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Saturday, January 19, 2013

UBS: Property stocks set for uptrend


KUALA LUMPUR: There is potential for some property stocks to move upwards this year, despite a sluggish performance in 2012.

According to UBS Investment Research, some property counters will do better this year although they failed to meet expectations in 2012.

UBS is expecting better global economic data and pick-up in regional equity markets. It expects property developers to also do better as investors start to put fresh money into the physical property market after the general election.

Among UBS' top picks are Mah Sing Group Bhd and SP Setia Bhd.

The research house's target price for Mah Sing this year is RM2.80 based on a 30 per cent discount in realisable net asset value (RNAV) of RM3.99.
"Due to its diverse product range, Mah Sing's sales and earnings are expected to grow by 20 per cent this year," UBS said, adding that the group was entrepreneurially managed with ambitious plans to grow within Malaysia.

UBS also placed a "buy" call on SP Setia, whose shares are currently traded at 14.3 times the expected financial year 2013 price-to-earnings ratio, with yield at 4.1 per cent.

The share price for SP Setia has fallen almost 20 per cent over the past one year because of the commitment of the company's chief executive officer Tan Sri Liew Kee Sin and his management team, the upcoming 15 per cent private placement of equity and exclusion from the MSCI index due to lack of liquidity.

"We like SP Setia for its proven track record and strategic landbank. The stock is currently trading at a 38 per cent discount to the RNAV of RM5.14," UBS said in its latest research note.

UBS said the discount more than fairly reflects the risks associated with the departure of SP Setia chief executive officer Tan Sri Liew Kee Sin, diversification of projects outside of Malaysia and upcoming product launches from its high-quality landbank, which should ensure that the company achieves its aggressive sales target for financial year 2013.

SP Setia's sales target for this year is RM5.5 billion, which is 30 per cent higher than last year's, not withstanding the expected sales contribution from its overseas project, such as the Battersea Power Station redevelopment in London.

The company has projects in four countries outside Malaysia - China, Singapore, Australia and London.

Read more: UBS: Property stocks set for uptrend

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