Property
Property Sector - 1QCY25 Earnings Review: Optimistic Outlook Amid Mixed Results
Fri, 06-Jun-2025 07:05 am
by Research Team • Apex Research

  • Overall results were mixed, with only AME’s CNP coming in within expectations. MATRIX and SKYWLD outperformed, while LAGENDA underperformed. 

  • We expect flattish to marginal qoq earnings growth in the upcoming quarter, supported by higher unbilled sales and a steady pipeline of project launches throughout the year.

  • We upgrade our sector view from NEUTRAL to OVERWEIGHT on the property sector. We reiterate our BUY calls on AME (TP: RM1.92) and LAGENDA (TP: RM1.53), while upgrading MATRIX from HOLD to BUY with a revised target price of RM1.53 (from RM1.35). Meanwhile, we maintain a HOLD call on SKYWLD (TP: RM0.47) for now, pending clearer visibility on its sales recovery and earnings momentum.

 

Review. The property sector remained resilient in 1QCY25, with the four companies under our coverage delivering mixed results. MATRIX and SKYWLD exceeded expectations, driven by stronger revenue recognition from ongoing projects and cost savings from completed developments. AME met expectations with stable performance, while LAGENDA slightly underperformed once again, due to slower construction progress, higher finance costs and cost overrun from completed project.

 

QoQ. In 1QCY25, four property companies under our coverage delivered an aggregate marginal qoq increase of 3.3% in core net profit (CNP), primarily driven by positive contributions from LAGENDA and SKYWLD. The improvement was supported by higher revenue recognition from ongoing projects, the absence of major one-off expenses that impacted the prior quarter, and cost savings following project completions. Conversely, MATRIX experienced decline in CNP, impacted by increased operating expenses, while AME reported flat earnings qoq.

 

YoY. On a year-on-year (yoy) basis, aggregate CNP declined 14.6%, with AME being the sole contributor to growth at 37.7%. AME’s CNP improved on accelerated construction progress and higher rental income. The gains were insufficient to offset earnings contraction from SKYWLD and MATRIX. SKYWLD’s earnings contracted due to the absence of contributions from completed projects, while MATRIX was weighed down by higher operating expenses and higher finance costs stemming from its MVV land acquisition. Meanwhile, LAGENDA’s CNP remained flat yoy. 

 

Outlook. We expect all companies under our coverage to report flattish to marginal qoq earnings growth in the upcoming quarter. Despite greater revenue recognition from new launches, these gains are likely to erode by higher financing costs linked to pipeline expansion. AME, MATRIX, and LAGENDA will benefit from strong unbilled sales, enhancing earnings visibility. Meanwhile, SKYWLD is anticipated to see marginal gains in the early stages of new launches, partly offsetting the revenue decline from completed projects.

 

The property market remains saturated with mid-range products, leading to a buildup of overhang inventory. However, our coverage is focused mainly on landed homes, affordable housing, and industrial properties - segments that continue to enjoy strong demand. The strategic positioning places our covered developers in a favourable position. Furthermore, rising housing demand beyond Kuala Lumpur, driven by industrial growth in Johor and Penang, presents additional opportunities. Several companies under our coverage have expanded into these high-growth regions to capitalise on the spillover effect, supporting a positive outlook for the property sector.

 

Valuation & Recommendation. Under the recent earnings season, we have upgraded MATRIX to BUY (TP:RM1.53) from HOLD as we are more confident of the Group’s outlook following the maiden launch within the Malaysia Vision Valley. All in all, we upgrade our sector view from NEUTRAL to OVERWEIGHT on the Property sector as we see stronger earnings visibility, resilient demand in key segments, and sustained momentum in project launches. Our top pick for the sector is LAGENDA (TP: RM1.53), supported by strong demand for affordable housing and attractive dividend yield of c.6% for FY25F-FY26F.

Recommendation: Overweight
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