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Malton At Highest Since July 2007

Extract from The Edge (14/10/10)

KUALA LUMPUR: Shares of property developer Malton Bhd gained five sen yesterday to close at 69 sen, its highest since July 2007. It hit an intra-day high of 70.5 sen.

Malton’s shares have surged more than 40% since end-September.

Trading volume was relatively high with almost 27.63 million or almost 8% of Malton’s share base changing hands. It was the second most actively traded stock yesterday. The trading volume has been relatively high for the past three days or so.

There has been no real change at the company, but its controlling shareholder Datuk Desmond Lim Siew Choon has been linked to many large-scale property projects. These links however remain unsubstantiated at press time.


Glomac Offers Good Growth And Dividends

Extract from The Edge (14/10/10)

KUALA LUMPUR: Investors can expect good growth coupled with decent dividends in the next few years from Glomac Bhd, according to its group managing director and CEO Datuk FD Iskandar Mohd Mansor. This is a rare proposition among local listed property developers.

“I think among the property stocks, we are one of the highest in terms of dividend payout. We don’t have a specific dividend policy. But we paid out seven sen last year (FY09 ended April 30), 8.5 sen this year (FY10), and for the next financial year we should be able to pay at least 8.5 sen, if not better,” said FD Iskandar in a recent interview with The Edge Financial Daily.

The dividend per share (DPS) of seven sen translated into a payout ratio of 61.4% for FY09 and DPS of 8.5 sen was about 60% of net profit in FY10.

Should Glomac at least maintain its dividend in FY11, gross dividend yield would be 5.2% or more, based on its closing price of RM1.63 yesterday. But this is not the first time that the group has been generous; its healthy balance sheet allows it to reward shareholders with generous dividends and it has been doing so for the last 10 years.
FD Iskandar says there is no property bubble in the country.


Glomac Tower Still Holds KL Office Record

Extract from The Edge (14/10/10)

Glomac Bhd’s landmark Glomac Tower continues to hold the enviable distinction of fetching the highest-priced ever for office space sold en-bloc in Kuala Lumpur.

The 40-storey office tower next to the KLCC Petronas twin towers, located at the corner of Jalan P Ramlee and Jalan Pinang, was sold at the end of 2007 for RM577 million, or the equivalent of RM1,160 per sq feet.

That price has not been surpassed, as the Kuala Lumpur office property market was later dampened by the global financial crisis of 2008-2009 and oversupply fears, and has not recovered strongly.

Glomac Tower, for which construction is well under way, consists of a 40-storey office tower with two retail floors and 722 car park bays. It has a net lettable area of approximately 515,000 sq ft and sits on a plot of land measuring 57,025 sq ft that was purchased in November 2006 for a reported RM1,000 psf.


Selangor Bumiputera Property Developers Call For Agency To Formulate Policies

Extract from Bernama (14/10/10)

KUALA LUMPUR -- The Bumiputera Property Developers Association Selangor is hoping the government will establish an agency to formulate effective development policies for local property developers.

Its President, Mohammad Sahar Mat Din, said the agency could also provide support programs such as training for developers, project planning and financial assistance.

"This industry is vital as it has an indirect influence on the Malaysian economy via its close linkages to up to 140 sectors and sub-sectors," he told reporters at the Business Financing Clinic organized by the Malaysian Islamic Chamber of Commerce and the Bumiputera Property Developers Association Selangor.

Mohammad Sahar also urged its members to look into opportunities to develop Malay reserve land in areas such as Gombak, Salak Tinggi, Bangi and in Jalan Kebun, Klang.


New Developer To take Over Abandoned Project

Extract from The Star (14/10/10)

JOHOR BARU: Buyers of a low cost housing project at Taman Baiduri here, heaved a huge sigh of relief after being told the project would be resumed after it was abandoned for eight years.

Taxi driver Sujali Ahmad, 51, said that he was grateful that the project would resume as he was in the dark over the progress of the flat that he purchased.

“Words could not describe my happiness as I almost lost my hope over the abandoned project.

“I almost wanted to buy another property as this project was abandoned, however financial difficulties have made it impossible to buy another house,” he said.


Call To Curb Loans For Third Home Buyers

Extract from The Star (14/10/10)

GEORGE TOWN: The Penang Master Builders’ and Building Materials Dealers’ Association (PMBBMDA) urges the Government to impose a cap on the margin of advance for housing loans for third home buyers.

The move was necessary to curb speculation, reduce gearing of purchasers, and maintain the sustainability of housing prices and the property market, PMBBMDA president Vincent Ong told StarBiz.

“The first and second home buyers should continue to get borrowing up to 90% of the property value to ensure that the demand for properties is sustained, creating spill-over effects for the contractors and building materials suppliers,” he said.

He also added that the federal and state governments should also implement more government projects in Penang, as there were so far only 28 projects, with a total value of RM172mil, awarded by the government sector for Penang for the period January to June 2010.


Time For Property To Bloom

Extract from The Edge (13/10/10)

Property sector
We expect Budget 2011 to support the government’s Economic Transformation Programme, aimed at propelling Malaysia into becoming a high-income nation. Higher real property gains tax (RPGT) and restrictive loan-to-value (LTV) caps will be deterrents to foreign direct investment (FDI) and high net worth individuals. While it is important to ensure a healthy property market, the risk of a property bubble in Malaysia is relatively low. Affordability remains high and the sharp price appreciation that has been seen is mainly limited to landed residential properties in prime locations. A LTV cap based on the number of properties owned, location and/or value may be difficult to implement — banks would be better off managing the risk on their own. Policy tightening in regional markets saw initial negative knee-jerk reactions, but share prices rebounded to surpass pre-policy levels (Singapore, Hong Kong) while property prices largely held up (but sales volume fell). Demand should continue to be supported by Malaysia’s positive macro factors — young population, urbanization, shrinking household size, rising income, inflation hedging, and strengthening ringgit.

We see huge re-rating potential from the transformation of Kuala Lumpur into a more livable and vibrant city. More details will likely be unveiled on the MRT, LRT extension, and government land redevelopment that could involve large private sector participation and FDIs (EPF, 1Malaysia Development Bhd, the Qatar Investment Authority and the UAE’s Mubadala Development Company have committed to date). Sure winners will be the current owners of large pieces of prime land with international development potential in Kuala Lumpur (S P Setia Bhd, Bolton Bhd and DNP Holdings Bhd). While it is trickier to guess the direct beneficiaries of government land redevelopment, GLCs and bumiputera developers have the upper hand (Malaysian Resources Corp Bhd, Boustead Holdings Bhd, Glomac Bhd, Bolton and S P Setia).

The Malaysian property sector is one of the biggest laggard sectors post-financial crisis. Regional peers have fared much better, despite higher policy risks with property prices appreciating more steeply. While the Malaysian property sector’s P/BV and P/RNAV multiples have recently inched up to 0.88 times and 0.68 times (slightly ahead of historical means of 0.77 times and 0.61 times, respectively), valuations are still a far cry from the 2-SD seen in 2004 and 2007, when re-rating was driven by strong sales momentum and positive policy changes — similar to what we are seeing now. At their peak, property stocks traded close to RNAV, while sector leader S P Setia fetched a 20% premium with foreign ownership hitting 56% (22% currently). — Hwang DBS Vickers Research


Sunrise Glows Beyond Mont’Kiara

Extract from The Edge (13/10/10)

Sunrise Bhd (Oct 12, RM2.13)
Upgrade to buy at RM2.12 with revised target price RM2.80 (from RM1.98):
The stunning sales performance of Sunrise’s recently-launched Canada project is a showcase of its ability to expand beyond Mont’Kiara. The project raises unbilled sales by 69% and makes Sunrise’s RM1.3 billion FY11 sales target more achievable. Unbilled sales could be further lifted by a RM480 million en bloc office sale, expected to be concluded by end-2010. We raise forecasts by 5% to 46% and realised net asset value (RNAV) by 0.9%. Our target price (TP) is raised to RM2.80, a 30% discount to RNAV.

Sunrise’s Quintet project in British Columbia marks a successful start to its overseas expansion. Phase 1 was fully sold within a month. Quintet has a gross development value (GDV) of RM1.2 billion at about RM1,730 psf. The size of the apartments ranges from 500 sq ft to 1,500 sq ft and the project will be developed in two phases. Given the strong sales recorded thus far, Sunrise will bring forward the launch of Quintet Phase 2. In our forecasts, we expect Quintet to contribute 4.3% to 28.1% of FY11/13 earnings before interest and tax (Ebit).

We understand that Sunrise is currently in talks with a local buyer for the en bloc sale of Menara Solaris (RM480 million initial GDV or RM818 psf; initially planned for strata office development). We are positive on these potential sales as it will reduce sales risks and enhance our forecasts by 5% to 11%.

We are upgrading Sunrise FY11/13 earnings forecasts by 5% to 46% to factor in changes in Quintet sales assumptions and profit recognition method as well as Menara Solaris GDV. Meanwhile, our estimated RNAV has been raised to RM4 per share (from RM3.97). We expect Ebit contributions from non-Mont’Kiara projects to increase from 4% (FY11) to 42% (FY13).


Budget: Expect Tighter Regulations For Credit Card & Property Sector

Extract from Bernama (13/10/10)

KUALA LUMPUR -- The Government is expected to adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up in consumer credit card spending and speculative activities in the property market.

"We believe Bank Negara Malaysia (BNM) is focusing on tackling household debt in 2011 to promote healthy credit card spending," said Kenanga Research.

In its 2011 "Wish List", Kenanga said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.

It said bank loans should be lowered to between 70 and 80 per cent value ratio for third mortgage, it said.


REHDA To Hold 3-Day Property Expo

Extract from Bernama (13/10/10)

KUALA LUMPUR -- The Real Estate and Housing Developers' Association (REHDA) will showcase a wide selection of properties at Malaysia's Property Exposition 2010 (MAPEX 2010) from Oct 22 to 24, 2010.

In a statement here Wednesday, REHDA said MAPEX 2010, with the theme '1Malaysia, 1Home', aimed to connect homebuyers to their dream home by providing a comfortable and convenient avenue for information seeking and exchange through interaction with 38 property developers.

Housing and Local Government Minister, Datuk Chor Chee Heung, will officiate at the launch of the expo on Oct 23.

Chairman of MAPEX committee, Datuk Ng Seing Liong, said in the spirit of 1Malaysia, REHDA wished to set up this platform to help the rakyat of all races own a home.