MAYBANK Investment Bank (MIB) has upgraded the property sector to positive (from neutral) as value has emerged after the recent sell-down. Investors should take this opportunity to position themselves in anticipation of upcoming new flows, such as the Johor-Singapore Special Economic Zone (JSSEZ), Data Centres (DC), High Speed Rail (HSR). 

There is no change to MIB’s earnings forecasts and target prices. Share prices of listed developers under their coverage declined by 10-16% yesterday due to the global market sell-down. 

While sentiment on property stocks could remain weak in the near term, sector fundamentals remain intact driven by resilient property sales, especially from the industrial property segment. 

In addition to the traditional property business, upcoming earnings would also be driven by land/stake sales. These land sales should strengthen developers’ net gearing in the coming quarters. 

Near-term catalysts remain the same, for example, the JSSEZ where more details will be announced in Sep-Oct 2024. However, MIB believes that the thematic driver for the sector over the medium term will be data centre investments, which could accelerate the monetization of land value. 

Ecoworld has recently announced its new business pillar, which are high-tech industrial park targeting AI, cloud computing, high-tech manufacturing and R&D.

“It will likely seal more land deals for DC in the short-term. Developers with ongoing corporate exercises, for example, the listing of investment properties and other businesses, should see a return of interest when the market recovers,” said MIB.

“We maintain our ratings on the developers under our coverage except for UEM Sunrise, where we have upgraded the stock to tactical buy.” 

MIB suggested that investors take the opportunity to accumulate property stocks backed by strong fundamentals and thematics during this market correction. Surprises could come from the revival of HSR which would provide short-term trading opportunities. - Aug 6, 2024 

https://focusmalaysia.my/upcoming-new-flows-a-boon-for-property-sector/