UOB Kay Hian upgrades ‘buy’ call on Mah Sing

UOB Kay Hian has upgraded Mah Sing to Buy from Hold with a higher Target Price (TP) of RM0.65 from RM0.47.

Acknowledging the challenges faced by property developers during these trying times, the recent announced government incentives under PENJANA for the property sector will help to alleviate the current weak sentiment and support the propterty sector.

Some of the requests made by Real Estate and Housing Developers’ Association Malaysia (REHDA) were approved, such as the reintroduction of the House Ownership Campaign (HOC).

Hoping to see success as seen for the HOC in 2019, the government further announced two other measures which will complement the HOC in 2020 – removing the real property gain taxes (RGPT) and lifting the loan-to-value (LTV) limit.

According to UOB Kay Hian, the removal of RPGT would help owners who are selling their properties (prior to the RPGT removal, the RPGT was embedded in the selling price).

“We are also positive on the removal of the 70 percent cap on loan to value for purchase of a third property and above, as this will offer buyers greater flexibility in terms of financing,” the research house said, adding that they believe these measures could mitigate the impact of a severe decline in property sales in 1H20 induced by the Covid-19 pandemic.

Furthermore, the research house also views that Mah Sing stands to be the biggest beneficiary of the reintroduction of HOC as most of its property projects are eligible for the HOC (below RM2.5 million threshold) and are in strategic locations.  In 2019, the 60 percent of their sales were sold under the HOC.


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