TA Securities sees Penang property market as prominent investment opportunity

Published by The Edge Malaysia• 31/10/2023

KUALA LUMPUR (Oct 31): TA Securities sees the Penang Transport Master Plan (PTMP) serving as a solid rerating catalyst for the state’s construction sector, making it an attractive destination for investors and developers.

“We are optimistic about Penang’s residential property market, driven by the robust recovery of the medical and tourism sectors on Penang Island post-pandemic, coupled with the thriving industrial sector on both Penang Island and the mainland,” said TA Securities.

“We maintain our overweight stance on both the property and MREITs sector,” it added.

In a note on Tuesday, the research house said that the PTMP will also be a catalyst for the city to mitigate mounting traffic congestion, with Gamuda Bhd and Kerjaya Prospek Bhd being the main primary beneficiaries of the master plan.

The research house has a “buy” rating on Gamuda with a target price (TP) of RM5.19 following its substantial exposure in the Penang development project via SRS Consortium Sdn Bhd, while keeping a “buy” call on Kerjaya Prospek with a TP of RM1.57 for its strong track record in Penang’s construction sector.

According to TA Securities, other potential beneficiaries from the execution of PTMP include IJM Corporation Bhd (“buy”, TP: RM1.85) and WCT Holdings Bhd (“buy”, TP: RM1.57). Sunway Construction, known for its expertise in railway-related jobs and civil works for township development, is also listed among companies expected to benefit from the PTMP.

TA Securities anticipates that that the PTMP’s implementation will be accelerated, given that the federal government and the Penang state government have aligned their political interests after execution of the project has been somewhat delayed due to financial limitations, environmental concerns and political issues.

Commenting on the development of the Penang South Island (PSI) that was commenced following the approval of its Environmental Impact Assessment (EIA) by the government, the research house believes the remaining available project will continue to flourish.

“Despite the PSI project being scaled down by scrapping Island B and Island C, we are not overly disappointed as the local government still maintains its plan to develop Island A (Silicon Island) with more concrete details and a timeline,” it said.

TA Securities said it anticipates that the PTMP will serve as a long-term catalyst, enhancing land value, stimulating economic activity and driving housing demand in Penang.

Consequently, it said property developers holding landbank in Penang Island stand to gain long term from the enhanced road and public transport connectivity under the PTMP.

Potential beneficiaries of the Bayan Lepas LRT project include Eastern & Oriental Bhd, Ideal Capital Bhd, IJM Corp Bhd, Ivory Properties Group Bhd and Mah Sing Group Bhd.

“To a lesser extent, Eco World Development Group Bhd, Paramount Corp Bhd, Tambun Indah Land Bhd and SP Setia Bhd, which have landbank in mainland Penang, could also reap benefits from the improved road and rail network,” it added.