RHB keeps overweight on Malaysian property stocks, sees JS-SEZ as catalyst
RHB Research has maintained its overweight call on Malaysian property stocks, saying the sector's recent sell-off has priced in much of the downside. It expects the Johor-Singapore Special Economic Zone master plan, slated for December, to provide catalysts, and names Eco World Development Group as
PETALING JAYA (Oct 12): The forthcoming Johor-Singapore Special Economic Zone (JS-SEZ) master plan and improving earnings visibility could support Malaysian property stocks following the recent sell-off, according to RHB Research.
The research house maintained its “overweight” call on the sector, which it said now trades at a 60% discount to revalued net asset value (RNAV), compared with 50% in May. RHB said much of the downside appeared to be priced in, attributing the sector’s weakness to rising bond yields and domestic political uncertainty, including the recent Johor and Negeri Sembilan state elections.
RHB favours developers with strong property sales, sizeable unbilled sales and clear earnings visibility, naming Eco World Development Group Bhd as its top pick. It maintained a “buy” call on Eco World with a target price of RM2.66, implying about 38% upside from its Oct 9 closing price of RM1.93.
Eco World recorded RM4.05 billion in property sales in the first 10 months of its financial year ending Oct 31, 2026, exceeding its RM4 billion full-year target as at Aug 31. RHB said projects in the southern region contributed almost half of the total. The research house favours Eco World for its execution track record and exposure to Iskandar Malaysia. It expects the JS-SEZ master plan to be launched in December, potentially providing catalysts for other developers including UEM Sunrise Bhd, Sunway Bhd, AME Elite Consortium Bhd, Mah Sing Group Bhd and KSL Holdings Bhd.
Beyond Johor, RHB said earnings quality among several major developers has improved as recurring-income businesses provide greater stability. According to the research house, property development accounts for about 20% of Sunway’s group revenue. At IOI Properties Group Bhd, the division contributes about 50% of revenue, down from more than 70% two years ago.
RHB said aggregate property sales rose 2.7% quarter-on-quarter and 32% year-on-year in the second quarter of 2026, although demand in the mass-market segment had softened. It added that developers had maintained their sales targets, although some had deferred launches to 2027.
On policy, RHB expects Budget 2027’s proposed first-home stamp duty relief to support demand, particularly for developers with affordable and mid-range offerings such as Matrix Concepts Holdings Bhd, Mah Sing and LBS Bina Group Bhd. Under the proposal, Malaysian citizens purchasing their first residential home priced up to RM500,000 would receive full stamp duty exemptions on instruments of transfer and loan agreements, with the relief applying to sale-and-purchase agreements executed from Jan 1, 2027 to Dec 31, 2030. For eligible homes priced above RM500,000 and up to RM750,000, full relief would apply to the first RM500,000, with 50% relief on the balance.
RHB said other Budget 2027 proposals could help cushion buyers against higher mortgage costs if interest rates rise. These include raising the minimum wage to RM2,000 from RM1,700 effective June 2027, increasing individual tax relief to RM12,000 from RM9,000, and reducing personal income tax rates by one percentage point for resident individuals with chargeable income of RM70,000 to RM150,000. Higher cash assistance under Budget 2027 could also support household spending, it said.
RHB does not expect the minimum wage increase to materially raise construction costs. It cited CIDB data indicating that general civil works workers already earn about RM2,400 a month, while skilled workers earn about RM3,100.
