Overbuilding of mega projects could affect sectors

From The Edge Malaysia
12th Sep 2013

KUALA LUMPUR: The overbuilding of mega projects, such as the Tun Razak Exchange, the RM5 billion Warisan Merdeka Tower and the Rubber Research Institute land development in Sungai Buloh, could negatively affect the banking, property and real estate investment trust (REIT) sectors.

CIMB Research, in a recent note, said without the solid backing of fundamental demand, the overbuilding of commercial real estate could result in painful long-term issues.

“Should the project be part-funded by government-guaranteed bonds and fail, the losses would hit the government’s balance sheet and exert further pressure on the overall public debt,” said the research house.

In addition, there will be an oversupply of office space, leading to depressed rentals and yields as well as wastage of strategic land resources. The research house is also concerned that the financial sector might see its non-performing loans ratio rise as borrowers default on their loans.

UBS positive on property stocks this year

By Star Online: Business

18th Jan 2013

PETALING JAYA: Residential property stocks which underperformed in 2012 will do better this year and among them the best is Mah Sing Bhd, a report by UBS Investment Research said.

It said the Mah Sing was ‘entrepreneurially managed with ambitious plans to grow within Malaysia”.

UBS stated that while 2013 should remain challenging, the company will deliver circa 20% sales and earnings growth based on its diversified range of products.

“Our new price target for Mah Sing’s stock is RM2.80 based on a 30% discount in realisable net asset value (RNAV) of RM3.99 and the company has a dividend policy of paying a minimum 40% of net profit resulting in a forecast yield of 6.2% for 2013,” it said.