Targets FY22 new property sales of RM4bn
? FY21 core earnings came in above our expectations due to stronger-than-expected revenue. FY21 new property sales exceeded its RM3.8bn target.
? It targets new property sales of RM4bn and RM4.25bn worth of new projects in FY22.
Key results highlights
SP Setia’s FY21 core net profit (excluding forex movement and reversal impairments) came in above our expectation at 152% of our forecast on stronger-than-expected revenue and lower-than-expected finance cost, but below Bloomberg consensus forecast at 84%. FY21 core net profit improved to RM167m vs. RM49m yoy, largely driven by stronger revenue recognition from its property development division (+17% yoy) and lower finance cost (-8% yoy). Qoq, 4Q21 core net profit came in at RM127m vs. core net
loss of RM73m in 3Q21 as development activities picked up post movement control order (MCO). Total unbilled sales stood higher at RM10.2bn as at end-Dec 2021 vs. RM10bn at end-Dec 2020 on stronger property sales.
FY22F new property sales target at RM4bn
SP Setia recorded new property sales (excluding RM200m land sales) of c.RM4.06bn in FY21 vs. RM3.82bn in FY20, exceeding its FY21 sales target of RM3.8bn. 82% of new property sales came from local projects, while the remaining 18% were from international projects. The group set its FY22 new property sales target at RM4bn. As at end-FY21, it had a booking pipeline of RM555m. The group declared a final DPS of 0.65 sen, which is unexpected, representing a 17% payout of its adjusted earnings.
More aggressive new launches in FY22F
We gather that SP Setia plans to launch projects worth up to RM4.25bn in gross development value (GDV) in FY22F vs. RM2.24bn in FY21. Some 58% of the total new launches would be projects with properties priced below RM1m each, with the rest comprising properties priced above RM1m each. In terms of product mix, 65% will be landed residential units, followed by affordable housing (13%), commercial units (12%), serviced apartments (5%), condominiums and apartments (3%), and industrial units (2%).
Reiterate Add
Our TP is revised to RM1.84, now based on FY23F P/BV of 0.6x as we update its historical mean P/BV and peg to its 5-year mean P/BV (vs. its 3-year mean P/BV previously). We use a 5-year mean P/BV to reflect its trading range pre- and post-lockdowns following business normalisation. We like SP Setia for its: i) strong FY22F EPS growth due to the handover of overseas projects, (ii) massive land bank, allowing it
to cater to changes in consumer preferences, and (iii) cheap FY22-24F valuation of 0.42x P/BV, which is below its peers’ 0.48x. It is also a likely beneficiary of rising demand for green-certified buildings as it has experience obtaining green certifications for buildings and possesses in-house industrialised building system (IBS) manufacturing facilities.