SP Setia earnings may be lifted by RM400m from sale of Battersea Phase 2 assets, says PublicInvest

KUALA LUMPUR (Jan 19): S P Setia Bhd's earnings may be lifted by at least RM400 million from the potential sale of commercial assets being developed within the Phase 2 of the Battersea Power Station (pictured) development in London, according to PublicInvest Research. 

In a note today, PublicInvest Research analyst Tan Siang Hing said the forecast was based on the assumption of a 15% profit before tax (PBT) margin. 

"This is positive in our view, for the group to monetise the commercial assets more efficiently and redeploy the capital into the subsequent phases of Battersea Power Station," Tan said. 

However, Tan noted details of the proposal are still sparse at the current juncture, hence not much further comments can be given. 

Yesterday, it was announced Permodalan Nasional Bhd (PNB) and the Employees’ Provident Fund (EPF) had inked a heads of terms agreement with Battersea Phase 2 Holding Co Ltd, a wholly-owned unit of Battersea Project Holding Co Ltd, in which S P Setia and Sime Darby Property Bhd own a 40% stake each, with EPF holding the remaining 20%.

When completed, the potential sale will be worth approximately £1.61 billion (RM8.8 billion) and sold to a joint venture company to be formed between PNB and EPF.

PublicInvest maintained its 'Outperform' call on S P Setia, with an unchanged target price of RM4.50. 

"We still favour S P Setia for its sizable and well-located landbank, consistent performance, good earnings visibility and decent dividend yield," the research house added. 

As at 11.57am, shares of S P Setia went up 5 sen or 1.57% at RM3.24, with 1.89 million shares traded. — theedgemarkets.com

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