Maybank Research today said it maintained its neutral call on the property sector in Malaysia, while it sees Sunway Group as a top buy.
“We maintain NEUTRAL on the property sector. The sector still lacks a strong re-rating catalyst. That said, we may see some trading opportunities around the sector rotation theme/better market sentiment ahead of GE14 but it could be short-lived if weak sector fundamentals persist.
“Since our initiation in Dec 2017, SDPR has performed well and is now closing in to our TP; hence we are downgrading the stock to HOLD with an unchanged RNAV- TP of MYR1.58 (0.55x P/RNAV peg). We maintain our BUYs on Sunway, ECW and UEMS; HOLDs on Glomac, Tambun Indah, Mah Sing and Eco World International,” said the research house.
It said that it’s top BUY pick for the sector is Sunway.
“We raise our target price (TP) for Sunway to MYR1.97 (on a higher P/RNAV peg of 0.75x, from 0.7x previously) for its relatively more resilient income base as compared to the pure developers,” it said.
Unlike the other big cap developers, Sunway’s earnings are also supported by its 54%-owned Sunway Construction Group (SCGB MK, BUY, TP: MYR2.63), 37.3%-owned Sunway REIT (SREIT MK, BUY, TP: MYR1.90) and healthcare.