Maybank KE Research has downgraded the property sector (developers) to “Neutral” from “Overweight” as it expects interest on property stocks to remain lacklustre.
“Sentiment towards developers should stay weak in the run-up to Budget 2014 in Oct 2013 and may only improve after more clarity on government policy and mega projects post Budget,” it said in a note on Monday.
Maybank KE said it downgrades Sunway and SP Setia to “Hold” while recommending “Buy” on Glomac, Mah Sing and UEMS.
It said it downgraded Sunway and SP Setia to “Hold” from “Buy” given their limited upside potential and noted Mah Sing and UEMS’ share prices have corrected 14% and 31% respectively since early June due to foreign selling.
Maybank KE added the continued strength in property demand and prices could lead to more cooling measures as the Prime Minister had said the real property gains tax (RPGT) would be part of his 2014 Budget.
“There is also the possibility that the government may raise stamp duties. At this juncture, we expect “softlanding” cooling measures, for the priority would be keeping a lid on speculation while promoting home ownership, we believe,” it said.
Maybank KE added property demand and price catalysts seem to be waning with the likely rescheduling of government projects as the government re-prioritises its spending to control its budget deficit.
“However, projects with a high multiplier such as the MRT 2 and Circle lines as well as the RRIM mass housing project should still take off,” it said.
Maybank added the listing of Iskandar Waterfront Holdings (IWH) is very likely delayed to first half 2014 from fourth quarter 2013 while IOI Corp is still confident of re-listing property arm IOI Properties by Dec 2013, despite difficulties in securing bondholder approval at this stage.
“The listing/re-listing of IWH and IOI Properties would result in a re-rating of existing players, especially Iskandar Malaysia stocks,” it said.