Liew cool over possible takeover

SHAH ALAM: Although Permodalan Nasional Bhd (PNB) has raised its stake in SP Setia Bhd to 32.9% which can easily trigger a general offer if it decides to further increase its stake to 33% in the coming days, the company’s president and chief executive officer Tan Sri Liew Kee Sin is unperturbed by worries of a potential takeover.

Addressing concerns voiced by the investment community that PNB may further raise its stake in the company and the possibility of the company being taken private, Liew, who owns 12% of the company, said he personally did not think that would happen.

“It does not make sense for the fund to take the company private because that will not serve any purpose in further adding value to its investment. Whatever future plans there may be, they will add value to the SP Setia group,” he told StarBiz.

PNB controls three property developers – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – all privatised between 2005 and 2007.

Liew sees PNB’s majority stake in the company as a boon that will enhance its value as a premier developer.

The investment fund, which has been a shareholder of SP Setia since the 1990s, had from last March started picking up more of the company’s shares in the open market.

He said being an investment fund, PNB would always be on the lookout to create value for its unitholders.

“Its purchase of the company’s shares over the last 16 months to become a majority shareholder underscores the good value it sees in SP Setia. We are very pleased to have a strong and long-term shareholder that looks for long-term value enhancement potential rather than quarter-on-quarter results performance,” Liew added.

He said the company’s goal was to have good, long-term institutional shareholders as their presence was a sign of confidence in the company’s potential and in what it had achieved so far.

Other institutional shareholders of SP Setia include the Employees Provident Fund with 12%, Capital Group of the US also with 12%, and other foreign shareholders which hold another 14% in the company.

On June 18, SP Setia announced the appointment of two nominees of PNB – Tan Sri Wan Mohd Zahid Mohd Noordin and Datuk Noor Farida Mohd Ariffin – as its new non-independent and non-executive directors.

SP Setia’s two executive directors – Khor Chap Jen and Teow Leong Seng – resigned from their positions on the same day.

However, both remain with the company in their existing capacity as executive vice-president in charge of property division (central) and executive vice-president/CEO of international business development respectively.

Analysts concurred that Liew’s hands-on management was a huge asset to SP Setia’s growth to become the largest property company by market capitalisation at RM4bil, based on the closing price of its shares at RM3.98 yesterday.

“The possibility of PNB taking over SP Setia and taking it private is very slim as the move will dilute the company’s value. It is also fair to say that the current management team led by Liew is highly professional and will be hard to replace,” an analyst with a foreign brokerage said.

ECM Libra property analyst Bernard Ching said the company was moving into the next stage of transformation from being a Malaysian-centric property player to a regional player.

“The management led by Liew has an enviable track record in Malaysian property scene. Its long term prospects are underpinned by its drive to penetrate high growth regional markets such as Vietnam and most recently China. While pursuing growth in new markets, management is also cognisant of risks involved and has structured its investment with minimal upfront cost and deferred payment based on development progress.

“Domestically, it is venturing into large scale commercial development such as Setia City. Its long-awaited The Kuala Lumpur Eco City project in Abdullah Hukum is also poised to enhance its value going into the next property cycle.

“This project will easily match Mid Valley’s size and value,” he said.

With projects worth a total gross development value of RM5bil in the pipeline for launch in one to two years, SP Setia will be well positioned for a potential pick-up in the property market.

“Its net gearing ratio at 0.2 times as of April 30, 2009 means its balance sheet is not stretched and has plenty of room to increase its leverage to capitalise on any acquisition opportunities as and when they arise,” Ching added.

Meanwhile, Liew said the company was confident of achieving its sales target of RM1.1bil for financial year ending Oct 31 after having raked in RM803mil in sales between November 2008 and June 15.

His confidence is based on the more positive signs appearing in the global and local economic fronts.

“The share market is improving and there is less negative news about the economy. I think things are looking to be more positive and that the worst times are over,” he added.

Attributing the company’s record sales of RM803mil to the Setia 5/95 Home Loan Package, Liew said the housing facility contributed 90% of the total sales recorded during the period.