DBS Vickers Rates Residential Sector “Neutral” on Positive Dividend Hand Out

DBS Vickers Securities (DBSVS) has a “NEUTRAL” view on Thailand’s residential sector, citing the sector’s good dividend hand out. Top pick stocks are SPALI, AP and LH. 

Thailand’s cabinet on September 14, 2021, approved measures to attract foreign investors to stay long term in the country in an effort to boost foreign direct investment (FDI) and to revive the economy after COVID-19.

These measures are designed to promote foreign direct investment by providing long-term resident visas and tax benefits to “high-potential” foreigners, such as wealthy global citizens, work-from-Thailand professionals, highly skilled professionals, and wealthy investors with business in the EEC, as well as gradually easing some restrictions on foreigners owning property and land. DBSVS believes that this will benefit the Thai real estate market in the long run.

However, in the near term, Thai property earnings in 3Q21 are expected to continue to suffer from the COVID-19 delta variant due to the government imposing various restrictions, including closing construction sites for a month, resulting in a delay in the transfer of ownership of houses and condominiums.

DBSVS forecasts that real estate sales and earnings will recover in 4Q21, as the government has eased some COVID-19 lockdowns and the outbreak is likely controllable.

DBSVS prefers Supalai Public Company Limited (SPALI) (BUY, TP: 24.70 baht), AP (Thailand) Public Company Limited (AP) (BUY, TP: 10.30 baht) and Land and Houses Public Company Limited (LH) (BUY, TP: 9.20 baht).