AmInvestment Research picked Sunway Bhd (Buy, FV: RM1.65) given that its local property launches have been generally well received due to good locations.
KUALA LUMPUR: AmInvestment Research is maintaining its neutral view on the property sector as it does not expect to see surprises in the earnings for the next 12 months.
It said on Wednesday its top picks for the sector are Sunway Bhd
, Eastern & Oriental (E&O) and Titijaya.
The research house picked Sunway Bhd (Buy, FV: RM1.65) given that its local property launches have been generally well received due to good locations.
As for E&O (Buy, FV: RM2.01), it said this was because of the property company’s prime landbank, including reclamation rights on Penang island, strong take-up for new property launches and the ability to clear unsold units.
On Titijaya (Buy, FV: 48 sen), it picked the company due to its strength in the affordable segment, coupled with strong earnings visibility backed by RM320mil unbilled sales and some RM826mil new launches planned over the immediate term.
AmInvest Research said affordable housing remains one of the key priorities of the government.
The extension of step-up financing for the lower income group will improve investor sentiment on the sector, especially for developers with more exposure to the affordable housing segment.
It pointed out the outlook of the property sector has been uncertain since GE14 as developers deferred their new launches while buyers held back their purchases.
“Now with a clearer political landscape accompanied with the government’s initiative to address the challenges in the property market as proposed in Budget 2019, we believe the situation will improve in the long term,” it said.
To recap, property market transactions were lower in 1H2018 both in terms of transaction volume (-2.4% YoY to 149,889) and value (-0.1% YoY to RM67.7bil) in general.
Residential properties account for 62.8% of the total volume and 46.7% of total value of transactions compared with non-residential ones.
For the same period, residential properties experienced contractions of 0.8% and 3.6% in volume and value respectively.
Unit launches declined by 7.1% YoY to 37,723 in 1H2018. The overhang of residential properties has almost tripled to 29,227 units since 2015, with the majority of unsold units being in the RM500K–RM1mil price category (25.7% of total overhang units).
Johor saw the highest number of unsold houses @ 5,988 units followed by Selangor @ 4,694 units, Penang @ 3,958 units and KL @ 2,350 units.
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