News

SPSB has released an official press statement regarding the departure of Tan Sri Liew Kee Sin, Dato’ Teow Leong Seng and Tan Sri Lee Lam Thye.

Liew, the Group’s President & Chief Executive Officer, will leave on 30 April 2014 whilst Teow, the Chief Financial Officer will stay on until 31 July 2014. Lee resigns immediately as a Non-Independent and Non- Executive Director.

SPSB has appointed Dato’ Voon Tin Yow as Acting President and Chief Executive Officer of the Company for a period of one year with effect from 1 May 2014 until 30 April 2015. The Board will also seek feedback from PNB regarding the succession planning.

Financial impact

We believe financial impact will be limited as SPSB has RM71bn in effective remaining GDV and has the necessary management and resources to execute its portfolio of projects.

Pros / cons

There will be lingering uncertainty over PNB’s final decision on Liew’s eventual successor, as the appointment of Dato’ Voon as CEO is on a one-year basis, and PNB will have the final say given its more than 60% stake.

Risks

Slowdown in sales; escalation in construction and raw material costs; delays in launches; uncertainty in longterm direction of top management.

Forecasts

Maintained, given that SPSB’s near term plans for its projects are unlikely to be affected.

Rating

HOLD

Positives: Strong product concepts and pipeline; consistent dividends.

Negatives: No longer the most liquid property stock in Malaysia; uncertainty in long-term direction.

Valuation

While its operations remain on-track, we believe concerns over management stability and near-term sales performance following Tan Sri Liew’s departure will linger and weigh on share price.

In light of the recent development of events, we reduce TP from RM3.35 to RM2.91 (increase discount to FD RNAV from 25% to 35%) to reflect the lack of fresh rerating catalysts as well as limited upside with the current subdued sentiment surrounding the property sector. Maintain HOLD.

Source: Hong Leong Investment Bank Research - 21 Jan 2014