The property investment division in Malaysia is experiencing a slowdown due to oversupply of commercial and office space while the situation in Australia is stabilising.
“We also project the property development division’s earnings to pick up in the future due to unit sales of AIRA Residence and the ongoing construction progress,” it said in a note on Friday.
The research house said the overall property outlook for 2018 remained bleak, amid the unfavourable macro environment.
The approval freeze on luxury projects (including shopping complexes, offices, serviced apartments and condominiums priced above RM1mil) starting November 1, 2017, low affordability and mismatch between supply and demand, are still risks to private developers’ sales, it said.
The group has put the mixed development Wisma Damansara under review and is reassessing the feasibility of this development.
“Although earnings prospects seem intact in FY18, in our view, the stock is not cheap at 22x FY18 price earnings ratio due to its low ROE,” it said.
It said the key upside risk to its Hold call is faster-than-expected development of its land bank, while the key downside risk is further deterioration in property market sentiment.