SP Setia’s 9MFY10/11 core net profit was in line with our forecast but ahead of consensus as it made up 73% of our full-year forecast and 78% of consensus. 4Q is historically the strongest quarter. The group racked up RM2.14bn property sales during the period and is on track to exceed its full-year target of RM3bn. We are raising our FY12-13 EPS by 1-8% for contributions from newly acquired landbank. But our target price is lowered from RM5.37 to RM4.73 as we now apply a 10% premium to its RM4.30 RNAV (RM4.13 previously) instead of 30% given the damper that global economic worries and the recent stockmarket rout have thrown on sentiments. Nonetheless, we remain positive about SP Setia’s longer-term prospects and maintain our OUTPERFORM call. Potential re-rating catalysts include 1) continued robust sales and 2) newsflow on landbanking.
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