Maybank IB introduced SP Setia’s expanded ESG tear sheet and assign an above average overall score of 57 (out of 100). SPSB introduced the Setia Green Roadmap in 2023 to help its transition towards carbon neutrality and net zero by 2050.
The house maintains its earnings forecasts, MYR1.66 TP (0.5x FY24E PBV) and BUY recommendation.
Improvement in “E” data disclosure needed
SPSB’s overall ESG score of 57, under Maybank’s proprietary scoring methodology is above average, which is close to its sector peer, SDPR at 63. SPSB’s score was dragged by the lack of disclosures on carbon emission data (pre-FY23) and energy and water consumption intensity data (in FY23), which make YoY comparison difficult. Additionally, there were two cases concerning work-related incidents leading to Lost Time Injury (LTI) recorded in FY23.
Implementing carbon reduction initiatives
SPSB introduced its Setia Green Roadmap in 2023 to help its transition journey towards a net zero organization by 2050. It aims to reduce Scope 1 and 2 carbon emissions by 45% by 2030 and by 70% by 2040, relative to a 2023 baseline. To reduce emissions across its business units, SPSB has introduced Setia e-GreenLiving, a range of sustainable home features
including smart home system, Green Switch, rainwater harvesting system and readiness for EV and solar power use. SPSB is now finalising the baseline relating to high-rise developments to reduce Scope 3 emissions. These initiatives could improve its ESG scoring going forward.
Undemanding valuation
Maybank IB said it continues to like SPSB for its undemanding valuation. It currently trades at 0.45x FY24E P/B versus industry average of 0.79x. Catalysts include: i) land sale (in FY24E), ii) REIT-ing of its investment properties (FY25-26E)
and iii) potential upward revision in BPS mall pricing (FY27E). As at Dec 2023, SPSB’s net gearing was 0.49x (also see our report dated 22 Mar 2024).
