Maybank IB is positive on SP Setia's latest land sale in Taman Pelangi for its attractive pricing (MYR157m or MYR600.9psf), which is 20% above external valuation. The land sale, secured via a tender process, is expected to complete by 1H25 while the proceeds will strengthen SPSB's balance sheet and support its upcoming project in Australia. Net gearing would decline to
0.34x post-land sale. The house has raised its FY25/26 earnings forecasts by 26%/2% to reflect the sale. The TP is kept intact at MYR1.64, on 0.5x FY25E P/B. BUY.

Secured via a tender process
It was announced that SP Setia has entered into a conditional SPA with Dsara Sentral S/B (subsidiary of Mah Sing Group [MSGB MK, CP MYR1.76, Not Rated]) to dispose a 5.99- acre freehold commercial land with a plot ratio of 6 in Taman Pelangi, Mukim Plentong, Johor Bahru, for MYR156.8m cash (or MYR600.90psf). The selling price of MYR600.90 psf, secured via a tender process, is 20% higher than its external valuation, as per SPSB's Bursa announcement. The land sale is expected to be completed by 1H25.

Positive on the land sale
Maybank has deemed the land sale as positve, given its attractive pricing which is 20% above market value. Proceeds from the sale can be utilised for strategic investments, working capital and debt reduction, and to support upcoming projects in Australia. Post-land sale, we estimate net gearing to decline to 0.34x (from 0.35x in end-3Q24).Earnings adjustments

The raising of earnings forecasts factors in a net land sale gain of MYR107.8m as announced in FY25E and lower financing
costs in FY26E. Maybank remains positive on SPSB's FY25-26E outlook, expecting its industrial parks to be the key growth driver, supported by its stable bread-and-butter township developments. In addition to its local operations, its overseas ventures (Australia) will contribute towards its MYR700m net profit target by FY29E. SPSB's plan to list its investment properties (with e.AUM of MYR1.5b) by 2H25 remains on track.