Maybank Investment Bank (Maybank IB) anticipated Johor-SG Special Economic Zone (JSSEZ) be the Malaysian property sector’s focus in the first half of 2024 (1H24) and suspected that it could be located in Sedenak or Iskandar Puteri area.
In its Malaysia Property note, the research house said the details for the development will be announced soon, but said based on its observation that JSSEZ could be located in Sedenak, which is part of the 7,290 acres of land owned by state-owned Johor Corp (JCorp).
“In our view, the sizeable landbank and relatively lower land costs should attract foreign investments, similar to Iskandar Puteri, which was previously known as Nusajaya, launched in 2007.
“Also, it is rational to position the JSSEZ in Sedenak to create a new growth area in Iskandar Malaysia (IM). The JSSEZ will help to generate more job opportunities in addition to the data centres located there, thus accelerating growth in the surrounding areas,” it said.
Iskandar Puteri (IP), where Khazanah owns land directly and through its 70%-owned UEMS, also stands a good chance as a location for the JSSEZ, the research house said.
It said while land costs in the IP area are higher as compared to Sedenak, it is more mature and closer to Singapore in terms of distance.
“Even without the JSSEZ, properties in IP would still be supported by resilient local demand, especially from Malaysians who are working in Singapore, and foreign investments.
“Forest City, which has been identified as the Special Financial Zone and a potential high-speed rail (HSR) station in IP should continue to attract buying interest into this region,” it said.
Maybank IB maintained a NEUTRAL rating for the Malaysia Property sector as it offers trading opportunities in the first half of 2024 (1H24), in which the thematics include JSSEZ, Bayan Lepas LRT alignment and the potential revival of HSR.
“Our stock calls, however, are more fundamental based. We have a BUY rating on SP Setia.”
It named SP Setia as its top pick as for its Johor exposure, which is 2,150 acres or 15% of total GDV) and its cheap valuation (0.3x PBV compared to industry average of 0.6x and 0.8x for UEMS (UEM Sunrise Berhad) as well as for its diversified product range.
“SP Setia is actively reducing its debt level by disposing of non-core landbank. FY24E earnings growth, which could be doubled will be driven by three land sale in Semenyih, Setia Alam and Johor,” it said =,
The risk factors of the research house’s sector rating include potential introduction of the build-then-sell scheme by the government; stronger-than-expected property sales; policy risks; easing of lending measures by the banks; higher-than-expected Liquidated Ascertained Damages compensation; and rising building material costs and labour issues.
