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    2010 CIMB Property Market Report 2010 CIMB Property Market Report Document Transcript

    • SECTOR UPDATE 29 April 2011 MALAYSIACIMB Research Report OVERWEIGHT MaintainedProperty Market Report 2010Home run for prices and transactions Terence Wong CFA +60(3) 20849689 - terence.wong@cimb.com • Bullish outlook for developers. The key points we picked up from the 2010 Property Market Report are 1) transaction values beat expectations and topped RM100bn for the first time ever, 2) residential prices rose a faster-than-expected 6.7%, the quickest pace since the 1997/8 Asian crisis, and 3) occupancy rates for commercial properties, particularly office space in the Klang Valley, were still weighed down by weak demand and rising supply. Overall, the performance in 2010 reinforces our preference for property developers to property investment companies. We believe that 2011 will be another year of record transactions and think that house price appreciation could, in fact, accelerate. We maintain our OVERWEIGHT on the sector, with Mah Sing as our top pick. Key potential re-rating catalysts for the sector are 1) newsflow on landbanking, 2) strong and record sales for most developers, and 3) accelerating earnings growth. • Transaction values hit new record. Property transactions rebounded from 2009’s slump, rising 11% to 376,583, thanks to real GDP growth of 7.2%. The value transacted surged 33% to a record RM107.44bn. Of the big-3 property markets in Malaysia, Penang enjoyed the biggest jump of 43% in transaction value, followed by 36% for the Klang Valley and 30% for Johor. By property type, the biggest increase in transaction value came from development properties which jumped 54% to RM11.74bn, followed by commercial properties (+45%) and industrial (+44%). Surprisingly, the value of residential transactions showed the most modest growth of 21%. • 6.7% uptick in house prices. Last year, house prices in all states recorded gains, taking the average gain for the country to a brisk 6.7%, the strongest in the past 13 years which included the mid-1990s property boom. The Klang Valley enjoyed a strong rebound from the contraction in 2009, with Kuala Lumpur recording the steepest appreciation of 12.2%. Selangor was in fourth place with a 9% clip while prices on Penang Island gained a moderate 6.7% after a hot pace of 16.8% in 2009. Johor remained one of the biggest laggards as its price appreciation was the second slowest in 2010. Johor has the dubious distinction of being the only property market where average prices were flat to lower over the past 10 years. • Mixed commercial performance. Prospects for commercial properties do not look promising as there appears to be significant new supply coming onstream for all types of properties in Malaysia. For specific locations, there are pockets of bright spots including shophouses in KL, retail space in Selangor and Penang, industrial units in KL, Selangor and Penang as well as hotels in Penang. In these areas, the future supply to current stock ratio is relatively low. The trouble spots appear to be shophouses, office space and retail space in Johor where upcoming supply is massive, as well as hotels in KL and Johor. Sector comparisons Target Core 3-yr EPS P/BV ROE Div Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%) ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011 E&O EAST MK O 1.42 1.63 402 18.9 14.5 11.8 1.0 5.6 2.5 KLCC Property KLCC MK U 3.25 3.03 1,019 10.8 9.5 10.6 0.5 5.1 4.6 Mah Sing MSGB MK O 2.59 3.30 723 12.6 10.1 22.7 2.1 17.5 3.5 SP Setia SPSB MK O 4.18 5.37 2,471 23.3 18.2 19.7 2.3 11.4 3.6 UM Land UML MK O 1.95 2.11 157 9.1 6.5 21.9 0.5 5.7 5.1 Simple average 14.9 11.8 17.4 1.3 9.1 3.9 O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy and TS = Trading Sell Source: Company, CIMB Research Please read carefully the important disclosures at the end of this publication.
    • Transactions The recently released 2010 Property Market Report (PMR) revealed a strong rebound of the property market from 2009’s slump. Aided by the 7.2% improvement in real GDP in 2010, the number of property transactions rose 11% to 376,583 while the value transacted surged 33% to a record RM107.44bn. This is the first time ever that the RM100bn mark has been breached. Of the big-3 property markets in Malaysia, Penang enjoyed the biggest jump of 43% in transaction value, followed by 36% for the Klang Valley and 30% for Johor. By property type, the biggest increase in transaction value came from development properties which jumped 54% to RM11.74bn, followed by commercial properties (up 45%) and industrial (up 44%). Surprisingly, the value of residential transactions showed the most modest growth of 21%. Figure 2: Property transactions (RM m) 120,000 Residential Commercial Industrial Agriculture 100,000 Devmt & others 80,000 60,000 40,000 20,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: PMR, CIMB ResearchFigure 3: Property transaction values by segment 2009 2010 Devmt & others Devmt & others Agriculture 9% 11% 10% Agriculture Industrial 11% Residential 8% 47% Residential Industrial 53% 9% Commercial Commercial 22% 20%Source: PMR, CIMB ResearchFigure 4: Transaction values(RM m) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Klang Valley 18,184.3 17,790.8 16,444.8 19,894.3 26,667.3 27,158.0 30,353.5 41,606.2 44,997.8 41,915.0 57,018.2Johor 6,087.7 5,654.7 6,298.8 6,689.1 10,628.8 7,852.5 6,937.1 8,452.8 11,905.8 9,081.3 11,807.2Penang 3,275.8 3,632.7 3,433.0 3,863.2 5,653.2 5,502.1 5,489.5 6,554.4 7,276.9 6,532.4 9,372.0Others 11,648.1 11,556.6 12,466.7 12,988.3 17,014.2 16,269.1 18,745.6 20,520.5 24,158.4 23,486.7 29,242.1Total 39,195.8 38,634.9 38,643.3 43,434.9 59,963.5 56,781.7 61,525.7 77,133.8 88,338.9 81,015.5 107,439.6Change 13.9% -1.4% 0.0% 12.4% 38.1% -5.3% 8.4% 25.4% 14.5% -8.3% 32.6%Residential 21,939.3 22,199.2 21,136.7 23,011.2 29,295.8 28,407.3 29,446.9 36,490.6 41,307.4 41,848.4 50,654.2Commercial 6,439.2 6,426.8 6,443.9 7,327.5 10,950.6 11,631.3 11,520.1 16,350.8 16,615.4 16,389.0 23,840.3Industrial 5,102.0 4,319.5 3,838.6 3,968.0 5,834.1 5,004.5 6,037.3 7,080.2 7,897.4 6,833.3 9,829.8Agriculture 3,073.1 2,308.5 3,229.4 3,698.2 5,474.7 4,952.0 6,213.7 6,910.2 8,512.1 8,340.4 11,377.8Devmt & others 2,642.3 3,381.0 3,994.7 5,430.0 8,408.5 6,786.6 8,307.8 10,302.1 14,006.6 7,604.3 11,737.5Total 39,195.9 38,634.9 38,643.3 43,434.9 59,963.5 56,781.7 61,525.7 77,133.8 88,338.9 81,015.5 107,439.6Source: CIMB estimates, PMR [ 2 ]
    • Residential The residential property sector in Malaysia performed very well in 2010. House prices in all states recorded gains, with the overall country average rising a robust 6.7%. This is the strongest appreciation in 13 years and the quickest annual pace since the mid- 1990s property bull market. The Klang Valley enjoyed a strong rebound from the contraction in 2009, with Kuala Lumpur enjoying the steepest appreciation of 12.2%. Selangor was in fourth place at 9% while prices on Penang Island gained a moderate 6.7% after a hot pace of 16.8% in 2009. Johor remained one of the biggest laggards as its price appreciation was the second slowest in 2010. Johor has the dubious distinction of being the only property market where average prices were flat to lower over the past 10 years (see Figure 7). Figure 5: House price indices 300.0 Malaysia house price index KL house price index Selangor house price index Klang Valley price index Johor price index Penang price index 250.0 200.0 150.0 100.0 50.0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: PMR, CIMB Research Figure 6: 2010 house price appreciation by state K. Lumpur Sabah Kelantan Selangor Malacca Terengga Saraw ak Malaysia Kedah Perlis Perak N.S. Penang Johor Pahang 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Source: PMR, CIMB ResearchFigure 7: Annual house price change 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10-yr avgSabah 5.6% 3.9% 5.9% 18.0% -2.7% 0.9% 20.8% 13.7% 7.8% 10.6% 8.5%Terengganu 2.4% 2.1% 4.3% 19.5% 16.1% 6.3% 10.6% -0.5% 8.5% 7.5% 7.7%Perlis 3.5% 16.1% -0.3% 12.9% 3.6% 2.8% 6.9% 7.0% -2.5% 5.5% 5.5%Pahang 5.3% 7.3% -1.4% 16.4% 4.7% 5.5% 6.8% 3.7% -0.4% 0.9% 4.9%K. Lumpur 1.6% 5.5% 0.9% 6.5% 6.5% 5.3% 7.9% 4.4% -2.5% 12.2% 4.8%Kedah 3.5% 6.4% 6.3% 8.7% 0.0% 1.1% 3.3% 5.5% 5.8% 5.8% 4.6%Perak 6.0% 6.8% 4.6% 5.1% 1.5% 3.6% 3.9% 6.5% 0.6% 5.1% 4.4%Sarawak 1.5% 3.5% 4.7% 1.2% 6.9% 4.1% 9.0% 5.0% 0.8% 6.9% 4.4%Penang 2.9% -0.3% 12.6% 3.0% 3.9% 1.9% 4.7% 6.1% 4.0% 3.5% 4.2%Kelantan 1.1% 15.0% -3.0% 0.5% -4.6% 5.1% 6.4% 3.8% 6.8% 9.8% 4.1%Malacca 7.8% -0.4% 6.6% -1.2% 4.9% -2.3% 2.5% 4.5% 6.3% 7.6% 3.6%Malaysia 1.1% 2.5% 4.0% 4.8% 2.4% 1.9% 5.3% 4.7% 1.5% 6.7% 3.5%Selangor 3.5% 2.1% 2.8% 5.2% 0.7% 3.2% 3.2% 4.6% -0.9% 9.0% 3.4%N. Sembilan 4.2% 4.7% 2.3% 1.7% 3.4% 0.9% 5.1% 3.8% 0.5% 3.8% 3.1%Johor -12.3% -4.1% 2.1% 1.9% -0.2% 0.7% 3.1% -0.1% 5.5% 2.7% -0.1%Source: CIMB estimates, PMR [ 3 ]
    • Zeroing in on the Klang Valley which is the pre-eminent property market in Malaysia with a population of close to 7m or nearly a quarter of Malaysia’s population, we were surprised at the pace of appreciation in 2010. The star performer was bungalows in Kuala Lumpur, which saw a 19% bounce in prices, followed closely by semi-Ds at 16.7%. This went against the impression we had that 2010 was the year for terraced houses as prices in various areas in KL and Petaling Jaya supposedly surged 20- 30%. The reality, however, was modest price rises of 8.3% for terraced houses in KL and 10.5% in Selangor. Also surprising was the relatively strong price increase of 9.7% for high rises in KL and 7% in Selangor. This is the fastest pace in KL since 1995 and the quickest in Selangor since 2003. Over the past two decades, high-rise properties in KL and Selangor have suffered the lowest appreciation and the strong gains in 2010 lend credence to the contention by some quarters that a property bubble is forming. Figure 8: Price index for various residential types in Klang Valley 210.0 KL terrace KL high-rise KL bungalow KL semi-D Sgor terrace Sgor high-rise 190.0 Sgor bungalow Sgor semi-D 170.0 150.0 130.0 110.0 90.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: PMR, CIMB ResearchFigure 9: Annual house price change in Klang Valley 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 10-yr avgKL terrace 4.8% 5.0% 4.6% 9.4% 17.7% 22.7% 3.0% -7.0% -3.7% 20.0% 7.7%KL high-rise 12.5% -6.6% -10.8% 9.4% 13.2% -7.6% -5.9% -7.2% 1.2% 8.0% 0.6%KL bungalow 22.8% 18.3% 5.9% 34.2% 60.0% 13.8% 13.7% -32.1% -10.8% 37.8% 16.4%KL semi-D 6.4% 5.5% 4.5% 11.6% 13.2% 11.8% 11.6% -10.2% -27.2% 41.8% 6.9%KL all 17.8% 1.3% 0.6% 10.7% 28.8% 12.3% 1.6% -9.5% -4.1% 13.3% 7.3% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10-yr avgKL terrace -0.7% 12.5% 1.0% 3.9% 5.0% 4.7% 7.1% 7.5% -4.5% 8.3% 4.5%KL high-rise -5.1% 3.7% 2.1% 5.4% 1.9% 0.0% 3.0% 1.8% 6.4% 9.7% 2.9%KL bungalow 11.1% -4.5% -1.5% 8.8% 13.9% 14.1% 8.1% 5.1% -6.1% 19.0% 6.8%KL semi-D 4.4% 4.0% 4.1% 15.6% 5.6% -3.8% 20.8% -5.5% 1.8% 16.7% 6.4%KL all 1.6% 5.5% 0.9% 6.5% 6.5% 5.3% 7.9% 4.4% -2.5% 12.2% 4.8% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 10-yr avgSgor terrace 6.5% 4.5% 4.0% 9.0% 11.3% 10.8% 13.8% -5.8% -10.0% 18.7% 6.3%Sgor high-rise 6.2% 5.2% 1.1% 7.4% 11.0% 7.1% 0.3% -5.9% -14.5% 17.9% 3.6%Sgor bungalow 10.0% 5.0% 2.8% 17.2% 17.8% 13.7% 9.2% -20.1% -22.0% 16.4% 5.0%Sgor semi-D 6.4% 5.5% 4.5% 11.6% 13.2% 11.8% 11.6% -10.2% -27.2% 41.8% 6.9%Sgor all 7.2% 4.7% 3.8% 9.2% 14.5% 8.4% 10.3% -6.4% -4.8% 14.7% 6.1% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10-yr avgSgor terrace 4.0% 4.8% 2.3% 3.9% 0.3% 0.9% 2.2% 3.9% -1.0% 10.5% 3.2%Sgor high-rise 0.3% -4.7% 8.2% 1.5% -2.1% -2.0% 2.1% -4.4% 4.0% 7.0% 1.0%Sgor bungalow 3.5% -7.4% 7.0% -1.8% 3.7% -0.4% 13.3% 23.1% -9.0% 8.0% 4.0%Sgor semi-D 2.8% -8.9% 1.4% 25.2% 4.7% -3.1% 7.6% 6.3% 1.8% 0.1% 3.8%Sgor all 3.5% 2.1% 2.8% 5.2% 0.7% 0.3% 3.2% 4.6% -0.9% 9.0% 3.1%Source: CIMB estimates, PMR [ 4 ]
    • However, we continue to hold the view that there is a good explanation for the strongproperty prices and that one year’s strong appreciation does not make for a generalbubble. 2009 was a weak year during which prices of terraced houses and bungalowsin both KL and Selangor fell on average. The rebound in 2010 should, therefore, notbe a big surprise. Strong gains were also made after the Asian financial crisis and alsothe years immediately after a year of flat or lower prices. As for prices of high-risebuildings in KL and Selangor, the 20-year CAGR is a miserable 1.5% for KL and 2%for Selangor, way behind the 5.4% CAGR for overall KL and 4.4% CAGR for overallSelangor. 2010’s gain could be the long-overdue catch-up for that asset class.Part of the reason for the strong property price appreciation is the limited new supply.The supply of completed residential properties in 2010 increased at the slowest pacesince 1997. This was true for the Klang Valley, Johor and Penang. The supply ofnewly completed residential properties in Malaysia rose only 2.2% in 2010, a drasticslowdown from the 3-12% range seen since 2001. New supply in the Klang Valley in2010 was only 2.5% and the growth rate was even lower for Johor at 1.7% andPenang at 2.3%. Within the Klang Valley, Selangor’s supply growth was low at 2.1%compared to Kuala Lumpur’s 3.6%. The state with the highest growth in supply in2010 was Sabah at 4.8%.Figure 10: % change in new residential supply 20.0% 18.0% KL Selangor Johor Penang 16.0% Malaysia Klang Valley 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: PMR, CIMB ResearchIn terms of unsold stock, there was a 21% spike in 2010 to nearly 79,000 units (seeFigure 12). This came largely from the smaller property markets as well as Johor,which saw a 19% increase. KL, Selangor and Penang saw a decline in number ofoverhang units, which would explain the higher house price gains in those areascompared to Johor. While the 65% overhang to needs ratio for properties in KL stillappears high relative to the national average of 55%, we are not concerned as theoverall ratio for the Klang Valley is only 38%. The authorities are trying to increase thepopulation in the KL city area and the popularity of smaller apartments will drawpeople into the city. In terms of the overhang to total stock, KL’s ratio is only 1.5%,lower than Johor’s 2.4% and also the national average of 1.8%. The overall ratio forthe Klang Valley is only 1.1%, dragged down by Selangor’s low ratio of 0.9%. OnlyPenang’s ratio is lower at 0.4%.Figure 11: Malaysia’s housing supply statistics (units)Starts Starts Completion Existing stock Under construction Future supply1998 152,946 121,987 1,797,542 417,343 353,0281999 142,563 128,351 2,315,059 399,316 452,9242000 41,924 69,329 2,366,925 377,284 394,3042001 23,137 112,157 2,761,242 480,517 503,6542002 135,899 156,042 2,991,738 572,961 504,9302003 166,143 187,178 3,237,599 584,531 527,3862004 155,589 165,964 3,467,812 641,771 625,8572005 152,852 180,600 3,680,462 637,208 636,7832006 142,594 170,962 3,850,568 608,840 648,1742007 133,948 181,123 4,063,167 573,716 666,9282008 107,856 130,309 4,193,150 551,263 673,8712009 86,743 103,335 4,338,609 538,894 667,9362010 84,210 95,938 4,433,310 527,166 660,032Source: Property Market Report, CIMB estimates [ 5 ]
    • Figure 12: Residential overhang (units) Klang Valley K. Lumpur Selangor Johor Penang Others Malaysia2004 28,923 3,604 25,319 17,817 3,550 29,218 79,5082005 24,939 2,713 22,226 19,735 3,173 32,859 80,7062006 27,471 7,751 19,720 21,523 1,393 35,104 85,4912007 20,961 5,931 15,030 18,407 1,164 35,566 76,0982008 19,630 5,808 13,822 19,015 1,888 35,846 76,3792009 18,767 6,612 12,155 13,475 2,483 30,681 65,4062010 18,246 6,327 11,919 16,039 1,401 43,290 78,976Note: Based on overhang + unsold under construction and not constructed properties2010 Klang Valley K. Lumpur Selangor Johor Penang Others MalaysiaOverhang (units) 18,246 6,327 11,919 16,039 1,401 43,290 78,976Population (m) 6.83 1.66 5.18 3.39 1.58 16.51 28.31Population growth (%)# 2.94 2.20 3.17 2.24 2.11 1.97 2.17Avg household (no.)* 3.88 3.72 3.93 4.17 3.94 4.54 4.31Housing needs (units) 51,800 9,788 41,779 18,184 8,447 71,606 142,518Overhang/needs 35.2% 64.6% 28.5% 88.2% 16.6% 60.5% 55.4%Total stock 1,696,787 415,860 1,280,927 674,188 348,343 1,713,992 4,433,310Overhang/total stock 1.1% 1.5% 0.9% 2.4% 0.4% 2.5% 1.8%# CAGR for 2002-2008* Based on 2010 censusSource: PMR, Poluation and Housing Census & CIMB estimates Office space Overall occupancy rates for office space in the Klang Valley softened last year for the third year in a row. The drop was mainly due to new supply outstripping demand. New supply in Kuala Lumpur and Selangor increased from 4.2m sq ft in 2009 to 4.4m sq ft while demand growth surprisingly softened from 2.5m sq ft to 2.1m sq ft. Overall occupancy in the Klang Valley fell 1.4% pts to 82.3% in 2010, after falling 0.9% pts to 83.7% in 2009. In line with the drop in occupancy rates, rental rates also came under pressure and were flattish. Newly completed office buildings in the Golden Triangle took longer to fill and building owners had to reduce rates to attract tenants. The only bright spot for office space appears to be the Bangsar belt from KL Sentral to Bangsar South where rental rates are firm. Occupancy rates in the three major property markets – Klang Valley, Johor and Penang – are the lowest in the country (see Figure 15). Figure 13: Klang Valley office space mil sq ft Demand Supply Occupancy Occupancy 140 120% 120 100% 100 80% 80 60% 60 40% 40 20 20% 0 0% 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 Source: PMR, CIMB Research, Rahim & Co Research, BNM, Domain Properties, CH Williams Talhar & Wong and JLW Research [ 6 ]
    • Figure 14: Klang Valley office space occupancy and rental rates 120.0% 7.00 100.0% 6.00 5.00 80.0% 4.00 60.0% 3.00 40.0% Occupancy Rental rates 2.00 20.0% 1.00 0.0% 0.00 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09Source: PMR, CIMB Research, Rahim & Co Research, BNM, Domain Properties, CH Williams Talhar & Wong and JLW ResearchFigure 15: Office occupancy rates by state in 2010 Perlis Terengganu Kelantan Pahang Perak Malacca Kedah Saraw ak Ng. Sabah KL Penang Selangor Johor 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0%Source: PMR, CIMB ResearchRetail spaceThe Klang Valley market for retail space fared slightly better than the office market asdemand nearly matched new supply. As a result, occupancy rates eased only 0.2%pts to 86.7%. Kuala Lumpur’s occupancy rose 0.3% pts to 84.2% while Selangor’sdipped 0.1% pts to 89.1%. In terms of supply, Kuala Lumpur’s supply increased 1.4%while Selangor’s supply growth was a higher 2.3%. Demand, on the other hand,improved 1.8% in Kuala Lumpur and 2.2% in Selangor. Unlike the office space marketin the Klang Valley, retail space fared better in terms of occupancy rates comparedwith most other states. The two worst markets for retail space were Johor andPenang.Figure 16: Klang Valley retail space mil sq ft Demand Supply Occupancy 70.0 120.0% 60.0 100.0% 50.0 80.0% 40.0 60.0% 30.0 40.0% 20.0 10.0 20.0% 0.0 0.0% 89 91 93 95 97 99 01 03 05 07 09 11 F 13 FSource: PMR, CIMB Research, Rahim & Co Research [ 7 ]
    • Figure 17: Retail supply growth by state 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010KL 15.3% 2.1% 3.7% 12.1% 8.6% 4.1% 0.7% 11.7% 0.0% -0.7% 1.0%Selangor 5.4% -0.8% 20.3% 24.0% 7.0% 5.0% 15.8% 7.3% 19.9% 0.2% 2.5%Johor 5.6% 3.7% 14.3% 0.8% 3.9% 4.1% 7.8% 14.9% 17.5% 7.3% 4.0%Penang 15.5% 9.8% 6.7% 0.9% 7.5% 0.0% 12.8% 7.7% 7.2% 6.9% 10.0%Ng. Sembilan 26.9% 11.1% -6.4% 0.0% 5.6% 0.9% 7.5% -1.1% 3.0% 8.0% 4.4%Perak 3.5% -2.1% 13.6% 1.1% -3.4% 8.7% 4.3% 7.8% 13.8% 4.8% 0.8%Malacca 6.0% -0.4% 8.3% 0.0% 0.0% -5.3% 12.0% 13.7% 1.3% 10.3% 27.4%Kedah -1.2% 0.0% 3.4% 3.1% -8.5% 8.2% 10.2% 6.2% 8.0% 10.8% 0.0%Pahang 13.2% 0.4% 13.2% 0.0% -0.3% 0.0% 0.9% 1.5% 21.7% 0.7% 0.0%Terengganu 0.0% 16.4% 0.0% 0.0% 0.0% 0.0% 0.0% 100.4% 28.2% -0.8% 27.5%Kelantan 0.0% 0.0% 0.0% 0.0% 106.2% 0.0% 20.4% -3.3% 12.3% 23.7% 8.2%Perlis 3.9% 1.6% 0.4% 0.0% -42.0% -0.1% 0.0% 2.7% 4.7% 0.0% 23.9%Sabah 9.5% 7.8% 15.0% 0.0% 7.6% 0.3% 13.8% 14.2% 42.4% 0.6% 15.3%Sarawak -22.5% 18.2% 6.3% 3.8% 1.2% 0.0% 0.0% -1.1% 39.4% -4.9% 6.9%Malaysia 8.3% 3.4% 9.3% 8.1% 5.5% 3.3% 8.4% 9.1% 12.6% 3.1% 4.9%Source: CIMB estimates, PMR Figure 18: Retail occupancy rates by state in 2010 Perlis Kelantan Selangor Perak KL Sabah Ng. Sem. Pahang Sw ak Malacca Kedah Terengganu Johor Penang 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% Source: PMR, CIMB Research Hotels The average occupancy rate for Klang Valley hotels improved 2.7% pts to 65.9% in 2010, reversing 2009’s 1.8% pt fall. However, it is still far from 2007’s peak of 71.6%. Occupancies in Kuala Lumpur picked up from 65.9% to 69.2% while in Selangor, it rebounded from 57.2% to 60.3%. The total supply of rooms in the Klang Valley rose 2.4% to 44,828 while demand grew at a faster clip of 6.7%. The higher occupancy rate is a pleasant surprise as tourist arrivals in 2010 increased by only 4%, the slowest since 2003. While new supply under construction for Malaysia is substantial, the growth in the supply of hotel rooms was only 1.1%, the slowest since 2003. Figure 19: Klang Valley hotel market (000 rooms) Occupancy Supply Demand Occupancy 60.0 100.0% 50.0 80.0% 40.0 60.0% 30.0 40.0% 20.0 10.0 20.0% 0.0 0.0% 89 91 93 95 97 99 01 03 05 07 09 11 F 13 F Source: PMR, CIMB Research [ 8 ]
    • Figure 20: Hotel room supply growth by state 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010KL 3.0% -1.7% 4.2% 0.0% 8.9% 1.3% 6.7% 0.0% 1.2% 0.4% 2.1%Selangor 1.7% 1.9% 11.9% 0.2% 6.1% 0.3% 1.9% 8.7% 1.8% -1.7% 1.4%Johor 129.4% -3.1% 6.1% -2.2% 0.4% -0.8% 0.0% 10.3% 10.1% 7.6% 2.5%Penang 4.6% 1.7% 2.6% 1.1% 0.4% 0.4% -1.0% 5.0% -0.3% 8.4% 0.7%Ng. Sembilan 78.0% 1.1% 3.8% 5.4% 4.8% -4.3% 2.3% 15.3% 7.5% -0.9% -0.5%Perak 10.1% 0.6% 5.9% 0.0% 1.3% 2.2% 2.6% 8.4% 2.8% 10.4% 0.0%Malacca 12.1% -0.3% 10.8% 0.0% 3.2% 8.6% 0.2% 8.3% 3.5% 1.8% 2.6%Kedah 69.4% 1.4% 1.9% 1.8% -0.7% 0.9% 1.8% 4.0% -1.8% 0.6% 0.0%Pahang 73.6% 15.2% 12.8% 0.7% -4.1% 15.2% 2.5% 0.7% 1.1% -0.5% 0.3%Terengganu 147.9% 6.6% 3.6% 1.9% 1.5% -0.3% 1.1% 2.8% 2.4% 2.5% 1.3%Kelantan 79.4% 19.9% -0.4% -1.9% 3.9% 4.8% 0.7% 5.8% 0.0% 5.4% 0.0%Perlis 64.8% 47.7% 14.7% 0.2% 23.4% 5.8% 2.6% 4.2% 11.5% 0.9% 0.0%Sabah 59.6% 0.5% 7.9% 0.0% 1.0% -1.0% -1.8% 15.4% 10.2% 4.2% 0.6%Sarawak 144.8% 4.2% 6.4% 0.5% -0.5% 5.3% 5.7% 2.0% 4.8% 7.5% 0.4%Malaysia 38.6% 2.6% 6.5% 0.3% 2.2% 3.0% 2.4% 5.1% 3.2% 3.1% 1.1%Source: CIMB estimates, PMR Figure 21: Tourist arrivals to Malaysia (mil) 30.0 25.0 20.0 15.0 10.0 5.0 0.0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 Source: CEIC, CIMB Research Outlook Promising residential prospects We are surprised by the 33% jump in property transaction value in 2010 as we expected the rebound to be closer to the 10-year average of around 10-15%. This means that the 2009 contraction due to the global financial crisis was milder than expected and the subsequent rebound was stronger than expected. Looking at the performance by sector, we see that the residential property market is healthier than other subsectors as the growth in transaction value was more modest and sustainable at 21%. For 2011, anecdotal evidence from leading developers points to another strong year. SP Setia is targeting sales growth of 30% while Mah Sing is aiming for growth of 30-60%. Both companies appear on track to meet or exceed their targets. But for the overall market, we expect transaction value growth to slow down to around 15-20% as historically, growth has never sustained at 30% for more than a year and the base of comparison is also much larger. [ 9 ]
    • Figure 22: Change in property transaction value vs. real GDP growth 100.0% Residential Total Real GDP grow th 80.0% 60.0% 40.0% 20.0% 0.0% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 -20.0% 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 -40.0% -60.0% Source: Property Market Report, MOF, CIMB ResearchFigure 23: Growth in transaction values 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Klang Valley 13.0% -2.2% -7.6% 21.0% 34.0% 1.8% 11.8% 37.1% 8.2% -6.9% 36.0%Johor 7.0% -7.1% 11.4% 6.2% 58.9% -26.1% -11.7% 21.8% 40.8% -23.7% 30.0%Penang 26.4% 10.9% -5.5% 12.5% 46.3% -2.7% -0.2% 19.4% 11.0% -10.2% 43.5%Others 15.9% -0.8% 7.9% 4.2% 31.0% -4.4% 15.2% 9.5% 17.7% -2.8% 24.5%Residential 18.3% 1.2% -4.8% 8.9% 27.3% -3.0% 3.7% 23.9% 13.2% 1.3% 21.0%Commercial 3.8% -0.2% 0.3% 13.7% 49.4% 6.2% -1.0% 41.9% 1.6% -1.4% 45.5%Industrial 41.8% -15.3% -11.1% 3.4% 47.0% -14.2% 20.6% 17.3% 11.5% -13.5% 43.9%Agriculture 0.6% -24.9% 39.9% 14.5% 48.0% -9.5% 25.5% 11.2% 23.2% -2.0% 36.4%Devmt & others -12.6% 28.0% 18.2% 35.9% 54.9% -19.3% 22.4% 24.0% 36.0% -45.7% 54.4%Total 13.9% -1.4% 0.0% 12.4% 38.1% -5.3% 8.4% 25.4% 14.5% -8.3% 32.6%Source: CIMB estimates, PMR We are also surprised by the strength of the rise in residential prices in 2010 as the 6.7% pace is the strongest since the Asian financial crisis and exceeded our forecast of 4-5%. Nonetheless, the direction of our forecast was right. The rise in prices is due to a combination of factors including 1) pent-up demand and constrained supply, 2) inflationary fears resurfacing due to rising oil prices, 3) renewed confidence due to the economy’s strong performance, and 4) traction gained from the government’s various transformation programmes. We believe the proposed RM50bn MRT project in the Klang Valley, several new highways and the possible high-speed rail project to Singapore also boosted prices as accessibility in the Klang Valley should improve significantly. Figure 24: Key highways among the seven proposed under 10MP Highways Value (RM m) West Coast Expressway (WCE) 5,000-6,000 Guthrie-Damansara Expressway 2,000-3,000 Sungai Juru Expressway 1,000-2,000 Paroi-Senawang-KLIA Expressway 700-1,200 Ampang Elevated Highway 2 2,000-3,000 Source: CIMB Research, 10MP Although we are projecting real GDP growth to moderate to 5.5% in 2011, overall house prices should still be strong and match 2010’s performance by rising 5-10%. The authorities were quoted as saying that they expected prices to appreciate at a faster rate of 10-20%, which is not impossible as prices surged 18.3% in 1995 and 25.5% in 1991. However, we do not expect that strong a price upsurge across the country unless the economy expands at a more rapid rate and overall confidence in the economy scales a new high. Also, we do not believe that there is a property bubble in Malaysia or the Klang Valley yet as strong gains were made only in 2010 after the global financial crisis. Looking back at the trends during the mid-1990s, we see that house prices rallied for three years from 1994 (8% in 1994, 18.3% in 1995 and 12.9% in 1997) before the Asian crisis set in. In fact, from 1991 to 1996, house prices appreciated at a CAGR of 13.4%, double 2010’s 6.7%. [ 10 ]
    • Figure 25: Residential prices vs. real GDP growth 30.0% Malaysia house price index 25.0% Klang Valley price index 20.0% Real GDP grow th 15.0% 10.0% 5.0% 0.0% -5.0% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 10 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 -10.0% -15.0% -20.0% Source: Property Market Report, MOF, CIMB ResearchFigure 26: Real GDP growth 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012FAgriculture (0.2) 2.9 6.0 4.7 2.6 5.2 1.3 4.3 0.4 1.7 4.0 3.5Mining (1.7) 4.4 6.1 4.1 (0.4) (1.0) 2.0 (2.4) (3.8) 0.2 2.5 2.5Construction 3.3 2.3 1.8 (0.9) (1.5) (0.3) 7.3 4.2 5.8 5.2 5.6 7.0Manufacturing (4.3) 4.1 9.2 9.6 5.2 6.7 2.8 1.3 (9.4) 11.4 6.0 5.5Services 4.1 5.8 4.2 6.4 7.2 7.4 10.2 7.4 2.6 6.8 6.0 6.8Real GDP 0.5 5.4 5.8 6.8 5.3 5.8 6.5 4.7 (1.7) 7.2 5.5 6.0Source: BNM, CIMB estimates Figure 27: Malaysia’s house price changes 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 -10.0% -15.0% Source: Property Market Report, CIMB Research Although the affordability index for residential properties in general slipped slightly in 2010 due to higher interest rates as the OPR was raised 75bp in total, it remains near its best ever. This is because per capita income rebounded 10% in 2010 after pulling back 8.4% in 2009. The rise in house prices in Malaysia as well as the major property markets including the Klang Valley, Johor and Penang continues to lag behind income growth. The lag widened after the Asian crisis. We believe the lag in house prices reflects a combination of factors such as the elasticity of supply due to the emergence of large and aggressive township developers as well as the trend towards high-density high-rise buildings. The extremely slow appreciation of high-rise residential properties in KL and Selangor reflects the abundance of relatively cheap land for such development. [ 11 ]
    • However, we believe the trend is starting to turn. House price appreciation could bemore pronounced in the coming years due to 1) increasing scarcity of land closer tothe urban centres and 2) the concentration of development in the hands of a handfulof large developers which are not churning out cheap homes. For the Klang Valley,house buyers are less willing to commute long distances given rising transportationcosts. This partly explains why prices of properties in KL continue to appreciate at thefastest pace. Also, the property sector is increasingly dominated by a handful of massdevelopers such as SP Setia, Mah Sing, Sime Darby and IJM Land, as they havedisplaced past big developers such as Land & General and Talam/K Euro which usedto produce large numbers of affordable homes.Figure 28: Affordability index (mortgage/income) for Malaysian properties 0.4500 0.4000 0.3500 0.3000 0.2500 0.2000 0.1500 0.1000 0.0500 0.0000 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20Source: PMR, CIMB ResearchFigure 29: House prices have lagged behind income growth 550.0 Malaysia house price index Klang Valley price index 500.0 Johor price index Penang price index Per Capita Income Index Consumer Price Index 450.0 400.0 350.0 300.0 250.0 200.0 150.0 100.0 88 90 92 94 96 98 00 02 04 06 08 09 19 19 19 19 19 19 20 20 20 20 20 20Source: PMR, CIMB ResearchCommercial property prospects mixedProspects for commercial properties does not look promising as overall, there appearsto be significant new supply coming onstream for all types of properties in Malaysia.However, a breakdown of future new supply by geographical markets reveals somebright spots including shophouses in KL, retail space in Selangor and Penang,industrial units in KL, Selangor and Penang, and hotels in Penang. In these areas, thefuture supply to current stock ratio is relatively low. The trouble spots appear to beshophouses, office space and retail space in Johor where upcoming supply ismassive, as well as hotels in KL and Johor. Interestingly, in Figure 31, the numbers forresidential properties in the Klang Valley for both KL and Selangor look healthy, whichaugurs well for the property market as a whole since residential properties make upthe bulk of the sector. [ 12 ]
    • Figure 30. Occupancy rates in KL/Klang Valley 100.0% Office Retail Hotel 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: PMR, CIMB estimatesFigure 31. Existing and future supply of properties Klang Valley Kuala Lumpur Selangor Johor Penang Others MalaysiaResidential (units)Existing stock 1,696,787 415,860 1,280,927 674,188 348,343 1,713,992 4,433,310Under construction 161,545 37,194 124,351 70,404 41,580 253,637 527,166Future supply 323,870 69,935 253,935 216,482 81,830 565,016 1,187,198Future supply/existing stock 19% 17% 20% 32% 23% 33% 27%Shop house (units)Existing stock 98,054 22,692 75,362 67,201 28,127 171,318 364,700Under construction 14,041 1,733 12,308 8,296 3,437 22,220 47,994Future supply 22,341 3,068 19,273 22,143 5,988 55,883 106,355Future supply/existing stock 23% 14% 26% 33% 21% 33% 29%Office space (mil sq ft)Existing stock 114.9 73.0 42.0 10.6 11.6 41.2 178.2Under construction 18.8 10.9 7.9 2.2 0.4 4.9 26.4Future supply 29.2 17.2 12.0 8.5 0.9 6.8 45.5Future supply/existing stock 25% 24% 29% 81% 8% 17% 26%Retail space (mil sq ft)Existing stock 50.6 23.0 27.6 15.5 15.0 32.9 114.0Under construction 9.0 6.6 2.4 3.0 1.3 5.3 18.6Future supply 11.1 11.1 3.4 12.1 2.3 10.9 36.3Future supply/existing stock 22% 48% 12% 78% 15% 33% 32%Industrial (units)Existing stock 39,464 5,130 34,334 13,452 7,679 32,544 93,139Under construction 2,738 30 2,708 619 238 4,059 7,654Future supply 4,343 183 4,160 3,123 810 21,667 29,943Future supply/existing stock 11% 4% 12% 23% 11% 67% 32%Hotel (rooms)Existing stock 44,828 31,065 13,763 16,821 13,631 92,005 167,285Under construction 9,822 6,213 3,609 6,098 654 9,120 25,694Future supply 21,414 16,891 4,523 7,079 2,473 22,573 53,539Future supply/existing stock 48% 54% 33% 42% 18% 25% 32%Note: Future supply = under construction + planned supplySource: PMR, CIMB estimates Valuation and recommendation The key points we picked up from the 2010 Property Market Report are 1) transaction values beat expectations and exceeded RM100bn for the first time ever, 2) residential prices rose a faster-than-expected 6.7%, the quickest pace since the 1997/8 Asian crisis, and 3) occupancy rates for commercial properties, particularly office space in the Klang Valley, were still weighed down by weak demand and rising supply. Overall, the performance in 2010 reinforces our preference for property developers to property investment companies. Developers benefited from the increase in transaction values and rising house prices in 2010 and will continue to do so in 2011. Property investment companies will continue to be weighed down by soft rental rates stemming from relatively high vacancy rates and substantial new supply. In terms of the outlook for the property sector, we remain bullish on residential [ 13 ]
    • properties as house prices are likely to trend higher and volumes should scale newhighs. While the authorities may fret about property bubbles and take measures tocool down the sector, history shows that such actions do not burst bubbles and merelyslowed down the ascent of property prices and resulted in short-term profit-taking onproperty stocks. The direction of house prices is determined by the major cycles aswell as negative external events such as the Asian crisis and the global financialcrisis. The major cycle favours the residential property sector. As for external shocks,they are by their very nature extremely difficult to predict. Also, the government is on aland privatisation drive and could call for general elections later this year or early nextyear. We do not expect any major negative policies to be introduced for the propertysector until after the general elections.We continue to OVERWEIGHT the property sector, particularly the developers. Wehave Outperform recommendations across the board for all the developers undercoverage. KLCC Prop remains our sole Underperform recommendation as it is aproperty investment company and will benefit the least from the continued strongdemand for launches and rising residential prices. Moreover, its 4-5% dividend yieldtrails far behind the 7-8% offered by REITs. In fact, KLCC Prop has been a biglaggard in the sector and was the only stock under our coverage which ended 2010lower. It continues to underperform this year. Our top pick, Mah Sing is the best-performing property stock YTD. Key re-rating catalysts for the sector are 1) newsflowon landbanking, 2) strong and record sales for most developers, 3) acceleratingearnings growth.Figure 32: Share price performance of property stocks under coverage (RM) 2010 2011 31 Dec 09 30 Dec 10 Change 28-Apr-10 ChangeE&O* 1.05 1.18 12.4% 1.42 20.3%UM Land 1.39 1.75 25.9% 1.95 11.4%SP Setia 2.61 3.96 51.8% 4.18 5.5%KLCC Properties 3.44 3.35 -2.6% 3.25 -3.0%Mah Sing 1.52 1.84 20.7% 2.59 40.8%Average 21.6% 15.0%KL PRP Index 781.71 1,020.86 30.6% 1,098.56 7.6%KLCI 1,272.78 1,518.91 19.3% 1,535.30 1.1%* Adjusted for the 1-for-2 ICSLS rights issue at 65 senSource: Bloomberg, CIMB estimatesFigure 33: Discount to RNAV and NTA Share price RNAV/shr (Discount)/ NTA/shr (Discount)/ (RM) (RM) Premium (RM) PremiumE&O 1.42 2.72 -47.8% 1.26 12.7%KLCC Prop 3.25 5.05 -35.6% 4.95 -34.3%Mah Sing 2.59 2.52 2.8% 1.02 153.9%SP Setia 4.18 4.13 1.2% 1.43 192.3%UM Land 1.95 4.21 -53.7% 3.55 -45.1%Average -26.6% 55.9%Source: CIMB estimates, companiesFigure 34: Recommendation, target price and basis Recommendation Target price Target basis (RM)E&O Outperform 1.63 40% discount to RNAVKLCC Prop Underperform 3.03 40% discount to RNAVMah Sing Outperform 3.30 mkt P/E or 30% premium over RNAVSP Setia Outperform 5.37 30% premium over RNAVUM Land Outperform 2.11 50% discount to RNAVSector OverweightSource: CIMB estimates, companies [ 14 ]
    • Figure 35: Regional comparisons Target Core P/BV Div RNAV Disc/ BB Price price Mkt cap P/E (x) (x) yield (%) Prem. To ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 CY2011 CY2011 CY2011 RNAVAllgreen AG SP U 1.17 1.17 1,513 8.0 9.1 0.7 5.8 1.67 -30%Bukit Sembawang BS SP O 4.33 5.86 912 6.7 6.9 1.1 4.5 8.38 -48%CapitaLand CAPL SP N 3.42 3.91 11,873 18.0 16.6 1.0 1.9 4.76 -28%CMA CMA SP N 1.77 2.16 5,592 27.3 24.9 1.1 1.1 2.16 -18%City Devt CIT SP U 11.74 11.79 8,681 19.3 15.5 1.6 1.1 13.10 -10%F&N FNN SP O 6.28 6.84 7,187 14.2 12.3 1.3 4.2 7.60 -17%Ho Bee HOBEE SP O 1.49 1.87 890 8.9 9.9 0.7 1.4 2.50 -40%Keppel Land KPLD SP O 4.16 5.29 4,912 18.3 16.9 1.3 2.2 5.88 -29%OUE OUE SP O 3.08 4.16 2,459 22.7 18.3 1.1 2.2 4.63 -33%Singland SL SP O 7.15 10.22 2,398 16.1 15.6 0.7 2.8 12.02 -41%UOL UOL SP O 4.85 5.68 3,027 11.9 12.8 0.8 2.0 6.68 -27%Wheelock WP SP O 1.85 2.41 1,800 8.1 10.3 0.7 3.2 2.68 -31%Wing Tai WINGT SP O 1.55 2.19 1,001 6.0 7.2 0.6 3.4 2.57 -40%Yanlord YLLG SP N 1.47 1.83 2,326 9.1 7.8 1.0 1.2 2.81 -48%Simple average 13.9 13.2 1.0 2.6 -32%Hong Kong/ChinaAgile 3383 HK O 12.70 16.58 5,846 8.6 7.7 1.7 2.9 20.7 -39%CC Land 1224 HK N 2.37 3.15 781 17.3 14.9 0.5 1.3 6.3 -62%China Overseas Land 688 HK O 15.14 19.18 15,924 9.9 8.8 1.9 2.0 19.2 -21%Poly HK 119 HK O 6.30 11.06 2,926 12.5 9.0 1.0 2.4 13.8 -54%R&F 2777 HK U 10.68 8.89 4,545 7.0 6.7 1.3 3.9 18.5 -42%Shimao Property 813 HK N 10.76 12.12 5,088 8.0 6.9 1.1 4.0 20.2 -47%Sino-Ocean 3377 HK N 4.43 4.90 3,345 8.2 6.4 0.7 3.0 9.8 -55%Simple average 10.2 8.6 1.2 2.8 -46%IndonesiaAlam Sutera ASRI IJ O 305.00 380.00 631 11.6 8.4 2.1 2.3 540.7 -44%Bakrieland ELTY IJ U 144.00 165.00 666 46.6 27.7 0.7 - 334.1 -57%BSD BSDE IJ N 920.00 970.00 1,866 20.2 15.2 2.4 0.5 1,547.1 -41%Ciputra CTRA IJ O 390.00 490.00 686 20.1 14.2 1.1 - 565.8 -31%Lippo Karawaci LPKR IJ O 780.00 829.75 1,955 26.6 23.4 2.1 0.7 1,151.4 -32%Summarecon SMRA IJ N 1,240.00 1,200.00 988 25.9 19.8 3.5 0.5 1,892.3 -34%Simple average 25.2 18.1 2.0 0.7 -40%MalaysiaE&O EAST MK O 1.42 1.63 402 20.2 16.3 1.0 2.5 2.8 -50%KLCC Property KLCC MK U 3.25 3.03 1,019 14.7 13.0 0.5 4.6 5.2 -38%Mah Sing MSGB MK O 2.59 3.30 723 14.3 11.5 2.1 3.5 2.5 3%SP Setia SPSB MK O 4.18 5.37 2,471 26.4 20.7 2.3 3.6 4.2 0%Simple average 18.9 15.4 1.5 3.5 -21%ThailandAsian Property AP TB O 6.30 8.90 468 6.4 5.7 1.3 6.2 - NALPN LPN TB O 10.50 13.80 518 7.4 6.5 2.1 6.7 - NALand And Houses LH TB TB 6.75 8.40 2,261 26.5 20.4 2.3 6.5 - NAPruksa Real Estate PS TB O 20.50 27.10 1,512 10.3 8.3 2.5 3.4 - NAQuality Houses QH TB U 2.34 2.24 663 14.4 12.1 1.4 5.4 - NASPALI SPALI TB O 11.70 16.80 671 6.4 5.6 1.8 6.8 - NASimple average 11.9 9.8 1.9 5.8 -Source: Company, CIMB estimates [ 15 ]
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RECOMMENDATION FRAMEWORK #1 * STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONSOUTPERFORM: The stocks total return is expected to exceed a relevant OVERWEIGHT: The industry, as defined by the analysts coverage universe, isbenchmarks total return by 5% or more over the next 12 months. expected to outperform the relevant primary market index over the next 12 months.NEUTRAL: The stocks total return is expected to be within +/-5% of a relevant NEUTRAL: The industry, as defined by the analysts coverage universe, isbenchmarks total return. expected to perform in line with the relevant primary market index over the next 12 months.UNDERPERFORM: The stocks total return is expected to be below a relevant UNDERWEIGHT: The industry, as defined by the analysts coverage universe,benchmarks total return by 5% or more over the next 12 months. is expected to underperform the relevant primary market index over the next 12 months.TRADING BUY: The stocks total return is expected to exceed a relevant TRADING BUY: The industry, as defined by the analysts coverage universe, isbenchmarks total return by 5% or more over the next 3 months. expected to outperform the relevant primary market index over the next 3 months.TRADING SELL: The stocks total return is expected to be below a relevant TRADING SELL: The industry, as defined by the analysts coverage universe,benchmarks total return by 5% or more over the next 3 months. is expected to underperform the relevant primary market index over the next 3 months. * This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.CIMB Research Pte Ltd (Co. Reg. No. 198701620M) [ 17 ]
    • RECOMMENDATION FRAMEWORK #2 ** STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONSOUTPERFORM: Expected positive total returns of 15% or more over the next OVERWEIGHT: The industry, as defined by the analysts coverage universe,12 months. has a high number of stocks that are expected to have total returns of +15% or better over the next 12 months.NEUTRAL: Expected total returns of between -15% and +15% over the next NEUTRAL: The industry, as defined by the analysts coverage universe, has12 months. either (i) an equal number of stocks that are expected to have total returns of +15% (or better) or -15% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +15% to -15%; both over the next 12 months.UNDERPERFORM: Expected negative total returns of 15% or more over the UNDERWEIGHT: The industry, as defined by the analysts coverage universe,next 12 months. has a high number of stocks that are expected to have total returns of -15% or worse over the next 12 months.TRADING BUY: Expected positive total returns of 15% or more over the next 3 TRADING BUY: The industry, as defined by the analysts coverage universe,months. has a high number of stocks that are expected to have total returns of +15% or better over the next 3 months.TRADING SELL: Expected negative total returns of 15% or more over the next TRADING SELL: The industry, as defined by the analysts coverage universe,3 months. has a high number of stocks that are expected to have total returns of -15% or worse over the next 3 months. ** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. [ 18 ]