S P Setia tops losers’ list despite land deal

S P Setia Bhd topped the losers’ list in yesterday’s trade as investors took profit on news that it secured a 40-acre prime land along Jalan Bangsar via its 50%-owned unit Sentosa Jitra Sdn Bhd.

It is learned that the other 50% of Sentosa Jitra could be owned by parties related to tycoon Tan Sri Syed Mokhtar Al-Bukhary.

The stock closed 29 sen or 4.3% lower at RM6.41 yesterday. Its warrant, S P Setia-WB, was at the top of the losers’ list, shedding 35 sen to RM1.88.

The property developer confirmed on Monday that it had received an approval-in-principle from the Prime Minister’s Department for Sentosa Jitra to enter into negotiations with Unit Kerjasama Awam Swasta and the Ministry of Health (MOH) over the terms for the proposed development of a new integrated health and research complex for MOH on 55.33 acres of land in Setia Alam.

In return for the development of the new health complex in Setia Alam, Sentosa Jitra will get the development rights for the government land along Jalan Bangsar.

The land here is one of the few sizeable parcels remaining in that location and analysts noted that its proximity to KL Sentral could turn it into another lucrative development.

The development is a boon to S P Setia as it also has an ongoing development — KL EcoCity, opposite Mid Valley, which is near Bangsar.

Apart from the proposed deal with MOH, S P Setia also announced a fund-raising exercise via a proposed placement of 15% of new shares to be done via book-building and a one-for-two bonus issue.

The exercise could easily raise RM1.14 billion which will fund existing projects, general working capital requirements, future expansion plans as well as to defray related expenses.

While most analysts are generally positive on S P Setia securing the prime land in Jalan Bangsar, ECM Libra downgraded the counter to a “sell” from “hold”.

“Despite the land deal being positive, the share price has appreciated significantly,” the research house said.

ECM Libra said current valuation for FY11 ending Oct 30 at PE of 24.7 times was already above two times standard deviation and 22% above its RNAV for S P Setia of RM5.50.

“Even rolling over the target price to FY12 and maintaining 20 times PE to derive revised target price of RM6.00, valuation still looks expensive. As such, we believe all positives have been priced in and advise investors to take profit,” it said.

On S P Setia’s partner for the Bangsar project, a check with the Companies Commission of Malaysia shows that the other 50% stake in Sentosa Jitra is held by Mekar Gemilang Sdn Bhd, which in turn, is owned by Che Aladita Che Amdan and Ahmad Zaed Saleh Hamdi.

A search on Ahmad Zaed shows various filings with Bursa Malaysia on transactions related to MMC Corp Bhd and Tradewinds Corp Bhd. The two companies are closely associated with Tan Sri Syed Mokhtar Al-Bukhary.

Ahmad Zaed was a shareholder in several private vehicles linked to the tycoon. Meanwhile, Che Aladita was on the board of Pilecon Engineering Bhd which was delisted early last year. - by Joy Lee, theedgemalaysia.com