S P Setia shares flat despite news of record sales

S P Setia shares flat despite news of record sales
Business & Markets 2013
Written by Cynthia Blemin of theedgemalaysia.com
Thursday, 26 September 2013 16:56

KUALA LUMPUR (Sept 26): Shares of S P Setia Bhd rose slightly, up by as much as 1 sen, despite news of its sales surpassing its FY13 target.

Yesterday, S P Setia announced record sales of RM6.27 billion for the first 10 months of its 2013 financial year ending October 31 (FY13), surpassing its FY13 target of RM5.5 billion.

At 3.24pm today, S P Setia stock rose 1 sen or 0.3% to RM3.38 on trades of 1.31 million shares.

In earlier trades, the stock dipped to as low as RM3.35, down by 0.6% against yesterday’s close.

MIDF Research in a note today, however, downgraded their rating on the stock but said the fourth quarter revenue and earnings are expected to be stronger.

It said the company had performed below expectations and its earnings growth had been affected by lower margins.

The research house said earnings growth remains subdued for three consecutive quarters, mainly due to higher cost of sales (gross margin 30.4% vs 32% in 9MFY12) and finance cost (RM37.8 million vs RM4.8 million in 9MFY12).

It noted that lower gross margin was due to higher percentage of profit from high rise developments resulting from change in product mix, stating that the higher finance cost could be attributable to cost incurred to kick start its new projects.

In addition, earnings also affected by RM11 million expenses incurred for the long term incentive scheme granted to employees, it added.