Comprehensive Analysis of Malaysian Property Sector – December 2024
Comprehensive Analysis of Malaysian Property Sector – December 2024
Date: December 9, 2024
Broker: UOB Kay Hian
Sector Overview
The Malaysian property sector’s third-quarter results for 2024 largely met expectations, with some companies standing out due to strategic initiatives and market conditions. Looking forward to 2025, the sector’s core net profit growth is anticipated to exceed revenue growth, driven by higher margin land sales and industrial properties. Key players such as Lagenda and IOIPG are top picks, with additional interest in developers like Mah Sing and Eco World, who have data center exposure.
Eco World Development Group Berhad (ECW)
Eco World Development outperformed expectations in the third quarter of 2024, with a core net profit of RM89 million, marking a year-on-year growth of 34.4%. This performance was driven by stronger revenue streams attributed to higher sales and progressive billings, coupled with margin expansion from cost savings. The company has been recommended as a “BUY” with a target price of RM2.10. The strategic investments in the data center industry have bolstered its market position, providing new revenue streams and enhancing investor interest.
IOI Properties Group Berhad (IOIPG)
IOI Properties Group faced challenges, missing forecasts due to weaker contributions from its Malaysian property segment and initial operating losses at IOI Central Boulevard. The third-quarter core net profit fell by 57.3% year-on-year to RM75 million. Despite these setbacks, the company remains a “BUY” with a target price of RM2.95, attributed to its increased launches and extensive landbank in Johor. The potential sale of land to data center operators presents a significant opportunity for revenue enhancement.
Lagenda Properties Berhad
Lagenda Properties delivered a solid performance with a core net profit of RM47 million, reflecting a 22.7% year-on-year increase. The company is expected to benefit from its new project in Pahang and is on track to meet its sales targets. Lagenda is maintained as a “BUY” with a target price of RM2.32, driven by its high margins and return on equity exceeding 16%.
Mah Sing Group Berhad
Mah Sing Group’s third-quarter results were in line with expectations, posting a core net profit of RM63 million, up 26.1% year-on-year. The company’s strategic expansions in the data center sector have positioned it for future growth, and it remains a “BUY” with a target price of RM2.29. Recent land acquisitions are expected to support higher sales targets for 2025.
Matrix Concepts Holdings Berhad
Matrix Concepts reported a core net profit of RM56 million, marking a year-on-year decline of 12.7%, yet the performance was in line with forecasts. The company is a “BUY” with a target price of RM2.49, supported by its expanding presence in the Sendayan Township and anticipated progressive billings from the Bayu series products.
SP Setia Berhad
SP Setia’s core net profit surged by 131.5% year-on-year to RM100 million, aligning with expectations. The company’s strategic land sales and upcoming launches are expected to drive its 2025 sales targets higher. SP Setia is a “BUY” with a target price of RM1.95, with significant contributions anticipated from the Setia Alaman Industrial Park and new project launches.
Sunway Berhad
Sunway Berhad exceeded expectations with a core net profit of RM350 million, marking an 85.3% year-on-year increase. The company has been recommended as a “HOLD” with a target price of RM4.71. Its strong performance was driven by property development and increased patient volumes in healthcare, positioning it as a key player in both sectors.
UEM Sunrise Berhad
UEM Sunrise’s results were in line with expectations, with a core net profit of RM31 million, reflecting a 262.4% year-on-year increase. The company’s Arcoris car park sale is expected to contribute to earnings, although there is a risk of sales delay. UEM Sunrise is a “SELL” with a target price of RM0.86, with future prospects dependent on more Johor launches.
Conclusion
The Malaysian property sector is poised for growth in 2025, driven by strategic land sales, new project launches, and expanding data center investments. While some companies face challenges, others like Eco World and IOI Properties are well-positioned to capitalize on emerging opportunities. The continued focus on industrial development and infrastructure projects will be key drivers for the sector’s success in the coming year.
