Despite the re-imposition of CMCO and MCO in 4Q20 to 1Q21, property sales continued to recover from the impact of the Covid-19 pandemic, Maybank IB Research observed. — Bernama photo
KUCHING: Despite the re-imposition of conditional movement control order (CMCO) and MCO in the fourth quarter of 2020 (4Q20) to 1Q21, property sales continued to recover from the impact of the Covid-19 pandemic, analysts at Maybank Investment Bank Bhd (Maybank IB Research) observed.
In its update report on Malaysia’s property sector, it said: “Judging from the sales momentum in early 21, most developers expect a better sales outlook in the financial year 2021 (FY21) though it may be coming at the expense of lower margins on lower pricing.
“We think the worst is over and the sector should continue to be driven by a better economic outlook, historically low interest rate environment and pent up demand.”
It noted that despite the re-imposition of CMCO in 4Q20, core earnings of developers under its coverage, improved quarter-on-quarter (q-o-q) in 4Q20 on the normalisation of construction works and strong pick up in sales driven by pent up demand.
It also pointed out that net gearing remained healthy, ranging from 0.03-folds to 0.6-folds in 4Q20 as developers continued to manage their inventories/cash flow carefully.
Sales-wise, the research team said there was q-o-q growth in 4Q20 property sales due to the pent-up demand post-lock down as well as attractive marketing packages offered.
“Judging from the sales momentum in January to February 2021 and Covid 19 vaccination rollout, we can sense that developers are turning more positive on FY21 sales outlook and this has reflected in their higher sales targets for FY21.
“Nevertheless, we expect margin continues to stay subdued as competition continues to rise. Also, margins are coming under pressure due to developers’ higher involvement in the affordable housing segment,” said Maybank IB Research.
All in, it maintained a ‘tactical positive’ stance on the sector. It said: “The re-imposition of MCO2.0 in 1Q21 should have lower damage impact on sales as compared to 2020 as most developers have acclimatised to the ‘new norm’ and accelerated the efforts to market their products via the digital platforms.”
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