PETALING JAYA: The upcoming financial reporting season for the third quarter of 2024 (3Q24) is expected to see many property developers recording strong earnings on the back of solid sales registered during that period.
RHB Investment Bank analyst Loong Kok Wen noted that the second half of the year (2H24) tended to be stronger for most real estate companies.
“This is because most players would ramp up their launches in the second half of the year,” she told StarBiz.
“Generally, in 3Q, we will see stronger numbers compared with 2Q,” Loong added.
She noted that property developers such as Sime Darby Property Bhd
(SimeProp) and S P Setia Bhd had consistent launches this year.
Meanwhile, former investment banker and seasoned investor Ian Yoong noted that while the impact of Budget 2025 was muted on the property sector, sales in the 1H24 have been firm.
“In the 1H24, the number of residential property transactions increased by 6.1% and the transaction value increased by 10.4%.
“The total property transaction value for the first half of 2024 was RM105.65bil, a 23.8% increase from the same period in 2023. These are signs that the residential property sector is turning around after a decade of tepid demand.”
Yoong added that while location is very important, he emphasised that branding and marketing had risen in importance.
“Large property developers have taken a holistic strategy in property development. An excellent example is SimeProp’s Elmina township and Elmina Business Park (EBP).
“Adding to the mix is Google’s US$2bil data centre, which will be located in EBP and is expected to generate 27,000 jobs –which is a winning formula. This project, spanning 6,500 acres, should drive SimeProp’s revenue and earnings for the next 12-15 years,” he said.
UOB Kay Hian (UOBKH) Research, in a recent report, also said it expects most developers under its coverage to record a stronger 3Q24, year-on-year.
“We expect UEM Sunrise Bhd and S P Setia to post more than 100% growth year-on-year in net profit on higher land sales contributions (versus little to no land sales contribution in 3Q23).
“We expect Sunway Bhd to record about 60% year-on-year growth on lumpy recognition from Singapore project Parc Central (RM130mil to RM140mil contribution to net profit).”
Moreover, the research house said Mah Sing Group Bhd and Lagenda Properties Bhd are expected to post 20% to 30% year-on-year growth on higher sales and progressive billings.
Additionally, Loong noted that developers with projects in Johor are also expected to announce solid 3Q24 earnings.
“Companies such as UEM Sunrise and Sunway saw good take-ups for launches towards the end of 3Q24. They will most likely see better earnings recognition in 4Q24.
“We expect players with projects in Johor to do quite well.
“Landed properties down south are still highly sought after,” she said.
Meanwhile, CIMB Securities, in a recent report, said developers with strategic landbank in Iskandar Puteri (Johor) had enjoyed brisk sales for their recent launches, as connectivity improves.
“This is augmented by rising demand for industrial properties and land for data centre developments. Stock-wise, we prefer Sunway and UEM Sunrise for exposure to Iskandar Puteri’s rising prospects.”
The research house said it visited two prominent developments in Iskandar Puteri that were initiated in conjunction with Invest Malaysia 2024, namely Sunway City Iskandar Puteri and Puteri Harbour.
“The former is a sprawling 2,000-acre integrated township that is also Sunway’s largest township to date.
“On the other hand, UEM Sunrise is the master developer of Puteri Harbour – a prime waterfront development address that also houses an international ferry terminal,” it added.
