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S P Setia raises RM885m from share placement

KUALA LUMPUR: S P Setia Bhd has completed its book-building exercise to place out 153 million shares, or equivalent to 15% of its paid-up capital, raising RM884.6 million to finance its existing projects and future expansion.

The shares were placed out at RM5.78 each, which represents a discount of 5.25% to the five-day volume-weighted average market price of S P Setia. The property stock was up 3 sen to RM6.15 on Tuesday, Mar 22 on Bursa Malaysia.

In an announcement to Bursa Malaysia, S P Setia said of the total RM884.6 million, RM762 million will be channelled towards its projects in KL Eco City, Shah Alam's Setia City and Fulton Land in Melbourne. Together, these projects possess a combined gross development value (GDV) of RM12.5 billion.

The company said the book-building exercise in relation to the placement has been completed. It will involve 153.059 million new shares, priced at RM5.78 each, which represents a discount of 5.25% to the five-day volume-weighted average market price of S P Setia up to and including Monday.

Of the remaining proceeds, RM113.1 million has been earmarked for future expansion, with the balance of RM9.5 million to be used to cover the cost of the placement.

To finance its future expansion and land acquisition, S P Setia told the media earlier it hoped to raise between RM1 billion and RM2 billion, from which RM245 million to RM430 million will be for the National Institute of Health, acquiring land in Bangsar and increasing its landbank.

This follows its recent RM420.4 million purchase of 108.5ha in Cyberjaya, to be developed into a mixed residential and commercial development dubbed Setia Eco Glades.

With a GDV of RM3 billion, the project is scheduled to begin in 2012 for completion in six years.

"We're still very confident in the company. Even without the placement, it still has a substantial amount of liquidity with RM2.1 billion in unbilled sales as of February this year," an analyst from Maybank IB Research told The Edge Financial Daily.

Following the land purchase in Cyberjaya, the research house expects more acquisitions from the company this year.

"We expect them to acquire more land and continue expanding, this definitely won't be the final stop for them," said the analyst.

The company's net profit surged 62% to RM62.04 million for 1QFY11 from RM38.2 million while revenue rose nearly 43% to RM518.9 million from RM363.9 million in the previous corresponding period.

However, revenue dropped 18% quarter-on-quarter, which was partly due to a gain from the disposal of Tesco Hypermarket in Bukit Indah, Johor in the previous quarter.

"The group is targeting new sales of RM3 billion this year, which we believe is rather conservative given the exciting projects in the pipeline.

"We are targeting new sales of RM3.1 billion to RM3.2 billion this year," AmResearch said in a report last week.

The company secured RM953 million in sales in 1Q2011.

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