Long overdue, analysts finally cut sales forecast for property developers

This week, The Edge carries a report on the sales performance of several property developers in Malaysia.

In the reporting period ended March 2014, close to half of the listed property developers under analysts’ coverage reported weaker than expected sales or earnings.  We had expected such moves.   

Meanwhile, property developers have largely maintained their FY2014 new sales target. It is going to be a tall order to meet new sales forecasts for some of these companies.

In the latest quarterly results, we can see slower demand for higher-priced properties and rising cost pressures. However, demand for affordable homes remains resilient.

Most of the larger listed property developers have relatively solid balance sheets (average net gearing of less than 20%) and hence, are able to hold back launches but this might not be the case for smaller property developers.

Companies in net cash position include UOA Development, Matrix Concepts (Matrix) and Daiman Development (Daiman). Matrix Concepts and Daiman focus on affordable and mid-range landed homes (terrace and cluster homes). This segment is clearly more resilient relative to high-rise homes.

Read the full report in The Edge.