MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its POSITIVE call on Malaysia’s property sector, buoyed by a rise in housing loan applications and stable earnings reported by most developers in the first quarter of the calendar year. The research house said the sector is showing early signs of recovery, citing strong property demand, improving loan approvals and developers’ consistent performance. Top picks in the sector include Mah Sing Group (Buy, target price: RM1.37), Eco World Development Group (Buy, TP: RM2.05) and UOA Development (Buy, TP: RM1.98).
Data from Bank Negara Malaysia showed loan applications for property purchases grew for the third consecutive month in April 2025, rising 6.1% year-on-year to RM56.2 billion. This brought total applications for the first four months of 2025 to RM203 billion, up 3.6% from the same period last year. MIDF Research reported this pointed to strengthening buying sentiment in the market. Despite a holiday-shortened month in April, monthly applications still gained 3.1% compared to March.
Approved loans also recorded an uptrend, increasing 6.8% month-on-month in April to RM24.9 billion. While the total approved amount for the January-April period remained relatively flat at RM84.7 billion (-0.1% y-o-y), MIDF expects approvals to improve further in the coming months on the back of stronger application volumes and improving approval ratios, which climbed to 44.3% in April from a low of 37.4% in February.
On corporate earnings, MIDF Research noted that five out of seven property companies under its coverage reported results in line with expectations for the first quarter, while UOA Development beat estimates and only S P Setia missed. UOA’s earnings jumped 62.7% year-on-year to RM80.2 million, driven by better margins and lower tax, while Mah Sing’s earnings grew 12.2% to RM63.6 million. Eco World posted an 11.9% rise in net income to RM79.3 million and Sunway’s profit climbed 20.9% to RM203.8 million, supported by its property investment and construction segments.
Sales momentum also remained steady. Eco World recorded RM1.93 billion in new sales in the first four months of 2025, achieving 55% of its full-year RM3.5 billion target, boosted by RM960 million in land sales. Mah Sing registered RM1.01 billion in sales in the first five months, on track to meet its RM2.65 billion goal. Sunway and S P Setia each reported RM554.7 million and RM718 million respectively, both making up 15% of their annual targets. UOA booked RM265 million in sales for the quarter, largely contributed by its Bamboo Hills Residence project.
The house said it expects property demand to remain stable in the second half of the year as more launches come onstream. While the reinstated Sales and Service Tax (SST) has raised cost concerns for industrial and commercial buildings, the research house believes the earnings impact will be minimal, especially as residential buildings are exempt. It also expects industrial property margins to remain intact due to resilient demand.
Overall, MIDF Research sees stronger new sales underpinning developers’ earnings in the coming quarters. The firm remains optimistic on Mah Sing for its focus on affordable homes, Eco World for its industrial segment and data centre developments and UOA Development for its recurring income stream and expansion into Johor.
