MIDF Research: Stamp duty status quo a positive for property sector

PETALING JAYA: The unchanged stamp duty for properties that are priced above RM1mil is a positive to the sector, said MIDF Research.

“We had expected the hike in stamp duty to affect sales of high end houses from 2018 onwards,” it said in a report yesterday.

The Government had initially proposed to increase stamp duty on instruments of transfer of real estate worth more than RM1mil from 3% to 4% effective Jan 1, 2018 during Budget 2018.

Rates would now remain at 1% for properties worth RM100,000, 2% for those worth between RM100,001 and RM500,000, and 3% for those worth RM500,001 and above.

“While most of the projects by developers under our coverage are priced below RM1mil, we reckon that property developers with exposure to projects priced above RM1mil per unit such as E&O (The Mews project), UEM Sunrise (Solaris Parq), SP Setia and Eco World to benefit from the unchanged stamp duty,” it said.

MIDF Research said it maintains its positive stance on the sector with its top three picks for the sector being SP Setia Bhd, UOA Development Bhd and Mah Sing Group Bhd.

It noted that it likes SP Setia (rated buy with a target price of RM4.13) for its plan to be part of the basket of stocks for the benchmark FBM KLCI status by 2018, the attractive price for the I&P deal and its good dividend yield.

MIDF Research said it also likes UOA Development (rated buy with a target price of RM2.80) for its attractive dividend yield of 6.3% and healthy balance sheet (at net cash position).

“For Mah Sing (rated buy with a target price of RM1.68), the company’s strategy in targeting mass-market projects in the Klang Valley should support its sales outlook in view of good demand for affordable houses,” it said.