JP Morgan maintain BUY Call on SP SETIA with TP of RM6.80

SP Setia has proposed to purchase a 268-acre piece of freehold land within the Cyberjaya Flagship Zone for M$420MM or M$36psf, which we believe is a fair price for the location. According to the company, the land is estimated to have a GDV of M$3B, with commencement of development expected to start in FY12,
spanning over six years. Management plans to replicate its success with its eco-themed development, Setia Eco Park in this new area in Cyberjaya.

Other developers like Mah Sing and UEM Land already have a presence in Cyberjaya only since the past 1-2 years, and response to their launches here have been encouraging overall.

We maintain an OW on SP Setia, but our preferred property play or top pick in the sector is IJM Land which trades at a steeper 30% discount to our RNAV versus SP Setia's 12% discount to our estimated RNAV of M$6.80/share. IJM Land is also backed by strong fundamentals and earnings growth. Our preferred entry level for SP Setia remains at below M$6.00.

Source: J.P. Morgan Research