FW: AmBank Research - Property Sector : 2018 a year of affordable housing NEUTRAL, 7 Dec 2017

 

SECTOR FOCUS OF THE DAY       

Property Sector : 2018 a year of affordable housing         NEUTRAL

 

We have a NEUTRAL stance on the property sector in 2018. The local property sector has been languishing over the last 4-5 years, since hitting a peak in mid-2013. We believe the most encouraging signs we have seen in 2017 are: (1) developers adjusting to the reality that mass-market affordable housing is where the demand is; and (2) the willingness of certain developers to cut prices (to the tune of 10-15% or more) in order to clear unsold stocks. We expect these trends to prevail in 2018, bringing some life back to the sector.

 

We do not expect a full-fledged recovery of the sector within the next 12 months, as various key challenges remain. We are mindful that affordable housing typically commands low margins. We believe the investment case for an affordable housing developer only holds water if the developer is able to sell affordable houses in large quantities, has access to highly cost-effective and speedy construction methods, and the ability to secure strategic landbank with a high plot ratio at cheap prices.

 

We see a bright spot in developers with overseas projects. We have already seen green shoots of recovery in property markets in the UK, Australia, Singapore and Vietnam since 2017. REITs tend to underperform in a rising interest rate environment. Retail REITs may be hurt further by the rise of e-commerce. Our top picks for the property sector are Sunway (BUY, FV: RM1.99) and Titijaya (BUY, FV: RM1.91) while for the REIT sector, it is YTL REIT (BUY, FV: RM1.38).

 

Others :

Lafarge Malaysia : Hopeful for a turnaround in FY18         HOLD

 

 

STOCKS ON RADAR

Petron Malaysia, Ideal Jacobs, MBM Resources, Sasbadi Holdings

 

 

ECONOMIC HIGHLIGHT

Malaysia : Exports to remain strong

 

 

NEWS HIGHLIGHTS

Corporate Governance : 'Bursa is the best in corporate governance’

7-Eleven : Sultan of Johor increases stake 

Nexgram : Aborts joint plan to develop AIC

HCK Capital : Subsidiary buying Sg Buloh land for RM80m

 

 

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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