Targets for property stocks raised

Targets for property stocks raised

PETALING JAYA: Singapore-based brokerage UOBKayHian has issued a 100-page report on the Malaysian property sector, which it believes is at the early stage of a new upcycle. The brokerage attributes this to improving domestic conditions and interest from international property groups.

On that outlook, the brokerage has raised its target prices for a number of property stocks to eye-popping levels, such as RM6.70 for E&O Property Bhd (closed at RM2.80 yesterday), RM5.50 for KLCC Property Holdings Bhd (RM3.42), RM3 for Malaysian Resources Corp Bhd (MRCB, RM2.06), RM5 for Tebrau Teguh Bhd (RM1.09) and RM7 for UEM World Bhd (RM4.22).

These targets are based on the potential appreciation in land prices, which the brokerage estimates to be at 50% to 300% over the next two to three years. These are not targets for the more usual 12-month periods that analysts work on.

“Early investors should take the opportunity to buy the largest landowners with land bank that is the most attractive to international interest. Only these large land owners would be able to offer international developers suitable plots large enough for development,” the report said.

UOBKayHian has identified several hotspots and the largest landowners are those in the southern tip of the Iskandar Development Region (UEM World), Tanjong Pinang in Penang (E&O Property), KL Sentral (MRCB) and KLCC (KLCC Property).

Reputable international investors have only just started to enter the Malaysian property market, which would raise the quality of local real estate to world standards, thus leading to new price benchmarks.

UOBKayHian believes the Four Seasons apartments, being developed by Singapore's Ong Beng Seng, would be launched at a record RM2,000 per sq ft, double the highest launch price of RM1,000 per sq ft set last year.