MAH Sing Group Bhd and Sunway REIT are among Nomura Research’s top property and real estate investment trust (REIT) stock picks in the Asean region.
Nomura has started initiating coverage on Malaysia’s REITs this month, and Mah Sing and Sunway REIT are part of its Asean list of 28 property players.
While it prefers growth to yield next year for Asia ex-Japan equities, Nomura has identified the two Malaysian stocks among the Asean property counters it covers for income-focused investors
that are still looking for dividend yield ideas.
This is based on two conditions — where the forecast calendar year 2015 yield is higher than the market’s and sovereign 10-year yield, and where dividend is projected to grow faster than the market in both fiscal years 2015 and 2016.
An analyst at Nomura said Mah Sing is one of its property picks as the company’s calendar year 2015 yield of five per cent is higher than the market’s 3.6 per cent and its forecast calendar year 2015 and 2016 dividend per share growth of 22 and 27 per cent, respectively, is higher than Bursa Malaysia’s benchmark index’s 6.8 and 7.2 per cent.
“We believe the company’s growth in dividend is underpinned by its industry leading new sales targets of RM3.6 billion and unbilled sales of RM4.8 billion, which can sustain at least four years of earnings (high visibility).
“This should drive earnings to expand 22 per cent a year up to 2016,” said the analyst.
Mah Sing has limited exposure to Iskandar Malaysia in Johor and this, the analyst said, is positive for the company.
Mah Sing is moving towards township development where earnings stream is long-term and certain. However, the analyst said this may not be fully appreciated by the market and it will take some time for the company to build a decent track record.
The stock continues to be one of Nomura’s top picks as its valuation looks attractive, trading at eight times forecast calendar year 2015 price-earnings ratio.
As for Sunway REIT, Nomura is “neutral” on the stock with a target price of RM1.60.