Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Tue, 7 Apr 2020, 9:34 AM


Property Developers - Unexciting Outlook

Author:   |    Publish date:

Maintain NEUTRAL on Developers. The sector rebounded from the lows in 4Q18 to chart a +5.5% gain YTD* handily outperforming the FBMKLCI (+0.8% YTD). Emerging from an uneventful 1QCY19, were early signs of easing interest rates and news that the House Ownership Campaign was to be extended by another 6 months to Dec-19. For the developers under our coverage, recommendations were left unchanged except for HUAYANG which we downgraded to UNDERPERFORM following its recent share price rally. In terms of earnings, we reduced ECOWLD’s FY19-20E earnings by 11%-15% following recently released results, while for other developers, FY19-20E earnings were reduced within a 1%-12% ran have e as we factored in higher financing cost to capture for the adoption of IAS 23. Post earnings review, our universe’s total sales/earnings trajectories are generally unexciting at -5%/+5% YoY in FY19/20E and +2%/+6% YoY in FY20/21E, with average RNAV/SoP discount tapered to 64.3% from last quarter’s 64.6% (- 1.25SD).

Property a Year-to-Date Outperformer. Emerging from an uneventful 1QCY19, the KLPRP index rose to outperform KLCI, charting +5.5% return YTD vs. the FBMKLCI (+0.8% YTD). The outperformance was partly technical, as it rebounded from the lows back in Oct/Nov-2018, and potentially encouraging effects of House Ownership Campaign, which is now extended by another 6 months to Dec-19. Recall that post Budget-2019 announcement in Nov-2018, property stocks were hammered down given government directives for developers to reduce house prices by 10% (due to SST exemptions on construction/building materials) and overall broad market weakness.

In terms of the recent 1QCY19 reporting season, it has been uneventful with 36% out of the 14 stocks under our coverage (i.e. AMVERTON, HUAYANG, LBS, MAGNA, MRCB) coming in below expectations (refer to APPENDIX result review details).

*Note that this report is based on 21/6/19 price cut-off date.

Source: Kenanga Research - 4 Jul 2019

Share this

Related Stocks

Chart Stock Name Last Change Volume 
AMVERTON 1.20 0.00 (0.00%)
HUAYANG 0.25 +0.035 (16.28%) 1,528,400 
LBS 0.40 +0.035 (9.59%) 9,354,900 
MAGNA 0.765 0.00 (0.00%)
MRCB 0.435 +0.025 (6.10%) 22,527,900 

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Earn MQ Points while trading with MQ Traders Group
MQ Affiliate
Earn side income from MQ Affiliate Program

654  231  427  609 

Top 10 Active Counters
 LAMBO 0.015+0.005 
 SAPNRG 0.11+0.005 
 HIBISCS 0.535+0.025 
 ARMADA 0.185+0.01 
 MINETEC 0.20+0.005 
 VELESTO 0.17+0.005 
 NETX 0.015+0.005 
 GAMUDA-WE 0.12+0.045 
 DBE 0.03+0.005 
 JAKS 1.01+0.125 


1. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
2. MQ Affiliate – A smarter way to earn more rewards MQ Trader Affiliate Program
3. MQ Affiliate – How to become an effective affiliate MQ Trader Affiliate Program
4. MQ Affiliate – Upgrading to Affiliate Partner MQ Trader Affiliate Program
Partners & Brokers