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JF Apex sees positive sentiment boosting property mart

January 19, 2014

KUALA LUMPUR : The local property market is likely to pick up as positive sentiment returns in the second half of this year. According to JF Apex Securities Bhd , the measures introduced in the 2014 Budget to curb speculation in the property market, which came into effect this year, have caused uncertainty and, hence, buyers will take a pause in the first half. "However, we opine that buying interest should progressively return in the second half of this year as potential house buyers come into the realisation that property prices are unlikely to fall drastically amid resilient economic growth and the inflationary pressure from the implementation of the goods and services tax in April 2015 , which could push up property prices further," it said in a note. Among the property counters on its radar, JF Apex likes SBC Corp Bhd . The research house has pegged its value on SBC Corp at RM1.85 , based on a price-to-earnings (PE) ratio of six times. This is based on a 50 per cent discount to the sector's average PE ratio of 12 times, in view of the group's small capitalisation and relatively low liquidity, as well as its financial year 2015 forecast earnings per share of 30.8 sen . "Our fair value renders about 30 per cent upside to the share price's current closing," it said. JF Apex expects stable earnings from SCB Corp as the company currently has unbilled sales of RM200 million , which could last until 2015. SCB Corp's revenue will start to surge when its three main projects - Kiara East , Bandar Utama in Batang Kali and Jesselton Quay in Sabah - kick in. The projects would contribute around RM400 million annually over the next seven years. JF Apex said SBC Corp has continuously given out dividends for the past 10 years, although at an average of 4.65 per cent yield, the research house does not consider it attractive. "Moving forward, we opine that the group will propose a dividend policy starting from the financial year 2014, based on favourable future earnings outlook," it said.


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Source: Business Times (Malaysia)


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