News by AllianceDBS Research

E&O is expected to announce soon the appointment of its Seri Tanjung Pinang phase two (STP2) reclamation contractor involving 384 acres (155.4ha) of reclamation (including 131 acres of the Gurney Drive foreshore for state government) though it has been delayed for a year.

While investors may treat the asset injection news positively, PavREIT’s one-year forward yield of 5.5% implies a spread of less than 1.5% over the benchmark 10-year Malaysian Government Securities yield, which is thinner than other Malaysian REITS (M-REIT) peers. This suggests that the potential from asset injection has been priced in.

MKH has the advantage of low land cost within the growing Kajang/Semenyih corridor, which will give it greater pricing flexibility.

Relative to other Malaysian REITs, KLCC REIT has been trading at a substantial premium with yields at about 1% above the 10-year Malaysian Government Securities.

The weaker-than-expected results were largely due to lower revenue (a decrease of 52% q-o-q, a decrease of 47% y-o-y) following the completion of two blocks of the Andaman Condominium project in 4QFY15, and most of its unbilled sales were booked under joint-venture projects.

We are positive on the JV as the land is located next to MKH’s existing 270-acre Kajang 2, which will be linked to a KTM commuter station

S P Setia booked RM1.8 billion in property sales in the first half of financial year 2015 (1HFY15), of which RM840 million is attributed to the Battersea Power Station project in London

E&O completed two blocks of the Andaman Condominiums project in Seri Tanjung Pinang during the quarter, which saw a 38% year-on-year (y-o-y) drop in revenue to RM143 million