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Feb 1 to 7: Lower on market correction
• Mixed week amid continued global equities correction
KLSE Property Index closed the week -0.6% amid continued weakness in global equity markets. Performance of property stocks under coverage has been mixed. SP Setia, Sunrise and Glomac have all retreated by 1.5% to 2.3% while Sunway City and YNH gained by 3.1% and 1.8% respectively. On notable major shareholders’ filings, Employees Provident Fund (EPF) has finally become a net buyer of SP Setia following weeks of selldown. 600,000 shares were added last week. Other major shareholders such as Datuk Dr Yu Kuan Chon (YNH), Datuk Richard Fong (Glomac) and Datuk Fated Iskandar (Glomac) were also seen supporting their companies’ shares amid market weakness.
• Notable property news
News of more project launches continued to hog the limelight. Land & General has reportedly lined up two new projects with gross development value of RM850 million. The first one is a RM400 million serviced apartment in Ampang (50:50 JV with Mayland) while the other is the first phase of a residential development in Bandar Sri Damansara worth RM450 million.
Meanwhile, Penang-based Hunza Properties is planning a multi-billion mini township in Bayan Baru in three years once it completes the acquisition of a 17ha site it recently acquired for RM82.1 million. The high-profile Four Seasons Place, which has been delayed, looks to be coming back on stream with talks that a Middle Eastern consortium may become a partner in the RM2.5 billion project sited next to the Petronas Twin Towers. The existing owners of the project are Tan Sri Syed Yusof Syed Nasir, the Sultan of Selangor, and Ong Beng Seng.
Last but not least, Ampwalk, a retail-cum-office building in Jalan Ampang, KL has reportedly been put up for sale for about RM85m. Located next to the Nomad Sucasa All Suites Hotel, the property is owned by Permata Alasan Sdn Bhd, a 50-50 JV between IGB Corp and Wearne Brothers (Pte).
• Maintain OVERWEIGHT
We remained bullish on the residential sub-segment of property sector on expectation of higher sales in CY2010 amid low interest rate and improving sentiments. We hold the view that interest rate hike will be gradual and minimal. As such, we prefer developers which cater to this segment, citing Sunway City and SP Setia as our top picks. Among non-rated property stocks, we also like IJM Land and Mah Sing. On the other hand, Sunrise offers significant upside of 54% and recent strong sales from its MK 28 project will provide the re-rating catalyst in the months ahead. On valuation method, we will be revising our target prices on all property stocks under coverage using RNAV in view of the coming into force of IFRIC 15 from July 1, 2010.
