantly by 19% and 25% respectively on the back of much improved new property sales and higher progress
billings. An interim dividend of 6.0 sen (an improvement from 5 sen in 2QFY09) has been declared for 2QFY10. Maintain Take Profit with a CY10 target price of RM3.59 based on 1.69x CY10 P/NTA.
Below expectation but earnings are catching up. SP Setia’s 1HFY10 y-o-y turnover and net profit improved significantly by 19% and 25% respectively on the back of much improved new property sales and higher progress billings. However, the 1HFY10 annualised results were 17% below our expectation and 11% below that of consensus. We are however unfazed by this as we believe that earnings will eventually catch up with our full-year projections as progress billing continues to pick up steam. This was, in fact, reflected in the much improved q-o-q results, with turnover and net profit improving by 12% and 34% respectively.
Earnings forecast maintained. Although the annualized earnings were below our expectation and that of consensus, we believe that progress billings from the recent impressive improvement in new property sales will pick up in momentum in the later quarters of FY10. Therefore, we maintain our earnings forecast for now. Currently, its unbilled sales total RM2.47bn, which is equivalent to 1.75x FY09’s total turnover.
Sales target close to our forecast. New property sales in 2QFY10 totaled RM598m while for cumulative sales for 1HFY10 was about RM1,206m, with both eclipsing the previous highs achieved in 2QFY09 and 1HFY09 respectively by 42%. The continuously strong improvement in recent sales was supported by the improving economic outlook and household confidence, as well as by the company’s 3rd innovative housing financing scheme called ‘Invest Setia Homes Scheme’ (which, in many ways, is similar to the 5/95 Home Loans which expired last year). The management continues to maintain its full-year sales target of RM2.0bn, which is rather close to our forecast amount of RM1.86bn.
Valuation still lofty; maintain Take Profit. We continue to maintain our CY10 target price of RM3.59 on SP Setia based on 1.69x CY10 P/NTA. Based on its current share price, the stock’s valuation remains lofty. As such, we continue to maintain our Take Profit call on the stock.
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