SP Setia jumps on improved PNB offer

SP Setia Bhd, Malaysia's biggest listed property developer by sales, advanced to its highest level in almost six months after Permodalan Nasional Bhd raised its buyout offer.

The stock gained 1.6 per cent to RM3.94 ringgit at 11:35 a.m. local time in Kuala Lumpur trading, bound for its highest close since Aug. 2.

Three brokerages raised their price estimates today, including HwangDBS Vickers Research Sdn. which forecast in a report that SP Setia could rise to as much as RM4.50.

Permodalan Nasional, the country's largest state asset manager better known as PNB, boosted its offer by 5 sen per share to RM3.95 for the remaining stock it doesn't already own and brought in SP Setia's Chief Executive Officer Liew Kee Sin as a bidding partner, according to an exchange filing on Jan. 20. Liew will stay on to run the developer as part of a deal struck almost four months after PNB's initial bid.

“This proposal is a win-win solution for PNB, the management and shareholders," Loong Kok Wen, an analyst at RHB Capital Bhd., wrote in a report today. The revised offer is "fair," she said, advising investors to accept.

The new bid values SP Setia at RM7.3 billion (US$2.4 billion). Liew, who currently owns 10.9 per cent of SP Setia, will keep his post for three years after the buyout is completed, according to the statement.

Investors are "better off holding on given management continuity for three years," HwangDBS Vickers said in its report. "Strong execution track record and solid balance sheet should help SP Setia weather challenging outlook."

Hong Leong Investment Bank Bhd. and RHB Capital Bhd. increased their share estimates to match the new offer price, according to separate reports today.

The developer reported net income of RM82.5 million for its fiscal fourth quarter ended October, 9.7 per cent growth from a year earlier. That brought its full-year profit to RM328 million, its highest annual income since 1994, according to data compiled by Bloomberg.

The benchmark FTSE Bursa Malaysia KLCI Index fell 0.1 per cent today. The stock market resumed trading after a two-day break for the Lunar New Year holidays.

By Bernama