Internal Weakness

Less exposures in affordable housing and township developments We expect the demand for affordable homes to remain strong driven by a sizeable young population. SP Setia seem to less exposure on affordable throughout the year. This is very important SP Setia to launch their housing development project more instead township developments as the election period coming and government might present more affordable housing program to meet the market demand. Penang and Selangor state government are strongly encouraging these housing projects could be done. But unfortunately, the less exposures in affordable housing becomes one of the weakness for the company. Besides that, the failure project happened in Tanjung Bungah, Penang leads township development more suffer from their business.

Wrong Investment SP Setia Bhd hopes to take advantage of lower prices in Vietnam's property market by starting a development in downtown Ho Chi Minh City or Hanoi SP Setia's first two projects in Vietnam are housing developments in Binh Duong province, adjacent to Ho Chi Minh City, the country's business centre. The developer is now looking for a high-rise building with some branding to boost its corporate image in Vietnam. Vietnam's property prices were falling amid a glut of high-end residential apartment developments, UK-listed Vietnam Property Fund Ltd said last month. Sales in the country had been slow, hurt by commercial bank lending rates of about 18% or 19%,Vietnamese central bank pushed up its policy rates to slow Asia's fastest inflation.

Weak Cost Structure A weak cost structure means for S P Setias costs are high in comparison to their competitor. Revenue increased 25.6% and also higher than preceding year corresponding quarter 24.2%, eps increased 21.8% but lower than preceding year corresponding quarter 8.7%, cash generated from operating not enough to cover financing payments hence generated more cash from financing and spent 17.9% of Group cash to cover all other

expenses, high margin and keep increasing, lower liquidity ratio and was indicate weakest financial strength among recent year, higher gearing ratio and was indicate weaker financial leverage, longer inventory turnover period but offset by higher revenue, higher property development cost can indicate got more property development project

Decline in Construction Business Revenue and earnings of construction segment declined by 37% and 23% respectively in 9MFY12 mainly due to completion of the KDN construction contract in Setia Tropika, Johor Bahru. Nevertheless, construction earnings contribution is negligible. The company said its construction business suffered a slump. Quarterly revenues were down 3 percent to RM29 million and pre-tax profit slumped a hefty 90 percent as it worked under concession on build, operate and transfer public works for Penang and Sabah state governments. These works were done in exchange for yet unrealised benefits such as development rights in Penang and land exchange in Sabah.

Bad Acquisition Bad acquisition can hurt SWOT Analysis for S P Setia by increasing their costs and reducing the value of their combined businesses. Acquisitions can also distract from the core business and merge cultures that dont complement each other. The countrys second largest property firm by market capitalization, is the latest to be swept off the private property sector with the takeover offer by its parent Permodalan Nasional Berhad(PNB). Research analysts are divided on whether investors should cash out on Permodalan Nasional Bhds (PNB) offer to acquire property developer SP Setia Bhds shares at RM3.90 per share and 91 sen per warrant.

The unstable condition by the investor due to the acquisition with PNB strongly volatile the share price in the market. From RM4.17 drops to RM3.87 within this suffer period.