While the one-month full lockdown is expected to affect the property sector’s sales and earnings for the second quarter of 2021, Maybank Investment Bank Research believes the sector is still poised for recovery this year, on the back of record low interest rate and pent-up demand.

In fact, the research house’s analyst Wong Wei Sum expects property sales to pick up once the full movement control order (FMCO) is eased.

She noted that these positives seem to have already been priced in by property players, with stocks under their coverage offering limited upside to their target prices (TPs).

With this, she maintained the “neutral” call on the sector, with “buy” picks unchanged for S P Setia Bhd and Eco World International Bhd. Her TPs for these two stocks are RM1.39 and 61 sen, respectively.

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She added that while construction works for some projects are allowed to continue during FMCO, channel checks showed that the industry is faced with various challenges, including tighter standard operating procedures (SOPs) and raw materials shortage.

“These have led to slower construction works. Sales wise, the signing of Sale and Purchase Agreements (SPA) have been postponed until FMCO is lifted; hence, we expect a quarter-on-quarter decline in Q2 2021 sales,” she said.

Despite this, Q1 2021 data from the National Property Information Centre (NAPIC) continued to show positive signs.

Citing NAPIC statistics, she revealed that home sales value rebounded 26% year-on-year, but fell 6% quarter-on-quarter, due to the imposition of MCO 2.0 in early January.

The situation with unsold residential stocks also improved, dropping 10% quarter-on-quarter and 17% year-on-year in Q1 2021. The decline in residential supply comes as developers offered attractive rebates and discounts amid a low interest rate environment.

“Based on our conversations with developers, sales achieved under the Home Ownership Campaign (HOC) 2020 (1 June 2020 to 31 May 2021) were better than HOC 2019 (pre-COVID 19),” she said.


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