AmInvestment remains cautious on property

Still high home prices and loan obstacles holding consumers back

KUALA LUMPUR: : AmInvestment Research remains cautious on the property sector due to the generally still elevated home prices, the low loan-to-value (LTV) offered by banks and house buyers’ inability to qualify for a home mortgage due to their already high debt service ratios (DSR).

In addition, the still subdued consumer sentiment, against a backdrop of the rising cost of living and elevated household debts, is holding consumers back from committing themselves to the purchase of big ticket items like a house, said the research unit in a report.

“However, we do see a bright spot in the affordable segment,” it said.

AmInvest Research maintains its “hold” call on UEM Sunrise Bhd (UEMS) with a revised fair value of RM1 (from RM1.25) based on a 40% discount to its realised net asset value (RNAV).

It cut FY18 earnings by 1 .1% while increasing FY19 by 7.7% after imputing new information and assumptions into its model.

“We expect UEMS to register net earnings of RM243.4mil, RM271.3mil and RM233.2mil for FY18-20 respectively,” it said.

UEMS has numerous ongoing key projects, namely Serene Heights @ Bangi (landed residential, GDV RM3.1bil), Solaris Parq @ Dutamas, KL (high-rise residential, GDV RM2.9bil), Estuari, Puteri Harbour (mixed development, GDV RM6.5bil), East Ledang @ Iskandar Puteri (landed residential, GDV RM4.1bil) and Almas, Puteri Harbour @ Iskandar Puteri (mixed development, GDV RM1.9bil).

In April 2018, UEMS acquired 72.7 acres of land in Kepong from the Kuala Lumpur City Hall (DBKL) for RM416.4mil via a 50:50 JV with Mega Legacy Equity Sdn Bhd.

The land is adjacent to the Metropolitan Park.

The JV plans to develop a mixed residential and commercial development with an estimated GDV of RM15bil over a 15-year period.

In H1FY18, UEMS has lined up RM356.8mil of new launches (high-rise and landed residential), with key selling points being: > affordability for Kondominium Kiara Kasih units in Segambut @ RM300,000 – GDV RM218mil); and > “nature-themed” units in Serimbum, Iskandar Puteri @ RM630,000- Kepong RM1.4mil – GDV RM139mil.

“Meanwhile, the unbilled sales of RM4.8bil together with a slew of new launches in FY18FY19 will boost its revenue in the near term.

“UEMS has a total landbank of 12,926 acres, with a remaining GDV of RM109.1bil where RM78.1bil are new projects while the balance RM31bil are yet-to-be-launched ongoing projects.

“These are mainly located at the southern and central regions, providing earnings visibility and driving the company’s growth well into the next decade,” said AmInvest.