• Maintain NEUTRAL. We think the stamp duty waiver announced by the Government will have minimal impact to the overall property market. Ongoing market headwinds such as rising inflationary pressure and weakening of the MYR continue to dampen market sentiment. Coupled with the expectation of higher interest rates ahead, potential home buyers may defer their purchase of big-ticket items over the next six months. We maintain our NEUTRAL call for the sector. Top Picks: Matrix Concepts and IOI Properties.

• Stamp duty exemption is back. Prime Minister Dato’ Sri Ismail Sabri announced that stamp duty exemption will now be offered to first-time home buyers for property priced up to MYR500,000, and 50% discount on stamp duty for those buying property priced from MYR500,000 to MYR1m. The exemption is for sales and purchase agreements that are signed between 1 Jun 2022 and Dec 2023. This exemption is similar to one of the features in the recent Home Ownership Campaign (HOC) that ended in Dec 2021, whereby stamp duty waiver was offered for properties priced up to MYR1m.

• Minimal impact on the property sector. Although the recent announcement may help to slightly spur demand, especially for properties priced <MYR500,000, the impact to the overall property market will be fairly minimal, in our view. We think prevailing concerns on macroeconomic headwinds, including rising inflationary pressure and weakening of the MYR, will deter demand for property over the next six months. Coupled with the expectation of higher interest rates ahead, many potential property buyers will likely hold back their purchases over the near term. We also note that, some of the developers are still offering stamp duty waiver for certain products as a continuation of the HOC in order to stimulate demand.

• Potential beneficiaries. Among the developers under our coverage, we think Mah Sing, LBS Bina, Matrix Concepts and Tambun Indah will benefit from the incentive, as these developers have relatively high exposure (>60%) to property products priced

• Margin pressure remains. Although demand-driven incentive is now reintroduced, cost pressure remains a big concern for developers as building material prices remain at high levels, while labour shortage issues have yet to be resolved. Therefore, we foresee potential downside risk to developers’ earnings in the coming quarters.

Source: RHB Securities Research - 18 Jul 2022