PP 7767/09/2010(025354)

30 March 2010

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

News Upda te
30 March 2010

SP Setia Share Price : RM4.18

MARKET DATELINE

Fair Value : RM4.66

Buys Land In Australia Recom : Market Perform
(Maintained)

Table 1 : Investment Statistics (SPSETIA; Code: 8664) Bloomberg: SPSB MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/NTA P/CF Gearing ROE GDY
Oct (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (x) (%) (%)
2009 1,408.4 163.2 16.1 (12.5) 26.0 - 2.1 10.8 0.3 8.4 3.3
2010f 1,407.7 188.9 18.6 15.7 22.5 19.0 1.9 18.2 0.2 8.8 2.2
2011f 1,532.8 220.4 21.7 16.7 19.3 22.0 1.8 16.7 0.2 9.7 2.6
2012f 1,616.1 230.9 22.7 4.7 18.4 26.0 1.7 16.1 0.2 9.5 2.7
Main Market Listing /Trustee Stock / Syariah-Approved Stock By The SC #normalised * Consensus Based On IBES

Issued Capital (m shares) 1,016.8

♦ Buys land in Melbourne, Australia. SP Setia has proposed to acquire Market Cap(RMm) 4,250.2
1.07 acres land in Melbourne, Australia from S.L Nominees Pty Ltd and Daily Trading Vol (m shs) 1.4
Jonquil Pty Limited for AUD30m cash, or AUD642.2 psf (RM92.4m / 52wk Price Range (RM) 2.76-4.76
RM1,977.9 psf)). The proposed acquisition is expected to be completed by Major Shareholders: (%)
this FY10/10. Tan Seri Liew Kee Sin 12.0
PNB 31.0
♦ More on the land… The land is strategically located on the central spine Capital Group 13.0
of Melbourne’s Central Business District within the northern precint, EPF 12.0

between A’Beckett Street and Franklin Street as well as between Elizabeth

FYE Oct FY10 FY11 FY12
and Queen Streets. The site is a short walk to Melbourne Central Shopping EPS chg (%) - - -
Centre and railway station. It is also close to the Queen Victoria Market, Var to Cons (%) (2.2) (1.5) (12.7)
RMIT University, University of Melbourne, La Trobe University and Flagstaff
Gardens. We understand that the company will develop the land into a PE Band Chart

high density inner-city integrated residential and commercial project and it PER = 23x
PER = 20x
will be launched within 18-24 months from now. PER = 17x
PER = 14x
♦ Positive over the longer term, but cautious in the short term. The
proposed acquisition is in line with the company’s strategy to expand its
reach beyond the Malaysian shore. We are positive on this deal over the
longer term given two key reasons: a) the close proximity of the land to
several Australian universities will enable the company to tap into its
Malaysian customer base who have sent their children to further studies in Relative Performance To FBM KLCI
Melbourne and are looking to invest in properties in Melbourne; and b) tap
onto Asian / Malaysian born migrants in Melbourne. According to the 2006 SP Setia
census published by the Australia Bureau of Statistics, it is estimated that
29,174 Malaysian borned migrants now live in Melbourne. Nevertheless, in
FBM KLCI
the short term, we are cautious on the local property demand as it may be
impaired by Australian governments’ tightening measures to prevent asset
bubbles from building up. The government had raised its interest rate four
times from 3% to 4% since Oct 09 in view of stronger-than-expected
economic recovery.

♦ Risks. The risks include: 1) competition from peers; 2) delays in launches

and approvals; 3) surge in raw material costs; and 4) country risk.

♦ Forecasts. No changes to our FY10-12 earnings forecasts pending further Low Yee Huap, CFA
details from the management. (603) 92802237
low.yee.huap@rhb.com.my
♦ Investment case. Our indicative fair value is RM4.66 based on RNAV
valuation method. We are maintaining our Market Perform rating on the
stock.

Please read important disclosures at the end of this report. Page 1 of 4

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 30 March 2010

Chart 1. Location on the proposed land acquisition

Source: Company, RHBRI

Table 4. Earnings Forecasts Table 5. Discount Rate Assumptions

FYE Oct (RMm) FY09a FY10F FY11F FY12F (%)

Turnover 1,408.4 1,407.7 1,532.8 1,616.1 Risk free rate 4.2

Construction 119.4 50.0 50.0 50.0 Beta 1.0
Property development 1,216.9 1,279.3 1,404.5 1,487.8 Equity risk premium 7.5
Others 72.1 78.3 78.3 78.3 Cost of debt 5.5
Turnover growth (%) 6.0 32.1 8.9 5.4 WACC 10.1
Gross Profit 304.3 169.2 221.8 233.0

EBIT 203.0 163.2 214.1 224.6

Pretax 231.1 251.9 293.9 307.9
Tax (59.9) (63.0) (73.5) (77.0)
Net Profit 163.2 188.9 220.4 230.9
Dividend (sen) 14.0 9.3 10.8 11.4
Source: Company data, RHBRI estimates

Page 2 of 4

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 30 March 2010

Table 6: RNAV Estimate

Market Book
Area value value Surplus
Assets (acres) RMm RMm RMm
Bukit Indah, Johor 151.0 98.7 39.5 59.2
Setia Indah, Johor 41.0 26.8 5.1 21.7
Setia Tropika, Johor 238.0 155.5 73.1 82.4
Setia Eco Garden, Johor 749.0 489.4 179.4 217.0
Setia Pearl Island, Penang 35.0 152.5 43.6 108.9
Sungai Ara 29.0 126.3 68.2 58.1
Setia Nexus 1 & 2, Klang 10.0 34.8 26.1 8.7
Kenny Hills Grande 6.0 78.4 71.4 4.9
Setia Alam 1,026.0 1,340.8 156.0 1,184.8
Eco Park 408.0 1,421.8 142.2 639.8
Setia City 128.0 167.3 19.5 147.8
Aeropod @ Tg Aru 42.0 164.7 110.5 37.9

DCF
KL Eco City 89.5
Sky Residences 8.6
Brook Rd 3.2
Setia Walk 21.2
Setia Vista 5.2
Eco Lakes 15.6
Lai Thieu Land 16.2
China, Hang Zhou 6.5

Net asset value 2,737.2

Add : Shareholders funds as at 31/10/09 2,037.2
Total net asset value 4,774.4
No. of shares (m) 1,016.8
RNAV per share (RM) 4.70
Proceeds from warrants 753.5
Total NAV 5,527.9
No. of shares (After warrants conversion) 1,185.0
FD RNAV per share (RM) 4.66

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Page 3 of 4

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 30 March 2010

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

Page 4 of 4

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com