Property and asset stocks have underperformed the market on the back of bleak sentiment, though major developers and builders reported robust earnings in the first half of the year, analysts said yesterday.
Shares in construction and building materials shed 0.14 percent versus the TAIEX’s 0.09 percent rise, Taiwan Stock Exchange data showed, as investors continued to shy away from the industry.
“Investors should remain cautious about developers and asset plays until the property market stabilizes,” Primasia Securities Co analyst Kai Chen (陳柏愷) said.
The sector posted losses for seven of the past eight weeks, with selling pressure building for such bellwethers as Highwealth Construction Co (興富發建設), Ruentex Development Co (潤泰新) and Huaku Development Co (華固建設), though some reported strong revenue growth in the first half, Chen said.
Huaku saw sales increase by 6.4 times the year-earlier value to NT$278 million (US$8.88 million) last month, due to revenue contributions from two residential development projects in Taipei.
The Taipei-based developer accumulated earnings of NT$4.28 billion for the first six months, an increase of 4.9 times from the same period last year, outpacing the growth of its peers, company data showed.
Farglory Land Development Co (遠雄建設), another Taipei-based building firm, saw its revenue more than double last month to NT$2.7 billion on the back of sales contribution from “U-Town,” a mega multifunction development project in New Taipei City’s Sijhih District (汐止).
As of last month, Farglory’s revenue climbed 85 percent year-on-year to NT$15.03 billion, the company said in a filing with the Taiwan Stock Exchange.
Farglory’s total sales are likely to exceed NT$30 billion this year, as the company might continue to book revenues from U-Town and other residential projects, with aggregate sales of NT$9 billion, Chen said.
Robust sales figures are no guarantee of a bright future, with continued weak sentiment ensuring shares in the sector remain unattractive, Chen said.
Transactions for existing homes declined by a double-digit percentage last month from a year earlier, suggesting a low buying interest, despite property tax adjustments, he said, adding that companies with diversified sources of income might fare better.
Jih Sun Securities Investment Consulting Co (日盛投顧) assigned a “hold” rating to Kindom Construction Corp (冠德建設), citing a slowing inventory adjustment.
However, Kindom might benefit from stakes in retail business Global Mall (環球購物中心), the brokerage said.
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