RHB Research said that it has maintained a “Neutral” recommendation for the real-estate sector with its top picks being Matrix Concepts, Sime Darby Property, and IOI Properties.
It said that the property sector should generally benefit from the re-opening of the economy and international borders.
The stockbroking firm said that it sees some potential trading opportunities as sector valuations are undemanding, at a 64% discount to RNAV. “Recent news flow on the construction sector and green light for the Mass Rapid Transit 3 (MRT 3) may potentially have a positive spillover on the sector,” it said.
It said that it is however cautious on developers’ earnings prospects, given the stubbornly high construction costs, from the spike in the prices of various commodities.
RHB Research said that it thinks that there could be short-term trading opportunities among the property stocks, as the sector is now trading at around 64% discount to RNAV – relatively unchanged since end-2021.
It said that recent news flow on the takeover of highways, as well as the go-ahead for MRT3, have stirred up investor interest on the construction sector. “As such, we think sentiment on the property sector may improve in the near term, while the sector’s cheap valuation is a good reason for investors to enter, especially those with a shorter investment horizon,” it said
On the macroeconomic front, RHB said that rising inflationary pressure may potentially dampen household disposable income. “Given the market has just recovered from last year’s lockdown, demand for property may be negatively affected as property is deemed a big-ticket item that is considered non-discretionary. Having said that, we believe the timing of election as well as expectation of election results may swing sentiment,” it said
