PETALING JAYA: Property firms are anticipated to publish higher earnings this yr as building actions normalize.
The sector can be anticipated to see restoration in property demand, pushed by greater mortgage purposes.
MIDF Analysis stated the upper gross sales posted by property firms final yr would doubtless result in greater earnings in 2022.
“Whole mortgage authorized for buy of property was greater at RM136.3mil in 2021.
“This was in line with the higher loan applications for the purchase of property.
“That has translated into higher sales for property companies,” it added.
However, MIDF Research noted that new property sales outlook would likely be “flattish to slightly positive” this year.
This is because the stronger buying interest from the easing of movement restrictions would partially be offset by the discontinuation of the Home Ownership Campaign.
Another key challenge that remains for property developers is the conversion of bookings into sales.
This is due to stringent bank requirements, said MIDF Research.
“The percentage of total approved loans over total applied loans for the purchase of property remained low at around 35% in 2020 and 2021.
“Hence, we expect the low conversion rate to remain a challenge for property developers in the near term,” it said.
As such, MIDF Research is keeping a “neutral” recommendation on the property sector, with “buy” calls for Mah Sing Group Bhd and IOI Properties Group Bhd.
“We are positive on Mah Sing due to its positive new sales outlook which is underpinned by a strategy of creating affordable range properties.
“Also, the earnings outlook is supported by the full-year contribution from the glove manufacturing division.
“New sales prospect of IOI Properties Group will continue to be driven by launches of projects in Malaysia and China,” it explained.
Besides that, MIDF Research said the KL Property Index underperformed the FBM KLCI last year by recording a decline of 4.22% against the FBM KLCI’s decline of 3.67% in 2021.
“The underperformance of the KL Property Index was mainly attributed to the higher beta nature of property companies amid the uncertain economic outlook in 2021 and Covid-19 pandemic,” it added.