BIMB expects robust property sector in 2025, maintains 'overweight' rating

• The Housing Credit Guarantee Scheme is set to incentivise first-time homeownership, boosting growth in the residential real estate sector in the second half of the year.

KUALA LUMPUR (Sept 3): BIMB Securities sees a resilient property sector going into 2025, following an expected strong finish this year.

The house maintained its ‘overweight’ evaluation of the sector in a note on Tuesday, citing robust earnings and increasing affordability, thanks to government schemes.

BIMB's evaluation comes after mixed earnings results from major companies in the property sector.

it noted that Mah Sing Group Bhd (KL:MAHSING) and Matrix Concepts Holdings Bhd (KL:MATRIX) met expectations, as Mah Sing maintained its strong sales performance, reaching RM1.66 billion in the first eight months of this year, 66% of the full-year sales target, driven by the M series, which saw higher demand among first-time homebuyers.

Meanwhile, Matrix’s core net profit fell by 3.5% year-on-year (y-o-y), with lower revenue contributions from the property development segment, due to a slower number of launches earlier in the year. 

Going into the financial year ending March 31, 2025, Matrix’s new launches are set to provide a significant boost, said the house.

Meanwhile, Sime Darby Property Bhd (KL:SIMEPROP) reported better-than-expected results, due to heightened sales activity and on-site development progress across major townships. 

"The company reported RM2.1 billion (+10% y-o-y) in total sales, marking the highest first-half sales since the 2017 demerger," said BIMB.

Meanwhile, although Lagenda Properties Bhd’s (KL:LAGENDA) earnings failed to meet BIMB’s estimates, due to lower-than-expected project launches, the company still recorded a historic high revenue, with confirmed sales of RM297.14 million in the second quarter of 2024.

With the potential launch of numerous projects and converting bookings amounting to RM543 million into sales, BIMB expects Lagenda’s revenue to increase significantly in the second half of the year.

Separately, BIMB also noted government policies as a key driver of the property sector ahead.

The Housing Credit Guarantee Scheme is set to incentivise first-time homeownership, boosting growth in the residential real estate sector in the second half of the year.

“Additionally, we expect the introduction of a 100% stamp duty waiver on transfer instruments and loan agreements for properties priced at RM500,000 or below, effective until the end of 2025, while salary hikes for civil servants, effective from Dec 1, 2024, are expected to stimulate economic activity and boost the property market in the second half of 2024 and 2025,” BIMB added.

The house highlighted ongoing infrastructure projects, such as the Mutiara Light Rail Transit (LRT) Line in Penang, LRT3, and the rise of data centres as catalysts to spur mixed-use developments, increase property values, and boost demand for residential real estate.

“We favour developers with a strong sales history, reputable brands, substantial land holdings in desirable locations, and minimal holding costs, which we believe company Mah Sing, Lagenda and Sime Darby Property suit for these requirements,” it stated.

BIMB kept its ‘buy’ calls on Mah Sing, with a target price (TP) of RM2.07, Lagenda (TP: RM1.48) and Sime Darby Property (TP: RM1.73), but downgraded Matrix (TP: RM1.99) to 'hold' from ‘buy’, given the recent share price rally.

At the time of writing, Mah Sing shares had gained three sen or 1.8% to RM1.68, translating into a market capitalisation of RM4.3 billion, while Sime Darby Property gained three sen or 2.2% to RM1.40, valuing the group at RM9.5 billion. 

Lagenda shed one sen or 0.8% to RM1.24, valuing the group RM1.04 billion, while Matrix was unchanged at RM1.90, valuing the group at RM2.4 billion.

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