In 2009, market speculation was rife that SP Setia was keen on acquiring PNB’s wholly owned subsidiary I&P as well as PNB two other property companies … Pelangi and Petaling Garden. SP Setia CEO then came out to say that it had no plans to buy the three companies and instead would seek to collaborate with them to develop land in the southern Johor.
The speculation did some have merit. PNB could have used a vehicle to house all its property interests, which would have helped improve its brand and economies of scale. Moreover, SP Setia has a number of government linked funds among its shareholders. These funds hold a collective stake of about 46% of the company.
With the UEM Land, Sunrise deal rocking the local property scene, speculation has again surfaced that a SP Setia may be a target of some of sort of partnership.
SP Setia has long been favored by investors for its liquidity, solid management, undeveloped landbanks of 3848 acres as at Oct 2010 and strong earnings.
So now what lies ahead for SP Setia?
With SP Setia having a market cap of RM5.2 billion, trading at 2.5 times book and a PER of more than 22 times. Any proposed acquisition of the company will be expensive. It is more likely that SP Setia would be an acquirer than a target, unless a foreign player decides to buy into the company.
On the other hand, purely from a valuation perspective, SP Setia could buy anyone in town without seeing the same dilutive effect, provided that the target has fairly decent earnings.
The source also says the only reason SP Setia would enter into a M&A with another property company would be if the price was right and the parties were friendly, or that its major shareholders had big plans.
There is less of a push for an established corporate to enter into a partnership or buy into a partnership because it is already generating everything internally with a strong team, as well as having ample resources and landbank.
No comments:
Post a Comment