Property Weekly Review: 15th – 21st December 2008

December 23, 2008 at 2:41 am Leave a comment

· Sunrise and Sunway City were the main gainers
Last week, Sunrise and Sunway City gained 17.5% and 15.7% respectively. On notable filings by major shareholders, Permodalan Nasional Bhd (including Skim Amanah Saham Bumiputra) acquired 6.88m shares in SP Setia while Employees Provident Fund added another 0.05m shares.
· In the news
Property consultants expect property prices to fall by 5-10% across the board from the first quarter of next year as a slower economy cools demand. However, a housing bubble is unlikely as Malaysia’s real estate is resilient enough to withstand the onslaught of the economic turmoil.
On the M&A front, TA Enterprise Bhd (TAE MK, not rated) is acquiring a 5-star hotel in Australia for RM389.12m, Pelaburan Hartanah Bumiputera Bhd is buying CP Tower in Section 16, Petaling Jaya for RM200m and IBhd (IBHD MK, not rated) may partner CapitaLand (CAPL SP, not rated)
to develop a RM500m shopping mall in i-City. On new projects, work on the RM750m Legoland theme park in Iskandar Malaysia will start in 2010 and the opening slated for 2013 while Sime
Darby Bhd (SIME MK, Buy, TP: RM7.30) will be launching a massive development project at the Negri Sembilan-Selangor border covering some 12,120ha, with the first launch expected next year.
· Maintain NEUTRAL
As the economy heads toward a downturn, demand for durable goods such as property will take a hit. Property developers have reduced their launches significantly in view of weaker demand and this will affect forward earnings over next 2 years. During such times, we favour property stocks with property investment earnings such as Sunway City.

Share price performance

KLSE Property Index ended higher last week, inline with the market. Sunrise and Sunway City were the main gainers with week-on week gains of 17.5% and 15.7% respectively. On notable filings by major shareholders, Permodalan Nasional Bhd (including Skim Amanah Saham Bumiputra) acquired 6.88m shares in SP Setia while Employees Provident Fund added another 0.05m shares. Controlling major shareholders in YNH Property and Glomac acquired 0.70m and 0.22m of their own shares respectively. Aberdeen Asset Management added another 0.15m shares. Aberdeen Asset Management also added another 0.15m shares in YNH Property.
On share buy back, YNH Property continued to be active with 0.20m shares bought back from the market.

Notable property news

– Property prices will fall by 5-10% across the board from the first quarter of next year as a slower economy cools demand, according to Association of Valuers & Property Consultants in Private Practice Malaysia (PEPS) president James Wong Kwong Onn. He said properties below RM300,000 and luxury condominiums tagged at above RM750,000 are already hit from a slower economy. But Wong said a housing bubble is unlikely as the Malaysia’s real estate is resilient enough to withstand the onslaught of the economic turmoil.
– TA Enterprise Bhd is acquiring the property and business known as The Westin Melbourne in Australia for RM389.12m. The acquisition of the freehold five-star hotel, which is part of the 16-storey Regent Place Development, only included the 262 rooms and hotel amenities located on nine floors of the development.
– Pelaburan Hartanah Bumiputera Bhd is buying CP Tower in Section 16, Petaling Jaya, from CIMB-Mapletree Management Sdn Bhd for RM200m, sources said. CP Tower is a 22-storey commercial office building with three levels of basement parking. It has some 314,000 sq ft of net lettable space.
– I-Bhd may sign a definitive partnership agreement with Singapore’s CapitaLand for a RM500m shopping complex early next year. The project, with gross lettable area of 1m square feet, forms part of i-City and is expected to be ready by the end of 2011.
– Work on the RM750m Legoland theme park at Bandar Nusajaya in Iskandar Malaysia will start in 2010 and the opening slated for 2013. The park, to be built in the city centre of Nusajaya, will have a 5.5m sq ft of gross floor area within the 58.679ha land dedicated for the lifestyle-theme development.
– Despite a slowing property market, Sime Darby Bhd will be launching a massive development project at the Negri Sembilan-Selangor border covering some 12,120ha, with the first launch expected next year.

Comments:
Glomac’s 1HFY09 results were below house and market expectation due to (1) RM2.2m provision for impairment of subordinated bonds which were subscribed as part of the group’s participation in primary collateralised loan obligations (CLO), (2) 1HFY08’s profit boosted by RM9m gain from land sale, and (3) continued losses sustained by its construction division.

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