Maybank KE Research remains Neutral on the property developers ahead of the 13th general election (13GE) as it expects the market to weaken post the dissolution of Parliament as investors price in political risk.
The research house said on Thursday its base case scenario for the outcome of the 13GE would be another win by the current ruling coalition and it expects the market to rerate and close the year stronger.
“In this scenario, we expect sectors/stocks that are significantly undervalued to re-rate. This includes the property developers, with stocks under our coverage trading at RNAV discounts ranging from 29% to 54%.
"Under our base case scenario, we also expect various thematics to draw investment interest with the Iskandar Malaysia play among them,” it said.
Maybank Research said any weakness in share prices thus offers opportunities to accumulate. Its picks are UEM Land and Sunway.
It said its visit to Iskandar Malaysia last week were that recent property launches have received strong take-ups at record prices, while the price momentum and demand for properties should remain strong with rising foreign investments and better connectivity by 2018 with the completion of the Rapid Transit System (RTS).
It also said Iskandar Malaysia projects were likely to be the key sales driver for these PLCs over the short-term, and interest on Iskandar Malaysia stocks should become stronger post-13GE.