Tuesday, 17 Jun 2025
PETALING JAYA: Buying interest in property is expected to remain healthy, says MIDF Research, which remains positive on the property sector.
“The sales of property companies are generally stronger, which should underpin earnings growth going forward.
“Meanwhile, the impact of the sales and services tax (SST) on property companies is expected to be minimal as residential buildings are exempted from the 6% SST,” the research house said.
MIDF Research also expects limited impact on earnings from the SST imposed on commercial and industrial buildings as it anticipates marginal impact due to the strong demand for industrial assets.
The research house’s top picks for the property sector are Mah Sing Group Bhd, Eco World Development Group Bhd (EcoWorld) and UOA Development Bhd.
“We remain positive on Mah Sing as its new sales prospects are stable, underpinned by launches of affordable residential projects. Meanwhile, we are positive on EcoWorld for the growing contribution from its industrial property segment,” MIDF Research said.
It also expects to see better earnings for UOA Development, backed by the profit recognition of its ongoing projects in the Klang Valley as well as income from investment properties.
“The dividend yield from UOA Development is attractive at 5.5% while its balance sheet is healthy, with a net cash position,” it added.
MIDF Research highlighted that the earnings of property companies in the first quarter of the year (1Q25) were largely in line with its expectations.
It pointed out that UOA Development’s 1Q25 earnings came in above expectations mainly due to a lower-than-expected tax rate.
However, the 1Q25 earnings of S P Setia Bhd missed expectations due to lower contributions from joint ventures and associates.
“Overall, most of the property companies recorded earnings growth except for S P Setia and IOI Properties Group Bhd due to their higher earnings in 1Q24.
“Similarly, Matrix Concepts (Holdings Bhd) recorded an earnings decline due to lower sales conversion from secured bookings,” the research house said.
Meanwhile, the earnings increase for other developers was mainly driven by higher progress billing of ongoing projects.
MIDF Research said new property sales were largely in line with expectations as sales are forecast to pick up in the second half of the year amid acceleration of project launches.
The research house said total loan applications for the purchase of property increased for three consecutive months on a year-on-year (y-o-y) basis.
Total loan applications were up 6.1% y-o-y to RM56.2bil in April after growth of 4.8% y-o-y and 18% y-o-y in March and February, respectively.
On a monthly basis, loan applications in April remained resilient, growing 3.1% month-on-month despite the Hari Raya holidays, bringing total loan applications higher at RM203bil in the first four months of this year.
“The higher loan application indicates that buying demand for property in Malaysia is strong,” MIDF Research said.
source: https://www.thestar.com.my/
