MARC Ratings has affirmed its ratings on S P Setia Berhad’s sukuk programmes as follows:
- RM3.5 billion Senior and Subordinated Perpetual Sukuk Wakalah Programme (with a sublimit of RM1.5 billion on the Perpetual Sukuk) at AAIS/A+IS
- RM500.0 million Islamic Commercial Papers Programme at MARC-1IS
- RM3.0 billion IMTN Programme at AAIS
The outlook on the long-term ratings is stable.
The ratings reflect S P Setia Berhad’s entrenched position in Malaysia’s property development sector, particularly in township developments, supported by a strong track record in landed residential projects and a resilient sales performance through industry cycles. The group’s sizeable unbilled sales of RM4.22 billion as at end-1Q2026 provide earnings visibility over the medium term, underpinned by developments within its established townships in the Klang Valley, Johor and Penang. The ratings also incorporate a one-notch uplift on MARC Ratings’ assumption of support extended by parent Permodalan Nasional Berhad, if needed.
S P Setia’s ongoing domestic projects carried a total gross development value (GDV) of RM8.4 billion as at end-2025. Take-up rates remained healthy for selected segments, particularly industrial land parcels (100%), retail (83%) and affordable housing (91%). Although landed and high-rise residential properties recorded moderate take-up rates of 55.1% and 23.0%, this was attributable to the sizeable proportion of ongoing projects having been launched only recently. Completed inventories declined marginally to RM1.2 billion (2024: RM1.3 billion).
The group continues to expand its development pipeline through its sizeable landbank of 4,264 acres (as of 1Q2026), with an estimated GDV of RM88.1 billion (1Q2026), providing long-term developmental opportunities. Moreover, its venture into industrial developments — including Setia Alaman Industrial Park in Selangor and Setia Fontaines Industrial Park in Penang — would enhance earnings diversification.
S P Setia’s overseas projects provide some degree of geographical diversification. Its latest project, Atlas Melbourne in Australia (GDV: AUD911.0 million), had achieved a take-up rate of about 60% as of end-March 2026. Meanwhile, its 40%-owned Battersea Power Station development in the United Kingdom continues to show strong progress, with high occupancy and sales levels across completed phases. Future phases may involve joint-venture arrangements at the project level to better manage funding requirements.
In 2025, group revenue of RM4.2 billion (2024: RM5.3 billion) reflected lower land sales, and reduced contributions from overseas projects following major completions in the preceding year. Notwithstanding this, profitability remained strong. Operating profit margin further improved to 33.5% from 30.8% in 2024. From the deleveraging efforts, namely land monetisation, total borrowings continued to decline, to RM7.9 billion as at end-2025 (2024: RM8.6 billion); gross debt-to-equity (DE) ratio eased further to 0.49x (2024: 0.54x). Borrowings are expected to broadly remain at the current levels over the near-to-medium term, as the group balances its funding requirements for ongoing developments and expansion initiatives. A more meaningful reduction in borrowings is anticipated upon the completion of its plans to set up and eventually list a commercial real estate investment trust, targeted for 2027.
Cash flow generation remains adequate, with cash flow from operations of RM1.38 billion in 2025 (2024: RM3.3 billion). Although lower than the previous year, it remains more than sufficient to meet financial obligations and operational needs. The group’s liquidity position is supported by cash balances of RM2.6 billion and unutilised banking facilities of RM1.5 billion. Near-term debt maturities, including the RM650 million sukuk due in 2026, are expected to be addressed through a combination of internal liquidity and refinancing arrangements.