03 July 2014

SP Setia sizzles on asset injection talk

  03 July 2014

SHARES of SP Setia Bhd rose to a high of RM3.44 yesterday, as investor sentiment was fuelled by speculation that major shareholder Permodalan Nasional Bhd (PNB) could inject its unlisted assets into the company.

SP Setia was up eight sen to close RM3.39 yesterday with 5.9 million shares changing hands.

Maybank Investment Research said news about a potential injection of PNB’s unlisted property companies held under I&P Group Sdn Bhd into SP Setia saw its share price rising eigth per cent to RM3.31 within two days.

The research house has kept its “hold” call on SP Setia at a target price of RM3.36.

“The M&A (merger and acquisition) is just a matter of time. SP Setia could emerge as the largest listed developer in Malaysia, if it materialises.

“Apart from the potential M&A, we suspect the buying momentum in SP Setia was also due to foreigners who have remained as net buyers of Malaysian equities since April 2014, although the quantum has tapered off in June 2014,” said Maybank Investment in its research notes.

PNB privatised three listed property companies, namely Petaling Garden, Pelangi and I&P between 2005-2007, and rationalised its holdings in these three companies via a holding company structure under I&P Group in 2009.

Maybank said according to the media, I&P Group’s assets could be worth RM10 billion.

“I&P Group’s financial year (FY) 2012 audited accounts showed RM4.41 billion in total assets, of which RM2.97 billion were land and property related.

“M&A involving the unlisted I&P Group and SP Setia, if materialises, would not be a surprise to us. The merger is just a matter of time as we already view SP Setia as PNB’s key property arm.

“Since SP Setia has a more established customer base, operating system and a stronger brandname, the injection should unlock the maximum potential of PNB’s landbank.

“Our study on I&P Group revealed that it has large tracts of land in Johor, Klang Valley and Negri Sembilan. Information remains sketchy for now.”

SP Setia yesterday confirmed its former president and chief executive officer Tan Sri Liew Kee Sin had disposed of his 67.79 million shares in the property company.

It said Liew had transferred the 2.75 per cent stake to PNB on Tuesday.

The transfer of the shares at RM3.95 each was pursuant to the exercise of three seventh of the SP Setia shares under the put option in the management agreement on January 20 2012.



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