PETALING JAYA: The recently concluded financial reporting season for the second quarter of 2024 (2Q24) saw many developers staying on track to meet, if not exceed their respective sales targets.
While analysts and industry experts felt that the financial results during the reporting season were mixed, they do believe that the outlook for real estate players remains bright.
RHB Investment Bank analyst Loong Kok Wen said most property developers will not have any issues achieving their sales targets for this year.
“I don’t think it will be a problem. Looking at the momentum so far, many real estate companies are on track to meet their targets for the current financial year,” she told StarBiz.
Loong said players such as Sime Darby Property Bhd
(SDP) will likely surpass its sales target for this year.
“They have been exceeding their targets for a few years,” she said.
SDP’s sales in the first half of the year rose 40% to RM2.1bil. The company is targeting to sell RM3.5bil worth of properties by the end of December.
This compares to its earlier sales forecast of RM3bil.
Meanwhile, UOB Kay Hian Research in a recent report noted that developers are on track to achieve their 2024 sales targets, having reached around 50% of their targets so far.
“Lagenda Properties Bhd and SDP led the way with double-digit sales growth for the quarter. Lagenda’s sales in 2Q24 surged 19% year-on-year to RM300mil, marking the highest quarterly sales in the company’s history.
Meanwhile, BIMB Research said Mah Sing Group Bhd maintained a strong sales performance, reaching RM1.66bil in the first eight months of the current financial year (FY24), representing 66% of its full-year sales target.
“The strong sales performance was primarily driven by its M series, which saw higher demand among first-time homebuyers.”
Commenting on Matrix Concepts Holdings Bhd, BIMB Research remains bullish on the developer’s near-term prospects.
“We expect Matrix Concept’s new launches to accelerate for the rest of FY25.”
Loong said it was not unusual for developers to see weaker earnings in the first half of its financial year.
“Historically, 60% of a company’s full-year numbers are registered in the second half, as developers tend to ramp up their launches and land disposals during the period.”
Commenting on the recently concluded earnings reporting season, MIDF Research said four out of six property companies reported earnings that came in within expectation.
“S P Setia reported earnings that came in above expectation as earnings were boosted by land sale gain which offset the losses from its Battersea Power Station project in the United Kingdom.
“On the flip side, IOI Properties Group Bhd reported earnings that missed expectations due to higher-than-expected depreciation charges and lower margin.”
Meanwhile, former investment banker and seasoned investor Ian Yoong said the property sector was one of the stars in the first half of 2024.
“Corporate results of property stocks for the June 2024 quarter were above expectations.
“The KL Property Index (comprising the listed shares of property companies) index peaked at 1,160 on July 18, 2024, a six-year high since March 2018.
“Notwithstanding the impressive gains by the KL Property Index over the past twelve months, this 14 month-rally in property stocks is expected to continue into 2025.”
Yoong noted that a few property developers bumped up revenue through land sales.
“This is definitely not a feasible long-term business model. These were fortunately the minority.”
MIDF Research said earnings of property developers in 2Q24 were largely positive with stable progress billing.
“Property sales were largely within expectation of marginal new sales growth.
“In a nutshell, our calls on property companies are unchanged post earnings reporting season and we are maintaining our ‘positive’ call on the property sector.”
TA Research said developers are poised for a stronger performance in 2024.
“In addition to favourable monetary and government policies, Malaysia’s resilient growth, supported by increased domestic demand and improved labour market conditions, is anticipated to impact the property sector positively.
“Furthermore, we anticipate that margin pressures will ease due to stable raw material costs and improved labour availability.”
Additionally, the research house expects positive developments related to major infrastructure projects and the establishment of special financial and economic zones, especially in the Johor region, coupled with the implementation of homeowner-friendly policies to underpin the future performance of the sector.
“Amid expectations of strong future demand from artificial intelligence, cloud computing and Internet of Things sectors, developers are capitalising on the trend by announcing deals related to establishing data centres.
“Overall, we view this development positively, as it will diversify revenue streams by utilising landbanks to generate recurring income.”
Loong, meanwhile, is also bullish on the local real estate sector for the remainder of the year.
“In terms of risks, it is low for now. Economic growth is on track and the local political scene is also stable.
“Unless there is some black swan event (an unpredictable event that is beyond what is normally expected and has potentially severe consequences), we remain upbeat on the outlook of the property sector,” she said.
