UOB Kay Hian
Report Date: 21 August 2025
SP Setia Bhd: 2Q25 Results Disappoint but Land Sales and Asset Monetisation Could Drive Turnaround
Key Takeaways
Rating: BUY (Maintained)
Target Price: RM1.48 (down from RM2.03)
Upside Potential: +35.8%
Share Price: RM1.09
Analyst: Ng Jo Yee
Company Snapshot: SP Setia Bhd
SP Setia Bhd stands as one of Malaysia’s premier property developers, boasting extensive landbanks across the Klang Valley, Penang, and Iskandar regions. The company is recognized for its scale, strategic land holdings, and history of strong development launches.
Major Shareholders:
Amanah Saham Nasional: 28.5%
Yayasan Pelaburan Bumiputera: 20.9%
EPF: 9.4%
Key Metrics
Market Cap: RM5,453.4 million
Shares Outstanding: 5,003.1 million
FY26 NAV/Share: RM1.25
FY26 Net Debt/Share: RM0.41
2Q25 Performance Overview
Despite a challenging quarter, management remains confident in achieving its full-year sales and launch guidance, with expectations for a stronger second half.
| Metric |
2Q25 |
1Q25 |
2Q24 |
YoY Change |
QoQ Change |
| Revenue (RMm) |
943.7 |
770.7 |
1,494.6 |
-36.9% |
+22.5% |
| Gross Profit (RMm) |
381.8 |
281.5 |
658.0 |
-42.0% |
+35.6% |
| EBIT (RMm) |
310.6 |
235.3 |
597.0 |
-48.0% |
+32.0% |
| PBT (RMm) |
195.7 |
141.5 |
466.8 |
-58.1% |
+38.3% |
| Core PATAMI (RMm) |
109.4 |
67.1 |
307.3 |
-64.4% |
+63.1% |
Margin Trends
Gross Profit Margin (2Q25): 40.5% (up qoq, down yoy)
Pre-tax Margin (2Q25): 20.7%
Core PATAMI Margin (2Q25): 11.6%
Earnings Miss and Drivers
2Q25 core PATAMI of RM109m was up 63% qoq but down 64% yoy, on RM944m revenue.
1H25 core PATAMI totaled RM177m, representing just 31% of UOBKH and 42% of consensus full-year forecasts.
Excluding Taman Pelangi land sale recognition (RM114m), 2Q25 core PATAMI would have been a loss of RM5m.
Weak performance attributed to higher admin/general expenses and JV losses.
Property segment pre-tax margin rose to 20.9% qoq thanks to land sales, but fell yoy due to lower land sale gains compared to last year.
Financial Highlights and Key Ratios
| Year (RMm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
4,373.6 |
5,293.6 |
5,575.6 |
5,940.1 |
6,188.7 |
| EBITDA |
1,102.7 |
1,610.4 |
1,316.3 |
1,545.5 |
1,637.7 |
| Net Profit (adj.) |
337.1 |
621.5 |
484.5 |
593.2 |
624.1 |
| EPS (sen) |
8.2 |
14.3 |
9.7 |
11.9 |
12.5 |
| PE (x) |
13.3 |
7.6 |
11.3 |
9.2 |
8.7 |
| Dividend Yield (%) |
1.2 |
2.6 |
1.8 |
2.2 |
2.3 |
| Net Margin (%) |
7.7 |
11.7 |
8.7 |
10.0 |
10.1 |
| Net Debt/Equity (%) |
52.9 |
37.3 |
37.4 |
37.6 |
37.7 |
Stock Impact: Land Sales and Timing Risks
Industrial Land Sales Delayed
2Q25 saw RM157m revenue from Taman Pelangi land sale to Mah Sing.
1H25 total land sales revenue at RM224m (-77% yoy), now only 13% of total revenue (vs 33% in 1H24).
Setia Alaman Industrial Park land sales revenue recognition is delayed; bulk of RM650m now shifted to 2026 (RM100m in 2025, RM550m in 2026).
Launches and Sales Backloaded to 2H25
2Q25 sales climbed to RM1,186m (+65% qoq, +35% yoy).
1H25 sales reached RM1.9b, about 40% of its RM4.8b full-year sales target.
Launches accelerated in June 2025 (RM1.3b in 2Q25 vs RM61m in 1Q25).
Full-year sales (RM4.8b) and launch (RM5.1b) targets maintained but are weighted toward 2H25.
Tanjung Kupang industrial land (RM8b GDV, 307 acres) remains in negotiation; sentiment may improve upon deal closure.
Earnings Revision and Valuation
Earnings cut by 31%/15%/15% for 2025-27F due to land sale delays and a more conservative margin assumption.
Target price lowered to RM1.48 from RM2.03, based on a higher RNAV discount (55% vs 47% previously).
Valuation implies 13x 2026F PE (industry average: 21x) and 0.5x 2026F P/B (industry average: 0.9x).
BUY rating maintained, expecting Tanjung Kupang land sales to finalize in 2025 and a REIT listing in 1H26.
Expected Land Sales: Detailed Breakdown
| Project |
Size (acres) |
Total Proceeds (RMm) |
PAT (RMm) |
Net Margin (%) |
Recognition Timing |
| Glengowrie, Semenyih |
500.0 |
392.0 |
39.0 |
9.9% |
1Q24 |
| Alam Impian |
3.0 |
26.0 |
9.0 |
34.6% |
1Q24 |
| Bandar Setia Alam |
18.0 |
228.8 |
140.6 |
61.5% |
3Q24 |
| Setia Federal Hill |
2.7 |
103.0 |
3.0 |
2.9% |
3Q24/2H25 |
| Alam Impian |
3.4 |
26.0 |
7.3 |
28.0% |
2H25 |
| Alam Damai |
– |
134.0 |
13.4 |
10.0% |
2025 |
| Setia Alaman (Industrial Park) |
399.0 |
650.0 |
292.5 |
45.0% |
4Q25/2026 |
| Taman Pelangi Indah 2 |
960.0 |
564.0 |
333.0 |
59.0% |
2Q24 |
| Taman Pelangi |
6.5 |
167.0 |
47.0 |
28.1% |
4Q24 |
| Taman Pelangi |
6.0 |
156.8 |
114.0 |
72.7% |
2Q25 |
Total Land Sales Proceeds and PAT:
2024: RM1,506.0m revenue, RM589.2m PAT
2025: RM469.8m revenue, RM181.2m PAT
2026: RM550.0m revenue, RM247.5m PAT
Environmental, Social, and Governance (ESG) Highlights
Environmental: Energy intensity ratio improved to 12.6 kWh (from 17.9 kWh).
Social: Community investment by S P Foundation totaled RM405,154.
Governance: High transparency with anti-bribery and anti-corruption policies.
Balance Sheet & Cash Flow Highlights
| Year (RMm) |
2024 |
2025F |
2026F |
2027F |
| Total Assets |
27,603.8 |
28,314.7 |
29,044.9 |
29,752.6 |
| Shareholders’ Equity |
15,843.8 |
16,277.6 |
16,830.6 |
17,417.3 |
| Net Cash Inflow/(Outflow) |
723.2 |
(161.8) |
(222.3) |
(205.2) |
| Ending Cash & Cash Equivalent |
3,141.5 |
2,979.6 |
2,757.4 |
2,552.2 |
Valuation: RNAV and Target Price Calculation
RNAV/share: RM3.30
Discount applied: 55%
Target Price: RM1.48
Breakdown of NPV of Development Profits (by region):
Central: RM2,162m
Northern: RM516.7m
Southern: RM418m
Eastern: RM119.5m
Battersea Power Station: RM465.2m
Australia, Vietnam & Others: RM286.1m
Total RNAV: RM18,417.6m
Enlarged Share Base: 5,583.7m shares
Outlook and Investment Summary
SP Setia remains a BUY despite short-term headwinds, thanks to potential catalysts in 2H25 including the finalisation of Tanjung Kupang land sales and a REIT listing in 1H26.
Valuation is attractive relative to peers, with significant upside as earnings visibility improves and monetisation initiatives progress.
Investors should watch for improved execution in land sales and launches, as well as margin recovery.
Conclusion
SP Setia’s 2Q25 results fell below expectations, primarily due to delayed land sale revenue and higher operating costs. However, the company’s robust landbank, strong sales pipeline, and upcoming asset monetisation events underpin its recovery potential. With a lower but still attractive target price and multiple catalysts on the horizon, SP Setia remains a compelling investment for those seeking undervalued opportunities in Malaysia’s property sector.
