Maybank Investment Bank Berhad
Date of Report: September 16, 2025
SP Setia: Navigating the Long Game in Global Real Estate

Introduction: SP Setia’s Strategic Patience in the Global Property Market

S P Setia Berhad (SPSB), a major player in Malaysia’s real estate sector, is demonstrating resilience and strategic patience as it navigates the evolving global property landscape. This in-depth analysis covers SP Setia’s recent performance, project updates—particularly the high-profile Battersea Power Station (BPS) in London—financial health, ESG initiatives, and key risks and opportunities for investors.

Battersea Power Station: Transformation and Future Prospects

The iconic Battersea Power Station project in London, in which SPSB holds a 40% stake (alongside Sime Darby Property and EPF), has matured from a brownfield site into a vibrant mixed-use destination. Recent site observations highlight the completion and operational status of apartments, a retail mall (The Power Station), offices, and the BPS underground station. Notably, the site has improved accessibility with transport options including Uber Boat and buses, and footfall at the mall has surpassed 13 million visitors in 2024, up 10% year-on-year.
The focus is now on Phase 3C, a senior living project, as recurring rental income remains in the early stages. A major office tenant’s rent-free period ends in September 2025, with lease renewal expected at higher market rates due to strong demand for green-certified buildings. However, while revised rental rates will benefit PNB-EPF (the asset owner), the consortium (including SPSB) mainly earns management fees, with a pricing-adjustment mechanism due for review in 2027. Future phases will be launched based on market demand, with Phase 3C expected to contribute from FY2026.

Financial Highlights: Resilience Amidst Market Challenges

SP Setia’s financials reflect a measured approach amid ongoing challenges in the UK property market, particularly in the residential sector. While the company’s international ventures are significant, its core strength remains in Malaysia, with a well-diversified project portfolio.

Additional financial highlights:

• Share price: MYR 0.99 (as at report date) with a 12-month target price of MYR 1.10 (+11%).
• Market capitalization: MYR 5.0 billion (USD 1.2 billion).
• Issued shares: 5,003 million.
• Major shareholders: Permodalan Nasional Bhd. (28.5%), Bumiputra Investment Foundation (20.9%), Employees Provident Fund (9.4%).
• Unbilled sales: MYR 3.95 billion as of June 2025, representing 0.8x FY26E revenue.
• Sales target for FY25: MYR 4.8 billion (-4% YoY).

Comprehensive Landbank and Project Portfolio

SPSB boasts a vast and diverse landbank, with 6,311 acres and an estimated GDV (gross development value) of MYR 120 billion, spanning Malaysia, London, Singapore, Vietnam, and Australia. The majority of GDV is derived from the Klang Valley (49%), followed by international markets (29%), Iskandar Malaysia (29%), Penang (11%), and Sabah (3%).
Key projects in Malaysia include Setia Alam, Setia Eco Park, Setia City, Setia Eco Hill, Setia Mayuri, KL Eco City, Bandar Kinrara, and more. The international portfolio features the high-profile BPS in the UK, as well as developments in Melbourne and Sydney, Australia, and in Vietnam.

ESG Initiatives: Building for a Sustainable Future

SP Setia has made significant strides in environmental, social, and governance (ESG) initiatives, achieving an overall ESG score of 57 (above average). Key highlights:

• Environmental: Implementation of Setia eGreenLiving across upcoming projects, focusing on energy efficiency, smart home technology, rainwater harvesting, and EV/solar readiness. Solar panels are being installed at headquarters and other commercial assets. The company targets a 45% reduction in Scope 1 & 2 emissions by 2030, and 70% by 2040 (2023 baseline).
• Social: Commitment to increasing female representation (46% of workforce in FY23; 37% in senior management), community engagement through the Setia Foundation, and strong safety protocols (Lost Time Incident Rate: 0.68 for employees in 2023).
• Governance: Board diversity (30% female, 60% independent directors), robust whistleblowing and ethics policies, and transparent audit practices.

Risks and Opportunities: What Investors Should Watch

Upside Potential:

• RNAV-accretive land acquisitions
• Stronger-than-expected take-up for ongoing and new projects

Downside Risks:

• Weaker property sales, sector downturn from slower economic growth
• Delays in project approvals or construction progress
• Higher raw material costs or labor shortages
• Unexpected losses from Battersea Power Station or other international projects

Valuation and Share Performance

SP Setia maintains a “HOLD” rating with a target price of MYR 1.10, representing an 11% upside from the current price. The company’s price-to-book ratio (P/BV) remains attractive at 0.2–0.5x, and net gearing is on a downward trend. While profit delivery from international ventures remains uncertain in the short term, the company’s core Malaysian projects provide earnings stability.

Conclusion: Strategic Positioning for Long-Term Value Creation

SP Setia stands out as a versatile, regionally dominant property developer with a growing international presence. The transformation of Battersea Power Station underscores its long-term vision and execution capability. While near-term challenges persist, particularly in the UK, the company’s diversified landbank, focus on ESG, and strong governance position it well for long-term value creation.
Investors should monitor SP Setia’s progress in delivering on its sales targets, managing costs, and navigating international headwinds, with a particular focus on the impact of the Battersea Power Station project as it transitions into higher-yielding, recurring income phases.