PETALING JAYA: S P Setia Bhd is set to achieve strong earnings this year despite the challenging market conditions.

The company, which has set a bullish sales target of RM4.55bil for this year, will be focusing on landed residential projects to grow its earnings, said Macquarie Research in a report.

TA Securities said overall demand for the group’s landed properties remain resilient, with maiden launches in Setia Safiro Cyberjaya and Setia Mayuri Semenyih fully taken up.

Credit Suisse said it expects SP Setia’s 2020 profit to improve 11% year-on-year, on the back of more advanced progress billings and also ongoing efforts to monetise unsold inventories.

The research house is maintaining an ‘outperform’ call with a target price of RM1.70.

MIDF Research meanwhile is maining a ‘buy’call on the stock with an unchanged target price of RM1.86.

Credit Suisse meanwhile said further monetary easing will be supportive of the property market.

In spite of the challenging economic climate, S P Setia Bhd achieved total sales of RM4.56bil, to meet its RM4.55bil sales target for 2019.

This was in spite of global geopolitical issues such as the US-China trade tensions, unrest in Hong Kong as well as tight lending criteria in Malaysia.

For the year ended Dec 31,2019, the group’s revenue and profit before tax came in at RM3.93bil and RM598mil, respectively.

Local projects are the biggest contributor to sales, bringing in RM4.01bil or about 88% of sales, while the remaining 12% is fulfilled by international projects such as UNO Melbourne in Australia, Daintree Residence in Singapore and EcoXuan in Vietnam, according to the company.

On the local front, sales were largely from the central region with RM2.78bil, aided by a RM747mil contribution from the southern region and RM480mil from the northern region.

For the final quarter of 2019, the group witnessed its strongest period, with a RM1.49bil spike in sales.

It said this was attributed to eleventh-hour purchases by home buyers to take opportunity of the incentives of the Home Ownership Campaign (HOC).

A total of RM675mil in sales from the HOC were secured during the fourth quarter.

For the full-year, total sales brought in by the HOC amounted to RM1.82bil.

SP Setia said its efforts to clear inventories had also contributed an additional RM637mil.

MIDF Research said the company’s earnings were within expectations.

SP Setia’s 2019 core net income of RM306.8mil came in within expectations, meeting 101% and 97% of our and consensus full year estimates respectively.

“Note that we have excluded mainly disposal gains on former British Embassy Land and foreign exchange losses in our core net income calculations.”

UBS meanwhile said SP Setia’s core profit after tax and minority interests (Patmi) was in line with its estimates.

“We expect launches in the first quarter to be slow before management starts ramping up again in the second quarter. “