SECTOR FOCUS OF THE DAY
Property Sector : Reinstatement of DIBS for first time home
owners? OVERWEIGHT
The Edge Malaysia reported that the Federal government is
considering a proposal by the REHDA to relax lending guidelines to boost first
home ownership. This follows REHDA’s proposal to the government to reintroduce
the Developers Interest Bearing Scheme (DIBS) for first time house buyers. DIBS
is a scheme where a developer helps the buyer of its property to absorb the
mortgage interest during its construction. According to The Edge Malaysia, the
selling prices of properties sold that come with a DIBS package may fetch a
premium of between 5% and 15%. Recall that the DIBS scheme was removed last
year.
The other measures include:- (i) 70% loan-to-value ratio
ruling for third residential mortgage loans and above; (ii) introduction of
Responsible Lending Guidelines; (iii) calculation of mortgage loans based on
the net selling price of the property; and (iv) minimum threshold of RM1mil for
foreign property investors. Plus, overall property sentiment has not been aided
by a weakening Ringgit and the imposition of the GST in April. The push to
reintroduce the DIBS policy followed a ‘wish list’ that REHDA had submitted to
the Federal government ahead of Budget 2016. Among the key suggestions that was
reportedly mooted are: (i) introduction of a homebuyer friendly scheme by
banks, particularly for first time homeowners of houses priced up to RM500k;
(ii) revision of the Bumiputera quota policy; (iii) GST relief for affordable
housing and controlled properties; (iv) reduction in the cost of doing
business; and (v) higher supply of affordable housing.
While most of these requests were not directly addressed or
mentioned during Budget 2016, the government’s subsequent willingness to
reconsider DIBS could be a boost, in our view. If pushed through, we envisage
the removal of the DIBS – along with inventory liquidation initiatives by
developers – to eventually kickstart a recovery in transaction volumes. Such a
move should help nurture a narrowing in discount to NAVs among property stocks.
With the sector, we remain BUYERs of Mah Sing Group, MRCB, E&O and Titijaya
Land
Others :
Banking Sector : Fifth consecutive month of higher impaired
loans (loans)
NEUTRAL
Banking Sector : Foreign shareholdings in MGS retraced
further in September (MGS) NEUTRAL
QUICK TAKES
CIMB Group : CIMB Niaga’s asset quality remains subdued in
3Q
HOLD
Malayan Banking : Rebound in net earnings for BII in
3QFY15 HOLD
Plantation Sector : Newsflow for week 26 to 30
October
OVERWEIGHT
Banking Sector : UOB’s 3Q briefing highlights prevailing
cautious outlook
(UOB)
NEUTRAL
NEWS HIGHLIGHTS
Automotive Sector : Perodua expands into pre-owned vehicle
retail segment
Airlines Sector : Airbus to spend RM25mil on new centre in
Malaysia
Consumer Sector : Nestle ramps up instant noodles output as
M’sians eat 3.6m packets a day
