KUALA LUMPUR (Jan 5): Maybank Investment Bank has maintained its “neutral” rating of the property sector, and said that Iskandar Puteri stands a good chance as a location for the Johor-Singapore special economic zone (JSSEZ).

In a note on Thursday, the research house said while land cost in the Iskandar Puteri area is higher as compared to Sedenak, it is more mature and closer to Singapore in terms of distance.

It said even without the JSSEZ, properties in Iskandar Puteri would still be supported by resilient local demand, especially from Malaysians who are working in Singapore, and foreign investments.

Maybank IB said Forest City, which has been identified as a special financial zone and a potential high-speed rail (HSR) station in Iskandar Puteri, should continue to attract buying interest in the region.

The research house said details of the JSSEZ are due next week, and would be the sector’s focus in the first half of 2024.

“Based on our observations, the JSSEZ is likely to be located in the Sedenak or Iskandar Puteri areas.

“For property sector exposure in Johor, we like S P Setia Bhd (with a 'buy' call) for its sizeable land bank there (2,150 acres or 870.07 hectares), undemanding valuation (0.3 times price-to-book value or P/BV), and de-gearing exercise via land sale,” it said.

Maybank IB said the property sector offers trading opportunities in the first half of 2024, with the thematics being the JSSEZ, Bayan Lepas Light Rail Transit (LRT) alignment, and potential revival of the HSR.

“Our stock calls, however, are more fundamental-based. We have a 'buy' rating for S P Setia.

“Apart from its Johor exposure (2,150 acres or 15% of total gross development value), we like S P Setia for its cheap valuation (0.3 times P/BV versus the industry average of 0.6 times and UEM Sunrise Bhd's 0.8 times) and diversified product range.

“S P Setia is actively reducing its debt level by disposing of non-core land bank. Its earnings growth in the financial year ending Dec 31, 2024 will be driven by three land sales in Semenyih, Setia Alam and Johor respectively,” it said.