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- A new state-specific cooling measure in place. The media reported that the Johor government is increasing the property processing fee from 10,000 ringgit per transaction to 4-5 per cent of property value for foreign buyers. This new measure would take place from Jan 14 onwards. We believe that this announcement is a prelude to a slew of measures to cool down the property market that is expected to be introduced during the 2014 Budget, including increasing the real property gains tax (RPGT) and the stamp duty charges.
- The National Property Information Centre (NAPIC) recently published the residential property market report for Malaysia and the respective states. As of Q@13, we saw transaction volumes and values climbing especially within the Iskandar market. From Q113 to Q213, transaction volume and values climbed by about 13.2 per cent and 30 per cent for Johor.
- Maintain MARKET WEIGHT on the sector, and believe that the sector’s performance would be dampened by more tightening measures and the anticipated consumption slowdown, which is tied to various reduction in government subsidies. For now, we maintain BUY on Sunway (Target: 3.39 ringgit) due to its reasonably cheap valuation (10x 2014F fully diluted earnings). Although the Government of Singapore Investment Corporation (GSIC) recently pared down its stake in the company, we understand that the major acquirers of the shares are Malaysian Government-linked funds, which are generally long-term investors. Also, if a slowdown in take-up happens, Sunway’s earnings will still be supported by its strong construction business and stable recurring income from its Reit division.
Source from BTInvest