UOA DEVELOPMENT BHD

By AffinHwang Capital Buy (maintained) Target price: RM3.11

UOA has priced its property products appropriately within the affordable price range category (ie around RM500,000) that is attrac- tive to first time home buyers.

Citing Bank Negara Malaysia, UOA said the maximum affordable home price in Kuala Lumpur is about RM450,000, based on a median household income of RM9,073 in 2016.

“The group’s strategy is to reduce the property size without reducing the price per sq ft, resulting in lower purchase price per unit. Hence, first-time home-buyers should stand to have a higher chance in securing home loans.

“As a result, UOA sees relatively low property booking cancellations, while preserving the group’s high gross margin.”

A good example, said AffinHwang, is UOA’s South Link serviced apartment project, which was launched at RM400,000 to RM720,000 per unit (RM800 per sq ft) with a built-up size of 500 sq ft to 900 sq ft in the fourth quarter of 2017.

“The project saw a good take-up rates (50%) due to its strategic location between two LRT stations in Bangsar South and accessibility to Federal Highway and New Pantai Expressway.”

The research house said UOA’s properties appeal to home buyers, as they have strategic location within the Greater KL area; good connectivity via major roads and highways; and close proximity to public transportation like the MRT and LRT.

“Despite the premium pricing to government affordable housing developed by PR1MA (RM100,000 to RM400,000), UOA is able to attract middle and upper-middle end customers (with incomes above the median household income) to buy its properties due to the above reasons.

“We like UOA’s strategy of rebranding its property development areas, like Kerinchi area to Bangsar South; and Segambut/Jalan Ipoh/ Kepong area to North Kiara by marketing mid- to high-end products in low- to midend areas.”