MBSB Research maintained its NEUTRAL call on S P Setia Bhd but lowered its target price to RM0.86 from RM0.98, while CIMB Securities kept its HOLD call and cut its target to RM0.92 from RM1.10, citing weaker earnings visibility and potential delays in land sale recognition.
MBSB Research said S P Setia’s 1HFY26 core net income of RM119 million was below expectations, accounting for only 27% of its full-year forecast. The shortfall was mainly due to weaker-than-expected progress billings in the second quarter, with revenue falling marginally to RM821.4 million.
Despite this, quarterly core net income rose 28.1% quarter-on-quarter to RM66.8 million as gross profit margin improved to 39% from 29.4% in the previous quarter. However, earnings fell 39.5% year-on-year due partly to the absence of land sale recognition from Taman Pelangi that had boosted the previous year’s results.
Property sales improved to RM865 million in 2QFY26 from RM555 million previously, bringing 1HFY26 sales to RM1.42 billion. While this represents only around 31% of the RM4.6 billion full-year target, management maintained its target, supported by RM2.75 billion of remaining launches.
CIMB Securities said the second-half pipeline includes higher-margin projects at Setia Alaman and potential sales of around RM500 million from two Vietnamese projects once sales permits are secured.
The research house also highlighted Setia’s proposed REIT, with an indicative value of RM2.8 billion, targeted for listing by 2Q27.
MBSB Research cut its FY26-FY28 earnings forecasts by 25%, 23% and 24% respectively, while CIMB lowered its target price to RM0.92, citing potential delays in land disposals.
As of 11.39 am, the stock price dropped nearly 3% to RM0.815.
