SP Setia may acquire PNB property units

SP Setia Bhd, Malaysia’s biggest property developer, may acquire three real-estate companies from a state asset manager, increasing sales and gaining financial backing from the government, said RHB Research Institute Sdn Bhd.

SP Setia would benefit if Permodalan Nasional Bhd sells three property units it is already planning to merge to SP Setia, in which Permodalan already owns shares, said RHB Research, the brokerage unit of RHB Capital Bhd, Malaysia’s fourth-biggest bank.

Adding Island & Peninsular Bhd, Pelangi Bhd and Petaling Garden Bhd would enhance SP Setia’s value and provide it with strong financial backing from the state for expansion, RHB said.

Malaysian developers’ sales slumped last year as the country’s exports fell, slowing economic growth, and the global financial crisis dried up credit.
Permodalan’s three property units have combined annual sales exceeding RM1.31 billion (US$358 million), similar to SP Setia’s 2008 figures, the Business Times reported on March 18.

SP Setia “could be pulled in to spearhead the merger in view of its strong brand name and market leader position in the local property industry,” RHB said in a report today and maintained an “underperform” rating on the stock.

“A mega property company could also potentially benefit from merger synergies, in terms of centralised procurement of construction materials and better negotiating power with contractors.”

Permodalan chief executive officer Hamad Kama Piah Che Othman plans to complete the merger of Island & Peninsular, Pelangi and Petaling Garden in July, a newspaper reported March 28, citing the CEO. Hamad Kama Piah wasn’t available to comment when Bloomberg contacted Permodalan today.

Loan Approvals

Loans approved for residential property rose to RM3.74 billion in February, the first increase in seven months, central bank data show.

SP Setia CEO Liew Kee Sin and company spokesman Diana Chin weren’t immediately available to comment when Bloomberg called the company.

SP Setia fell 0.6 per cent to RM3.28 at the 12:30 pm break on the Malaysian stock exchange, valuing the developer at RM3.33 billion. The benchmark Kuala Lumpur Stock Exchange Composite stock index advanced 0.4 per cent to 964.90.

Permodalan held a 6.5 per cent stake in SP Setia as of January 30, according to data compiled by Bloomberg.

By Bloomberg