Property Devt & Invt - Site visits to two flagship townships
Recommendation: Neutral
Our visits to Mah Sing's and Eco World's flagship townships in the Klang Valley today as the Invest Malaysia conference kicked off were an eye opener in that both projects exemplify the strong execution capability of our top-2 picks in the property sector. Both townships have achieved over RM1bn sales since their launch in 2014. We continue to rate the property sector a Neutral on the back of likely subdued sales following the implementation of the Goods and Services Tax (GST) on 1 Apr. Mah Sing and Eco World are our only Add recommendations in the sector due to their strong management capability which will drive robust earnings growth in the coming years.
We continue to rate the property sector a Neutral on the back of likely subdued sales following the implementation of the Goods and Services Tax (GST) on 1 Apr. Mah Sing and Eco World are our only Add recommendations in the sector due to their strong management capability which will drive robust earnings growth in the coming years.
Southville City @ KL South
During the site tour for over 30 local and foreign investors, the first stop was Mah Sing's new flagship project, the 425-acre Southville City in Bangi, Selangor. The township is located south of Kuala Lumpur and is a 30-40 minute drive from the city centre. The RM8.31bn project was officially launched in Mar 2014 and sales up to end-Dec amounted to RM803m. The group is aiming to sell RM921m worth of properties there this year. It achieved over RM200m sales in 1Q15, taking property sales from Southville City to RM1bn since the maiden launch. This is commendable as the property sector slowed down significantly in 2014 as a result of the government's property cooling measures which were first announced in the 2014 Budget in Oct 2013. One of the top-selling products in Southville City is the affordable serviced apartments priced between RM318k and RM506k. Five blocks of apartments have been launched and take-up is a healthy 82%. Southville City's GDV makes up 17% of the group's RM49bn total.
Eco Majestic
Our next stop was Eco World's largest township and flagship project, the 1,073-acre Eco Majestic township in Semenyih, Selangor. The RM11.15bn township is about an hour's drive from Kuala Lumpur as access to the project is currently via the congested old Semenyih road. Completion of a dedicated interchange in 2016 should cut the travel time to the city centre from an hour to 30-40 minutes. Eco Majestic was also launched in 2014 and has chalked up RM1.2bn in sales. The biggest sales contributor is terraced houses which have seen prices appreciate from around RM650k on average to around RM750k. The group has also launched bungalow lots in the township at RM140 psf, a premium over neighbouring projects. Eco Majestic's GDV also makes up 17% of the group's RM65bn total.
Property sector subdued
The strong sales performance by both developers, not only in their flagship projects but also elsewhere, should not be used as a barometer for the property sector as a whole. Many other developers saw flat or lower sales in 2014 due to the property cooling measures and are likely to suffer further sales weakness in 2015 as a result of uncertainties caused by the GST. Mah Sing and the management of Eco World are both well known for their marketing prowess in both the up- and down-cycles of the property market. That is why the two companies are our only picks for 2015.
Source: CIMB Daybreak - 23 April 2015
Recommendation: Neutral
Our visits to Mah Sing's and Eco World's flagship townships in the Klang Valley today as the Invest Malaysia conference kicked off were an eye opener in that both projects exemplify the strong execution capability of our top-2 picks in the property sector. Both townships have achieved over RM1bn sales since their launch in 2014. We continue to rate the property sector a Neutral on the back of likely subdued sales following the implementation of the Goods and Services Tax (GST) on 1 Apr. Mah Sing and Eco World are our only Add recommendations in the sector due to their strong management capability which will drive robust earnings growth in the coming years.
We continue to rate the property sector a Neutral on the back of likely subdued sales following the implementation of the Goods and Services Tax (GST) on 1 Apr. Mah Sing and Eco World are our only Add recommendations in the sector due to their strong management capability which will drive robust earnings growth in the coming years.
Southville City @ KL South
During the site tour for over 30 local and foreign investors, the first stop was Mah Sing's new flagship project, the 425-acre Southville City in Bangi, Selangor. The township is located south of Kuala Lumpur and is a 30-40 minute drive from the city centre. The RM8.31bn project was officially launched in Mar 2014 and sales up to end-Dec amounted to RM803m. The group is aiming to sell RM921m worth of properties there this year. It achieved over RM200m sales in 1Q15, taking property sales from Southville City to RM1bn since the maiden launch. This is commendable as the property sector slowed down significantly in 2014 as a result of the government's property cooling measures which were first announced in the 2014 Budget in Oct 2013. One of the top-selling products in Southville City is the affordable serviced apartments priced between RM318k and RM506k. Five blocks of apartments have been launched and take-up is a healthy 82%. Southville City's GDV makes up 17% of the group's RM49bn total.
Eco Majestic
Our next stop was Eco World's largest township and flagship project, the 1,073-acre Eco Majestic township in Semenyih, Selangor. The RM11.15bn township is about an hour's drive from Kuala Lumpur as access to the project is currently via the congested old Semenyih road. Completion of a dedicated interchange in 2016 should cut the travel time to the city centre from an hour to 30-40 minutes. Eco Majestic was also launched in 2014 and has chalked up RM1.2bn in sales. The biggest sales contributor is terraced houses which have seen prices appreciate from around RM650k on average to around RM750k. The group has also launched bungalow lots in the township at RM140 psf, a premium over neighbouring projects. Eco Majestic's GDV also makes up 17% of the group's RM65bn total.
Property sector subdued
The strong sales performance by both developers, not only in their flagship projects but also elsewhere, should not be used as a barometer for the property sector as a whole. Many other developers saw flat or lower sales in 2014 due to the property cooling measures and are likely to suffer further sales weakness in 2015 as a result of uncertainties caused by the GST. Mah Sing and the management of Eco World are both well known for their marketing prowess in both the up- and down-cycles of the property market. That is why the two companies are our only picks for 2015.
Source: CIMB Daybreak - 23 April 2015
