HLIB Research keeps Neutral on property sector, top pick IOI Properties

KUALA LUMPUR (June 17): Hong Leong IB Research has maintained its “Neutral” rating on the property sector with IOI Properties Group Bhd as its top pick after cooling measures were recently announced in several states in Australia to curb speculation by foreign property buyers.

In a note today, the research house said that New South Wales (capital city: Sydney) will be proposing a stamp duty surcharge of 4% in its 21 June’s Budget following the move by Victorian and Queensland.

It said the Victorian government (capital city: Melbourne) announced in its 2016-2017 Budget to impose additional stamp duty for foreign buyers (3% to 7%) effectively from July 1.

It said that in term of percentage of remaining total gross development value (GDV), the exposure in Australia is relative small, with S P Setia Bhd (2.9%), Matrix Concepts Holdings Bhd (1.4%) and UEM Sunrise Bhd (1%).

“For new projects in pipeline, UEM Sunrise is targeting to launch St Kilda by end of the year with GDV of RM750 million (circa 38% of FY16’s total GDV launches). As such, any slowdown in Australia’s property market is expected to impact UEM Sunrise on its new sales.

“Press also reported that Westpac, one of the big four banks in Australia has announced stopped lending money to foreign property investors. Foreign buyers (non-Australians) accounted for a large percentage (ranging from 54% to 86%). That said, we would expect tightening of lending rules on foreigners to dampen sales growth.

“Maintain Neutral on the sector. Top Picks: IOI Properties (Buy; TP: 2.77). We also have Buy call on Sunway Bhd (TP:3.72),” it said. — theedgemarkets.com

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