KUALA LUMPUR (Aug 18): SP Setia Bhd's RM4 billion new property sales target for 2017 is achievable as first half sales had exceeded RM2 billion, according to Hong Leong Investment Bank Bhd and RHB Research Institute Sdn Bhd.

Hong Leong said SP Setia sold RM2.1 billion worth of properties during the first half ended June 30, 2017 (1HFY17). 

"During 1HFY17, total new sales achieved stood at RM2.1bn (+86.5% yoy) with 42% from international sales, largely contributed by the launch of Sapphire in Melbourne (RM795m at 74% take-up). The total sales are on course to meet full year target of RM4bn, supported by another RM2.9bn worth of launches in 2H," Hong Leong wrote in a note today.

RHB said SP Setia's "MYR4bn full-year sales target should be met, given its effective strategy to focus on mid-range landed properties in 2HFY17." 
 
Hong Leong and RHB's notes followed SP Setia's 2QFY17 results announcement yesterday.

SP Setia said yesterday that its 2QFY17 net profit rose to RM136.32 million, from RM125.78 million a year earlier. 1HFY17 net profit fell to RM241.5 million, from RM249.17 million a year earlier.

Today, Hong Leong said SP Setia's earnings was expected to be stronger in 2HFY17, as SP Setia delivers more properties under the UK's Battersea Power Station project in London to buyers.

"1HFY17 revenue of RM1.7bn translated into PATAMI (profit after tax and minority interests) of RM241.5m, accounting for 34.8% and 31.9% of HLIB (Hong Leong) and consensus full year estimates. The result is deemed in line as we expect stronger 2HFY17, with handover of another 6 blocks from Battersea Power Station Phase 1," Hong Leong said.

RHB said SP Setia's 2QFY17 results were below expectation. "The weaker earnings were largely due to the completion of several phases in KL Eco City, as well as the entire Eco Sanctuary in Singapore last year," RHB said.

Hong Leong has a RM4 target price (TP) for SP Setia shares, while RHB's TP stood at RM4.38. At 12:30pm, SP Setia shares settled unchanged at RM3.31, for a market capitalisation of RM9.89 billion.