PETALING JAYA: The
Malaysian property sector will remain "overweight" for the third quarter of the
year with key drivers being stronger gross-domestic-product (GDP) growth for
2014 and upcoming infrastructure developments, said RHB Research.
People looking at a model of a housing project during a property fair in Penang last month. RHB's analysts said their regional key stock ideas were Malton Bhd and Indonesia's Modernland.
Its analysts said the
third key driver was the front-loading of big-ticket items ahead of the
implementation of the 6% goods and services tax (GST) in April 2015.
Maintaining their
sector rating, the analysts said concerns of a rate hike should have already
been discounted by the market.
"In line with our
expectations, property sales generally recovered from the first quarter. The
weak second-quarter results were not a surprise as developers typically report
stronger earnings in the second half," they said in a regional real estate
research report yesterday.
RHB's analysts said
their regional key stock ideas were Malton Bhd and Indonesia's Modernland.
They said Malton would
enter a new phase of earnings growth, with its financial year 2015 (FY15)
earnings set to be underpinned by RM470mil unbilled sales and RM410mil
construction contract value.
Adding that Malton had
a compelling re-rating angle, they said that its Bukit Jalil City project would
be a major turning point while new launches this year would drive FY16 earnings.
RHB Research's top
buys for the Malaysian property market are Sunway at a fair value of RM3.60,
Tambun Indah (RM3) and Matrix Concepts (RM3.80).
Maintaining its "neutral" sector rating on Indonesia, the analysts said demand for mid-range
property priced in the 500 million rupiah to below 2 billion rupiah per unit
range would remain robust.
With an increase in
debt level, they expect changes in capital structure as new mortgage
regulations could impact the collection period/cashflow.
RHB Research also maintained
its "overweight" call on Singapore, with the REITs sector outperforming the
broad market as it provided a total return of 13.5% against the Straits Times
Index's total return of 7.9% on a year-to-date basis.
Its analysts continue
to see an upcycle trend within the sector given favourable demand-supply
dynamics within subsectors such as commercial, retail and industrial.
Following a 30% quarter-on-quarter rebound in second-quarter results and a 58% surge in
presales, RHB Research has upgrade its sector call on Thailand to "overweight" from "neutral".
Its analysts said
growth drivers included stronger forecasted GDP growth, less stringent lending
measures from mid-2014, a low interest rate environment with a policy rate of
2%, and a a 20% higher budget for the nationwide infrastructure plan worth 2.4
trillion baht.
Meanwhile, they expect
the property oversupply issue in Hong Kong to worsen in the second half as
developers generally have 20-30% more saleable projects to be launched.
Imposing a "neutral" call on the sector, they
said the China developers came out with disappointing interim results, adding
that margins were down while net gearing and inventories were high.
