MIDF Research has maintained a positive stance on the property sector.
PETALING JAYA: The property sector is expected to benefit from the Johor-Singapore Special Economic Zone (JS-SEZ), Johor Baru–Singapore Rapid Transit System, growing demand for data centres and industrial property, analysts say.
The developments will unlock the value of land held by property developers, thus benefiting the local property sector, said MIDF Research, which has maintained a positive stance on the sector.
Furthermore, Bank Negara held the overnight policy rate at 3% during its Monetary Policy Committee meeting earlier this month.
The unchanged rate should remain supportive of buying interest in property, noted the research house in a report yesterday.
MIDF Research said its top picks for the sector were Mah Sing Group Bhd
and Eco World Development Group Bhd.
The research house, which has a “buy” call on Mah Sing with a target price of RM2.09 per share, said: “We remain positive on Mah Sing as its new sales are positive, underpinned by resilient demand for affordable residential projects while Mah Sing Data Centre Hub @ Southville City will provide recurring income in the near term.”
The research house also has a “buy” call on Eco World Development with a target price of RM2.11, given the group’s positive prospects in its industrial-property segment.
Eco World Development’s build-and-lease data centre deal with Pearl Computing Malaysia Sdn Bhd further supports growth of recurring income, the research house added.
Meanwhile, MIDF Research noted property-loan applications were off to a weaker start this year.
Bank Negara in its latest data said loan applications declined by 12.3% year-on-year (y-o-y) to RM44.8bil in January.
“On a monthly basis, loan application were lower by 5.1% month-on-month in January, which we think could be due to lower applications amid school holidays and the Chinese New Year public holidays,” MIDF Research said.
Looking forward, the research house said it expects loan applications to be flattish for February due to the shortness of the month and subsequently grow stronger from March onwards.
“Overall, we still expect buying interest in property to remain resilient this year,” it noted.
Similarly, there was a lower number of approved loans for the purchase of property, down 7.8% y-o-y to RM18.8bil in January after a 32%y-o-y surge last December.
Moving forward, MIDF Research said it expects approved loans to remain subdued for February and subsequently grow in March onwards in tandem with higher loan applications.
On the recent result announcements for the fourth quarter of last year (4Q24), the research house said the earnings of property developers were mixed, with some upside surprises.
Of the property companies under its coverage (excluding Glomac Bhd), Sunway Bhd, UOA Development Bhd and Eco World Development reported earnings that beat expectations while Mah Sing Group and S P Setia Bhd reported earnings that came in within expectations.
MIDF Research said the positive earnings deviation was mainly due to the higher-than-expected progress billings.
“Overall, earnings growth in 4Q24 was positive at an average of 5% y-o-y, while most of the property companies recorded earnings growth last year, underpinned by stable new progress billings and lower costs,” the research house said.
Looking ahead, MIDF Research said Sunway, Mah Sing and Matrix Concepts Holdings Bhd are setting higher new-sales targets for this year, while S P Setia and Eco World Development set lower targets as new sales last year were lifted by land sales.
On the slight increase in unsold residential units in 4Q24, the research house said it thinks that the number remains healthy as unsold residential properties remain below a three-year average of 27,000 units.
