MIDF Research has maintained a “Neutral” call on the property sector adding that it sees tepid outlook for property companies as consumer sentiment may turn weak due to rising inflationary pressure.
It said that according to data released by Bank Negara Malaysia, the total loan applied for the purchase of property in May 2022 declined to RM40.2b (-1.7%yoy). Loan application in May 2022 was tepid following a decline of -6.3%yoy in April 2022.
Total loan approved for the purchase of the property was higher at RM15.7b (+6.9%yoy) in May 2022 despite lower loan application mainly due to a higher percentage of total approved loan over total applied loan of 39% in May 2022 against 35.8% in May 2021.
On the KL Property Index (KLPRP), it said that the index (KLPRP) underperformed KLCI in 1H22 after recording a decline of -9.5% against KLCI’s decline of -7.9%.
MIDF said that the weak performance of KLPRP could be attributed to the lack of catalyst to support buying interest on property in 2022 as House Ownership Campaign ended in 31st December 2021.
On the recommendations for the sector, MIDF said that it has a “buy call (Mah Sing BUY, TP: RM0.74) and IOI Properties Group (BUY, TP: RM1.29).
It said that it likes Mah Sing for its strategy of focusing on the affordable home segment which should support new sales. We are also positive on IOI Properties Group as we expect earnings recovery from property investment and leisure & hospitality divisions following the reopening of the economy.
