Overview of Malaysia’s Property Sector

The Malaysian property market is entering a new era with the announcement of the Johor-Singapore Special Economic Zone (JS-SEZ). This highly anticipated initiative is set to boost long-term property demand, with a focus on job creation and investment opportunities. However, Maybank Investment Bank maintains a NEUTRAL stance on the overall property sector, as many of the positives seem to have been priced in. The report highlights the investment potential and challenges for key players in the market, providing a detailed analysis of their performance and prospects.

Sunway Berhad (SWB MK)

Rating: Hold

Target Price: MYR 4.78

Market Cap: USD 6,101 million

Sunway Berhad remains a stable player in Malaysia’s property market, but its valuation reflects limited upside potential. The company’s forward price-to-earnings (P/E) ratios stand at 32.3x for 2024 and 31.3x for 2025, with a price-to-book (P/B) ratio of 2.0x for 2024 and 1.9x for 2025. Dividend yields are steady at 1.1%. Despite its strong fundamentals, the lack of significant catalysts leads to a Hold recommendation.

Sime Darby Property (SDPR MK)

Rating: Buy

Target Price: MYR 1.66

Market Cap: USD 2,608 million

Sime Darby Property is viewed positively for its robust growth prospects, with a focus on high-value projects in the JS-SEZ. Its forward P/E ratios are 21.8x for 2024 and 17.7x for 2025, while P/B ratios are at 1.1x. Dividend yields are forecasted to grow from 2.1% in 2024 to 2.6% in 2025. The company’s strategic initiatives align well with the government’s focus on industrial and manufacturing investments, making it a top pick in the sector.

SP Setia (SPSB MK)

Rating: Buy

Target Price: MYR 1.64

Market Cap: USD 1,608 million

SP Setia is another strong contender in the property market, offering a compelling valuation. Its forward P/E ratio is expected to improve significantly from 10.6x in 2024 to 16.5x in 2025. P/B ratios remain low at 0.4x, and dividend yields are projected at 2.0% in 2024 and 1.0% in 2025. The company’s diverse portfolio and its alignment with JS-SEZ priorities make it an attractive investment option.

Eco World Development (ECW MK)

Rating: Buy

Target Price: MYR 2.25

Market Cap: USD 1,399 million

Eco World Development continues to shine as a top pick in the property sector. The company’s forward P/E ratios are 15.2x for 2024 and 16.0x for 2025, with P/B ratios of 1.1x and 1.2x, respectively. Dividend yields remain strong, expected at 3.4% in 2024 and 2.8% in 2025. Its focus on Eco Business Parks and other industrial developments positions it as a key beneficiary of the JS-SEZ initiative.

UEM Sunrise (UEMS MK)

Rating: Hold

Target Price: MYR 1.05

Market Cap: USD 1,234 million

UEM Sunrise is a major landowner in Iskandar Malaysia, with a strategic landbank of 4,783 acres valued at MYR 61 billion. While the JS-SEZ theme offers a compelling tailwind, much of the positives are already priced in. UEMS is trading at a forward P/B ratio of 0.8x for 2025, which is higher than peers like SP Setia (0.46x). Challenges in execution and high investor expectations temper enthusiasm, leading to a Hold recommendation.

Eco World International (ECWI MK)

Rating: Hold

Target Price: MYR 0.27

Market Cap: USD 141 million

Eco World International faces challenges with its earnings visibility, as its forward P/E ratios are not meaningful (nm). The company’s P/B ratio is stable at 0.6x, but dividend yields are expected to drop from a high of 36.7% in 2024 to 23.8% in 2025. While its exposure to international markets offers some diversification, the lack of clear growth drivers results in a Hold rating.

Tambun Indah (TILB MK)

Rating: Hold

Target Price: MYR 0.93

Market Cap: USD 89 million

Tambun Indah remains a niche player in the property sector, with a focus on affordable housing. Its forward P/E ratios are 8.4x for 2024 and 7.6x for 2025, while P/B ratios are at 0.5x. Dividend yields are attractive, forecasted at 4.7% in 2024 and 5.3% in 2025. However, limited scalability and exposure to the broader JS-SEZ initiatives result in a Hold recommendation.

Conclusion

The Malaysian property market is poised for long-term growth, driven by the JS-SEZ initiative. Companies like Eco World Development and SP Setia are well-positioned to capitalize on this opportunity, earning Buy recommendations. However, key players like Sunway and UEM Sunrise face challenges that could limit short-term upside. Investors are advised to weigh the risks and rewards carefully, especially in light of execution challenges and rising competition in the sector.