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Domestic Property Players Optimistic In Achieving Higher Sales In FY24

KUALA LUMPUR: Domestic property companies are setting higher new sales targets to express optimism about the outlook for the financial year 2024 (FY24).

Mah Sing Group Bhd’s growing presence in the industrial property segment will support its earnings growth in the medium to long term.

MIDF Research said Sunway Bhd targets to achieve new sales of RM2.6 billion in FY24 after recording new sales of RM2.4 billion in FY23.

Similarly, Mah Sing Group Bhd is setting a higher new sales target of RM2.5 billion for FY24 after hitting new sales of RM2.26 billion in FY23.

“SP Setia recorded bumper new sales of RM5.1 billion in FY23, including land sales of RM836 million.

“Excluding land sales, new property sales are estimated at RM4.2 billion in FY23 as SP Setia is setting a new sales target of RM4.4 billion for FY24,” the research firm said in a report.

Eco World Development Group Bhd has set a sales target of RM3.5 billion for FY24.

MIDF Research, quoting Bank Negara Malaysia (BNM) loan data, said the total loan application for property purchase in 2023 was higher at RM605.3 billion, up by 5.7 per cent year-on-year (YoY).

The data said the higher loan application was supported by stronger demand for property as the outlook for the property sector improved.

Further, it noted that BNM’s pause in the Overnight Policy Rate (OPR) hike since July 2023 had also underpinned the recovery in buying interest on property.

Meanwhile, loan application data is off to a good start in January 2024 as it was higher at RM51 billion, up by 46.5 per cent YoY, as buying sentiment on property remains healthy.

“Moving forward, we maintain our  view that demand for properties would be stronger in 2024 as the landscape for the sector is improving,” MIDF Research said.

Further, BNM data also showed that the approved loans for the purchase of  property was strong at RM261 billion, up by 7.3 per cent YoY in 2023, driven by the higher loan application in 2023.

Besides, the higher percentage of total approved loans over total applied loans of 43 per cent in 2023 against 42 per cent in 2022 had also lifted the approved loan in 2023.

Meanwhile, approved loan data in January this year remained encouraging as it grew by 40.8 per cent YoY and 14.1 per cent month-on-month (MoM) to RM20.4 billion, driven by the higher loan application.

MIDF Research said the higher approved loan bodes well for new sales outlook for property developers.

MIDF Research also noted that for the recently concluded earnings reporting season, four out of six property
companies reported earnings that came in within expectations namely Sunway, Matrix Concepts Holdings Bhd, UOA Development Bhd and Mah Sing.

Meanwhile, SP Setia reported earnings that came in above expectations as earnings in FY23 were lifted by land sales gain of RM110 million and better margin, MIDF Research noted.

“On the flip side, earnings of IOI Properties Group Bhd missed expectations as earnings contribution from China was weaker than expected.

“Meanwhile, property companies that concluded FY23, namely Sunway, SP Setia, Mah Sing Group and UOA Development, reported higher new sales in FY23,” MIDF Research said.

Touching on overhang units, MIDF Research said data released by the National Property Information Centre (NAPIC) showed residential overhang increased marginally to 25,816 units in the fourth quarter (Q4) of 2023 from 25,311 units in the third quarter (Q3) of last year.

Perak had the highest number of residential overhangs, at 4,598 units in Q4 2023, up from 3,625 units in Q3 2023.

Meanwhile, Johor has the second-highest residential property overhangs at 4,228 units in Q4 2023, which declined from 4,500 units in Q3 2023.

Kuala Lumpur has the third-highest residential property overhangs at 3,535 units in Q4 2023, an increase from 3,111 units in Q3 of the same year.

“Despite the marginal increase in the overhang, we think that the overall declining trend in overhang eased concern on oversupply of property.

“Note that the residential property overhang of 25,816 units in Q4 2023 was lower than 27,746 units in Q4 of 2022 and 36,863 units in Q4 of 2021,” MIDF Research said.

MIDF Research maintains a Positive stance on the property sector and remains sanguine about the outlook for property companies.

The research firm said buying sentiment on properties is expected to remain healthy going forward as the property sector’s landscape improves.

New sales of property companies are improving, which should translate into better earnings visibility going forward, it said.

“Our top picks for the sector are Mah Sing (Buy with a target price of RM1.12) and Matrix Concepts (Buy with a target price of RM1.91).

“We like Mah Sing for its quick turnaround strategy and high exposure to affordable homes via its M series projects.

“Besides, its growing presence in the industrial property segment will support earnings growth in the medium to long term.

“Meanwhile, we like Matrix Concepts as its new sales remain encouraging while landbank expansion in Labu, Negeri Sembilan, will further buoy earnings growth. Besides, the dividend yield of Matrix Concepts is attractive at 5.6 per cent,” MIDF Research said.

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