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3Q21: Earnings Below Expectations; Expect Strong Recovery In 4Q21

SP Setia saw a core net loss of RM10m in 3Q21 amid the lockdown. 9M21 earnings came in below our expectations. Sales remained resilient at RM671m, with 9M21 sales accounting for 89% of the full-year target. This should see earnings catching up in 4Q21. Rising material cost has not negatively impacted margins with gross profit margin at 30% in 3Q21. We expect the group to exceed the target given its digital efforts and the economic reopening fuelling pent-up demand. Maintain HOLD. Target price: RM1.35.

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