Property
Property Sector - Recovery on the cards
Fri, 05-Jan-2024 10:20 am
by Kenneth • Apex Research

Review

The property sector recorded another decent quarter according to Valuation and Property Services Department (JPPH) with total property transactions valued climbed 22.6% yoy to RM57.15bn in 3Q23. Meanwhile, volume transacted also grew 3.7% yoy to 108,955 units. On the breakdown, residential sub-sector registered 62.9% of total transactions, followed by the agricultural subsector (18.5%) and the combination of trade subsector and other subsectors (18.6%). During the quarter, new residential launches rose to almost 6,900 units vs. close to 4,800 units in 2Q23, while sales of new launches increased to 37.6% against 24.7%, highlighting the stability of housing demand. At the same time, average property price to transaction also improved to RM524,528/unit which was the highest since 3Q21.

Outlook 

The Malaysia property sector may continue to remain stable, driven by healthy loan applications which signals demand remain fairly solid. Property players are expected to remain prudent over future launches in bid to avoid flooding the market and increase the overhang units. We expect interest to pick up within certain states such as Johor, Klang Valley and Penang, mainly driven by improving connectivity

Valuation & Recommendation. 

We continue favour property players that sits on strong balance sheet and is equipped with good traction of township developments such as OSK (NR), MATRIX (NR) and SUNWAY (NR). Meanwhile, our top picks are LAGENDA (BUY; FV: RM1.63) for its strong exposure in the affordable housing segment which is strongly aligned with the mass market demand and SKYWOLD (BUY; FV: RM0.94) for its strong historical take-up rates backed by competitive property pricing and strategic locations. Following the appreciation of share prices in majority of the property players, we gather that forward PB for the property sector is trading at 0.5x for 2024F is now fair against the historical average of 0.4-0.6x.

Recommendation: Neutral
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