KUALA LUMPUR: CIMB Equities Research is neutral on SP Setia's acquisition of a 1.07-acre piece of land in Melbourne for A$30 millio (RM92.4 million) as the strong potential earnings contribution offsets its concern that the Melbourne property market may be close to its peak.

The A$644 psf (RM1,982 psf) price tag appears fair given its strategic location. However, this is a brand new market for SP Setia, which may have to pay the price of going through a learning curve as it did in Vietnam.

“We make no changes to our earnings forecasts as this project is only likely to start contributing in FY13.  We maintain our Outperform call and target price of RM5.51, based on a 20% premium over its fully diluted RNAV of RM4.59.

“Factors that could catalyse the stock include 1) continued strong sales in FY10, and 2) SP Setia's renewed appetite for land banking, both domestically and internationally,” it said.