SP Setia (BUY)

SP Setia (BUY)

• SP Setia and Rimbunan Hijau Group have entered into a JV Framework Agreement (“JFVFA”) with Qinzhou Jingu Investment Co, Ltd to set up a JV company to develop, construct and operate the China-Malaysia Qinzhou Industrial Park (“QIP”) on ~13,590 acres of mixed development land. 
• Recall that the QIP was proposed by the Chinese Premier to Malaysia’s Prime Minister during last year’s Malaysia-China Economic, Trade & Investment Cooperation Forum.
• We see this deal as significantly enhancing its share performance prospects.  Given that SP Setia’s valuations are well below UEM Land’s, we upgrade to BUY, and raise target price to RM4.39 (10% discount to RNAV).

Source: HLIB Research - 3 April 2012