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Tuesday, August 23, 2016

SP Setia’s earnings to pick up in Q4

Monday, 22 August 2016 | MYT 4:24 PM
SP Setia’s earnings to pick up in Q4

KUALA LUMPUR: SP Setia Bhd’s net profit may come in at between RM115mil and RM125mil in the second quarter (Q2 16) of this year when the property developer announce its results on Tuesday.

Maybank IB Research said on Monday the company’s results for Q2 16 are likely to come within expectations and earnings should start to pick up in the fourth quarter (Q4 16).

“The Q2 16 net profit could come in at RM115mil-RM125mil (-31% to -34% year-on-year (YoY), +14% to +23% quarter-on-quarter (QoQ) , lifting its first half (H1 16) earnings to RM216mil-RM226mil, accounting for just 29%-32% of our and consensus full-year estimates.

“However, earnings should start to pick up strongly in Q4 16 on the recognition of lumpy contributions from its Melbourne project, Parque Melbourne, and London’s Battersea Power Station phase 1 (units will be handed over between Q4 16 and Q1 17),’’ the research house noted.

Maybank IB said it was advocating investors to subscribe for the Islamic redeemable convertible preference shares (RCPS-I) for the steady and attractive dividend rate of 6.49% versus Malaysia REITs’ average net yield of 5.1% for 2017.

The issuance of up to 1,069.7 million new perpetual Islamic redeemable convertible preference shares priced at RM1.00 issue price is expected to be completed by Nov 2016. To recap, the RCPS-I carries a preferential dividend rate of 6.49% per annum to be paid semi-annually. The RCPS-I can be converted anytime at two SP Setia shares for seven RCPS-I held, implying a RM3.50/sh conversion price.

The research house added it was maintaining a buy with RM3.63 target price. It was also maintaining its earnings forecasts of RM3.63 revised net asset value target price (RNAV-TP) and buy rating.

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