SP Setia Bhd, Malaysia’s biggest property developer, fell the most in one month as Credit Suisse Group AG and four other brokerages recommended investors sell the stock even as third-quarter earnings improved.
Maybank Investment Bank Bhd., AmResearch Sdn., OSK Research Sdn. and ECM Libra Capital Sdn. maintained their “sell” ratings on the stock. Credit Suisse kept its “underperform” recommendation after raising its target price to 3.71 ringgit from 3.25 ringgit.
The shares slumped 4.4 per cent to RM4.40 at close in Kuala Lumpur trading, its biggest decline since August 25.
The stock is trading at 26 times estimated earnings, exceeding its peak valuation during past property cycles, ECM Libra said.
“This is not justified even after taking into account the commendable sales achieved,” ECM Libra said in its report today. It raised SP Setia’s target price to 3.36 ringgit from 2.65 ringgit.
The company said late yesterday third-quarter profit rose 4.4 percent to 42.7 million ringgit ($12 million), and sales added 4.9 percent to 317.1 million ringgit.
Maybank, AmResearch and OSK said SP Setia is trading significantly above its fair value even as exceeding its annual property sales target. -- Bloomberg
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