KUALA LUMPUR: Malaysia’s listed property companies except Sunway Bhd, are now trading at a discount to the 1998 and 2008 average low of around 0.5 times of their price to book value (P/BV), market observers said.
They also said the Covid-19 pandemic and resultant Movement Control Order may see property transaction volumes decline by up to 30 per cent in the short term, as seen in 1998 during the Asian financial crisis and Nipah virus outbreak.
AmResearch said most developers were now trading at a P/BV ratio of 0.2x–0.4x, with the exception of Sunway (0.88x). The latter company’s property development business makes up 24 per cent of its total profit.
AmResearch said based on historical numbers, Malaysian property developers had traded in the range of 0.19x–0.8x in 1998 and 0.17x–0.85x in 2008 at their all-year low levels.
"If the current economic condition persists, we believe property developers will still trade at their current P/BV levels,” the firm added.
AmResearch maintained its “neutral” stance on the property sector.
Its top picks are Sunway, given its diversified income base, and IOI Properties Group Bhd, which is banking on its property development projects in China.
Since March 13 this year, Bursa Malaysia’s Property Index dropped from 815.40 points to 518.96 points on Thursday.
At closing yesterday, Sunway remained unchanged at RM1.57, while IOI Properties was down one sen, or 1.07 per cent, to 92.5 sen,
Some other major property stocks fared better.
UEM Sunrise Bhd inched up 0.5 sen, or 1.19 per cent, to 42.5 sen, Mah Sing Group Bhd increased 0.1 sen, or 2.33 per cent, to 44 sen and Eco World International Bhd closed 0.5 sen higher, or 1.25 per cent, to 40.5 sen.
Meanwhile, PropertyGuru Malaysia said the expected decline in the local property transactions was reflected in the US, which had already seen mortgage applications drop by 30 per cent.
“Closer to home, the impacts are being felt by Malaysians from every walk of life, not just by developers and agents, but by businesses across the board and friends and family members as well,” PropertyGuru Malaysia country manager Sheldon Fernandez said in a statement..
He said moves such as Bank Negara Malaysia’s reduction of the Statutory Reserve Requirement ratio to 2.00 per cent, moratorium on financing payments and Overnight Policy Rate revision as well as the government’s revision to voluntary Employees Provident Fund contribution guidelines had eased financing concerns for property seekers to a large degree.
