MBSB Investment Bank Bhd (MBSB Research) maintained its NEUTRAL call on the property sector, with IOI Properties Group Bhd and Mah Sing Group Bhd as its top picks with Buy ratings and target prices of RM4.64 and RM1.25 respectively, as Malaysian property companies continue to show commitment towards improving environmental, social and governance (ESG) practices.
MBSB Research said ESG ratings among property companies under its coverage remained largely unchanged compared with a year ago, reflecting continued efforts in managing sustainability risks. Four companies, including Sunway Bhd, IOI Properties, Mah Sing and Eco World Development Group, maintained 4-star ESG ratings under the FTSE Russell ESG framework, while Matrix Concepts Holdings, S P Setia and UOA Development retained 3-star ratings.
The research house noted that Malaysia has made progress in areas such as green building certifications, solar photovoltaic systems, electric vehicle charging facilities and sustainable township planning. However, it highlighted that the sector still trails more advanced markets including Singapore, Australia and Japan in several areas.
MBSB Research identified green building regulations, wider green financing adoption, green lease practices and carbon pricing as key areas requiring further improvement. The research house said stronger regulatory frameworks and broader sustainability initiatives could help developers enhance operational efficiency, strengthen brand reputation and create long-term value.
Within the sector, MBSB Research favoured IOI Properties due to its ability to unlock value from its extensive landbank through active asset monetisation, while the proposed IOIPG REIT listing could strengthen its balance sheet. Mah Sing was also favoured due to its focus on affordable housing, which is expected to support steady sales momentum.
