PETALING JAYA: The


Malaysian property sector will remain "overweight" for the third quarter of the


year with key drivers being stronger gross-domestic-product (GDP) growth for


2014 and upcoming infrastructure developments, said RHB Research.

People looking at a model of a housing project during a property fair in Penang last month. RHB's analysts said their regional key stock ideas were Malton Bhd and Indonesia's Modernland.

Its analysts said the


third key driver was the front-loading of big-ticket items ahead of the


implementation of the 6% goods and services tax (GST) in April 2015.

Maintaining their


sector rating, the analysts said concerns of a rate hike should have already


been discounted by the market.

"In line with our


expectations, property sales generally recovered from the first quarter. The


weak second-quarter results were not a surprise as developers typically report


stronger earnings in the second half," they said in a regional real estate


research report yesterday.

RHB's analysts said


their regional key stock ideas were Malton Bhd and Indonesia's Modernland.

They said Malton would


enter a new phase of earnings growth, with its financial year 2015 (FY15)


earnings set to be underpinned by RM470mil unbilled sales and RM410mil


construction contract value.

Adding that Malton had


a compelling re-rating angle, they said that its Bukit Jalil City project would


be a major turning point while new launches this year would drive FY16 earnings.

RHB Research's top


buys for the Malaysian property market are Sunway at a fair value of RM3.60,


Tambun Indah (RM3) and Matrix Concepts (RM3.80).

Maintaining its "neutral" sector rating on Indonesia, the analysts said demand for mid-range


property priced in the 500 million rupiah to below 2 billion rupiah per unit


range would remain robust.

With an increase in


debt level, they expect changes in capital structure as new mortgage


regulations could impact the collection period/cashflow.

RHB Research also maintained


its "overweight" call on Singapore, with the REITs sector outperforming the


broad market as it provided a total return of 13.5% against the Straits Times


Index's total return of 7.9% on a year-to-date basis.

Its analysts continue


to see an upcycle trend within the sector given favourable demand-supply


dynamics within subsectors such as commercial, retail and industrial.

Following a 30% quarter-on-quarter rebound in second-quarter results and a 58% surge in


presales, RHB Research has upgrade its sector call on Thailand to "overweight" from "neutral".

Its analysts said


growth drivers included stronger forecasted GDP growth, less stringent lending


measures from mid-2014, a low interest rate environment with a policy rate of


2%, and a a 20% higher budget for the nationwide infrastructure plan worth 2.4


trillion baht.

Meanwhile, they expect


the property oversupply issue in Hong Kong to worsen in the second half as


developers generally have 20-30% more saleable projects to be launched.

Imposing a "neutral" call on the sector, they


said the China developers came out with disappointing interim results, adding


that margins were down while net gearing and inventories were high.