Maybank IB thinks the worst is over for Malaysia property sector

KUALA LUMPUR (Jan 19): Maybank Investment Bank Bhd (Maybank IB) has maintained its tactical positive call on the property sector, as it believes the worst is over for the sector.

It said sales of houses might have hit rock bottom already, thus it should improve year-on-year in 2021.

Being an under-owned sector with short-term positive catalysts, Maybank IB believes property stocks may surprise investors on the upside in 2021.

“Moreover, we think the current rock-bottom valuations of property stocks (0.4 times/0.3 times price-to-book value/price-to-revalued net asset value) should have more than priced in the negatives (oversupply),” it said in a research note today.

According to the investment bank, the property sector is poised for recovery in 2021, driven by a better economic outlook, historically low interest rate environment, as well as pent-up demand.

“In our view, sales in the first half of 2021 (1H21) should be better than 2H21, as we expect a spike in sales before the end of Home Ownership Campaign on May 31, 2021, as well as better political stability during the nationwide state of emergency, which will last until Aug 1, 2021,” it said.

Meanwhile, Maybank IB said the reimposition of the Movement Control Order should have lower damage impact on sales and earnings in the property sector compared with in 2020, as most developers have acclimatised to the “new norm” and accelerated efforts to market their products via digital platforms.

“A few developers told us that 50%-70% of their financial year 2020 sales were derived from their online platforms,” it said.

Elsewhere, it noted that construction works are also allowed during the MCO 2.0 — as long as approvals are obtained after registering with the Covid-19 Intelligent Management System and the standard operating procedures are adhered to — thus limiting the impact on the first quarter of 2021 earnings.

Source: TheEdgeMarkets