DESPITE the re-imposition of the conditional movement control order (CMCO) and MCO 2.0 during the 4Q 2020-1Q 2021 period, property sales have continued to show signs of recovery from the impact of the coronavirus pandemic.
Sales-wise, Maybank IB Research observed that there was quarter-on-quarter (qoq) growth in 4Q 2020 property sales due to pent-up demand post-lock down as well as attractive marketing packages offered.
In fact two of the developers under its radar – Sime Darby Property Bhd and Tambun Indah Land Bhd – posted FY2020 actual sales which were above expectations while another two developers, SP Setia Bhd and Mah Sing Group Bhd, met their targets.
“Judging from the sales momentum during January-February and COVID-19 vaccination rollout, we can sense that developers are turning more positive on FY2021 sales outlook,” opined analyst Wong Wei Sum in a property sector update.
“This is reflected in their higher sales targets for FY2021 (Sime Darby Property, Mah Sing, Eco World Development Bhd and Sunway Bhd).”
On the hindsight, Maybank IB Research expects margin to remain subdued as competition in view of rising competition.
“Also, margins are coming under pressure due to developers’ higher involvement in the affordable housing segment,” Wong pointed out.
Earlier, the research house shared that 66% of the listed developers under its universe with Dec 31 financial year end have reported their latest 4Q FY2020 results as of Feb 28 with the remaining 34% having deferred their reporting until mid/end-March.
Of the four developers, two results were below expectations (SP Setia and Sime Darby Property), while Mah Sing Group and Tambun Indah were in line/above expectations.
“Despite the re-imposition of CMCO in 4Q 2020, core earnings improved quarter-on-quarter in 4Q 2020 on the normalisation of construction works and strong pick up in sales driven by pent up demand,” justified Wong.
“Net gearing (also) remained healthy, ranging from 0.03 times (Tambun Indah) to 0.6 times (SP Setia) in 4Q FY2020 as developers continued to manage their inventories/cash flow carefully.”
All-in, Maybank IB Research maintained a tactical “positive” on the property sector with top picks comprising Sunway Bhd, Sime Darby Property and SP Setia. – March 5, 2021
