Analysts are maintaining their positive stance on S P Setia Bhd, citing attractive valuations and potential upside from upcoming projects. MBSB Investment Bank Bhd (MBSB Research), CIMB Investment Bank Bhd (CIMB Securities), and Hong Leong Investment Bank Bhd (HLIB) all retained their BUY ratings, with target prices ranging from RM1.18 to RM1.40.
Analysts highlighted that the property developer’s 9MFY25 earnings and robust new sales position it to achieve full-year targets while its industrial property ventures and planned REIT listing offer further upside.
S P Setia reported 3QFY25 core net income of RM100.9 million, marking an 8.7% decline quarter-on-quarter but a 20.2% year-on-year rise, according to MBSB Research. For the cumulative 9MFY25, core earnings stood at RM277.7 million, down 29.8% YoY due to a high base effect from 9MFY24 when earnings were lifted by land sales and overseas projects in Australia and Vietnam.
CIMB Securities noted that 9M25 results were in line with expectations, despite core profits of RM241 million reflecting a 41% YoY drop on a 39% fall in revenue, partly cushioned by narrower joint venture losses. HLIB reported core PATAMI of RM174.2 million for 9M25, down 52.9% YoY, accounting for 59.2% of its full-year forecast, with analysts anticipating stronger 4QFY25 contributions.
New property sales remained resilient, with S P Setia recording RM1.59 billion in 3QFY25, up from RM1.18 billion in 2QFY25, bringing 9M25 sales to RM3.49 billion or 73% of the RM4.8 billion full-year target. Domestic projects contributed 83% of total sales, while international ventures made up 17%.
Analysts from CIMB Securities and MBSB Research highlighted that partnerships, including the second tie-up with Japan’s Mitsui Fudosan for RM1.3 billion of high-end landed homes at Setia Ecohill and the ongoing development of Setia Alaman Industrial Park, would generate recurring revenue and strengthen earnings visibility from FY26 onwards.
Margins showed improvement despite weaker topline, with 3QFY25 gross profit margin rising to 37.2% from 31.0% in the same quarter last year, reflecting a lower-margin overseas project base in 2024. Share of joint venture losses narrowed significantly to RM80.3 million from RM161.6 million in 9M24.
HLIB noted that ongoing land-sale recognitions, including from Alam Damai, Bandar Setia Alam, and PG Resort, as well as partial contribution from the RM650 million Setia Alaman industrial land sale, would support near-term earnings.
S P Setia’s balance sheet continued to strengthen, with net gearing adjusted for RCPS reclassification falling to 46.3% in 3QFY25 from a peak of 91% in 3QFY22. Analysts expect the planned REIT listing by FY26 to further enhance financial flexibility.
Valuation remains undemanding, with the stock trading at a 65–77% discount to RNAV, providing a compelling case for investors seeking exposure to Malaysia’s property sector.
