Home sales stabilising, Sime Property top pick, Maybank Research says
Maybank Research's top pick is Sime Darby Property as it has an advantage over many developers.
KUALA LUMPUR: Maybank Investment Bank Research views the demand-supply rebalancing in the property sector will take some time but home sales may have hit bottom already and should stablise in 2019.
In its property outlook report issued on Friday, it said the current rock-bottom valuations of property stocks have priced in the negatives (record high unsold stocks, slower GDP growth).
“Hence, we are maintaining our neutral stance on the property sector. The sector still lacks a strong re-rating catalyst.
“That said, we may see some trading opportunities around the sector rotation theme/better market sentiment [revival of major infrastructure project such as KL-Singapore High Speed Rail (HSR)] but it could be short-lived if weak sector fundamentals persist, we think,” it said.
Maybank Research's top pick is Sime Darby Property as it has an advantage over many developers.
As a land seller, it can monetise its landbank for additional income and use the proceeds to self-fund its property developments or reward shareholders.
“Its relatively stronger balance sheet (0.26 times net gearing in end March 2019) would help it to sail through the prolonged slowdown in property market, if there is any,” it said.
Its other buys are Glomac and UEM Sunrise
.
Glomac is more of a turnaround story after facing the drag from poorly-occupied Glo Damansara Mall over the last two years.
“We expect Glomac to report significant YoY earnings growth in FY4/20 on lower operating cost from Glo Damansara Mall after the mall secures two anchor tenants – LESSOHOME and Jaya Grocer. Occupancy rate will improve to 74% (from 45%). Glomac’s net gearing stood at 0.31 times at end-Apr 2019, which is manageable.
“As for UEM Sunrise, we have recently upgraded it to buy after share price fell -18% since its April peak and it now presents an upside potential of 19%,” it said.
In its property outlook report issued on Friday, it said the current rock-bottom valuations of property stocks have priced in the negatives (record high unsold stocks, slower GDP growth).
“Hence, we are maintaining our neutral stance on the property sector. The sector still lacks a strong re-rating catalyst.
“That said, we may see some trading opportunities around the sector rotation theme/better market sentiment [revival of major infrastructure project such as KL-Singapore High Speed Rail (HSR)] but it could be short-lived if weak sector fundamentals persist, we think,” it said.
Maybank Research's top pick is Sime Darby Property as it has an advantage over many developers.
As a land seller, it can monetise its landbank for additional income and use the proceeds to self-fund its property developments or reward shareholders.
“Its relatively stronger balance sheet (0.26 times net gearing in end March 2019) would help it to sail through the prolonged slowdown in property market, if there is any,” it said.
Its other buys are Glomac and UEM Sunrise
. Glomac is more of a turnaround story after facing the drag from poorly-occupied Glo Damansara Mall over the last two years.
“We expect Glomac to report significant YoY earnings growth in FY4/20 on lower operating cost from Glo Damansara Mall after the mall secures two anchor tenants – LESSOHOME and Jaya Grocer. Occupancy rate will improve to 74% (from 45%). Glomac’s net gearing stood at 0.31 times at end-Apr 2019, which is manageable.
“As for UEM Sunrise, we have recently upgraded it to buy after share price fell -18% since its April peak and it now presents an upside potential of 19%,” it said.
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