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SP Setia - Expect higher earnings
Stronger upcoming quarterly results but recent sales trend has softened. SP Setia’s 3QFY09 net profit could have increased 10-13% qoq and yoy due to an across-the-board higher sales in Klang Valley, Johor and Penang (please refer to table overleaf). The strong sales were mainly attributable to deferred payment scheme such as the 5/95 programme and low mortgage rate of less than 3.5%, which helped to boost the affordability of home buyers. The Group has achieved new sales of RM1.3b as of 9MFY09, which is RM100m higher than the corresponding period of 9MFY08 and exceed its full-year target of RM1.1b, and it can easily match FY08’s sales of RM1.4b.However, we understand that the new bookings have slowed down since the 5/95 scheme ended in mid-July.Margin likely to be 2-3ppt lower. Nonetheless, these new sales were achieved at the expense of margins. We expect FY09’s EBIT margin to decline to 16% (vs FY08’s 19%) as a result of the margin compression of around 2-3ppt from the 5/95 scheme, which requires S
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