KUALA LUMPUR (April 12): Bursa Malaysia's Property Index climbed to a six-year high on Friday amid better market sentiment surrounding the sector.

The index, which tracks property sector-linked stocks on the local bourse, surged to an intra-day high of 1,036.15 points — its highest since touching 1,093.73 points on Sept 3, 2018 — after climbing 20.08 points or 1.98%.

It later pared some gains to close at 1,033.72 points, still up 17.65 points or 1.74%. In contrast, the benchmark FBM KLCI closed 0.16% or 2.47 points lower at 1,551.04 points.

Gains in index heavyweights such as S P Setia Bhd, Sime Darby Property Bhd, Malaysian Resources Corp Bhd (MRCB), and Eco World Development Group Bhd (EcoWorld) contributed to the index's climb on Friday.

S P Setia closed six sen or 4.14% higher at RM1.51, valuing it at RM6.93 billion; Sime Darby Property settled four sen or 4.42% higher at 94.5 sen for a market capitalisation (cap) of RM6.39 billion; and MRCB climbed five sen or 7.52% to 72 sen, translating into a market cap of RM3.17 billion. EcoWorld was four sen or 2.78% higher at RM1.48, yielding a market value of RM4.36 billion.

Year to date, the property index has jumped 19.91%, surpassing the FBM KLCI's 6.13% gain. Bloomberg data reveals that out of the 98 constituents, 76 stocks saw gains.

Khoo Zing Sheng, assistant manager of equity research at AmInvestment Bank Bhd said there has been a gradual improvement in sentiment in the Malaysian property market, driven by favorable developments such as Johor-Singapore Special Economic Zone (JSSEZ), Kuala Lumpur-Singapore High-Speed Rail (HSR) and Malaysia My Second Home (MM2H).

"These include the formalisation of the Memorandum of Understanding (MoU) between Malaysia and Singapore to jointly establish the JSSEZ, the revival and launch of mega-scale infrastructure projects and the unveiling of further details on the relaxation of conditions for the MM2H programme," he told The Edge.

Among the top property gainers YTD are S P Setia and Mah Sing Group Bhd, which have gained 88.75% and 57.83%, respectively.

In a note on March 26, RHB Investment Bank Research (RHB IB) remained bullish on S P Setia, which it kept on 'buy' with a higher target price (TP) of RM1.56 versus RM1.24 previously, as the research house believes that S P Setia's sizeable land bank portfolio provides it good flexibility to adapt to market changes and to roll out more industrial park developments.

Additionally, RHB IB anticipates the property developer's debt levels to stabilise, considering potential earnings from land sales and future financial commitments. "We expect about RM130 million to RM140 million gain on land disposals to be recorded this year, mostly from Bandar Setia Alam and Glengowrie, Semenyih," it said.

As for Mah Sing, MIDF Research raised its TP for the stock that it kept on 'buy' to RM1.42 from RM1.23 in a note on April 8, after factoring in the revised net asset value contribution from its new land acquisition in Johor.

"The land acquisition is expected to be positive for Mah Sing as it allows the company to further expand its exposure to the Johor property market," it said, referring to the group's latest acquisition of a 75.7-acre plot in Pulai, Johor Bahru for RM103.75 million, cash, for a residential development named M Tiara 2 that will have a gross development value of RM1.45 billion.

Mah Sing's healthy balance sheet — the acquisition is expected to have minimal impact, with net gearing expected to marginally increase to 0.11 times from 0.08 times in FY2023 — also provides the group with the financial flexibility for future land banking exercises, it added.