#The Edge Forum* Look at fundamentals not share price - Analyst

KUALA LUMPUR: Investors should look at the fundamentals of the development company rather than its stock price when it comes to investing in property stocks, ECM Libra Capital Sdn Bhd head of research Bernard Ching said.

Among the fundamentals to be taken into consideration are the developers’ gearing, management, sales track record, product delivery, landbank replenishment as well as company’s products and geographical segmentations to current demand, he added.

“Don’t buy just because it is cheap as the bulk of property counters listed on Bursa Malaysia, most of them are trading below their book value,” he said during The Edge Investment Forum on Real Estate on April 10.

Ching said the stocks of high-growth developers are worth buying for capital gain, while real estate investment trusts (REITs) are for stable dividends.

The size of investment at the equity market is smaller, compared to the physical property, as they are now traded in quantums of 100 units, he said, adding that this trading pattern allows investors to pay less than RM500 even for the most expensive property stock on Bursa Malaysia.

According to Ching, the property counter performs better during an economic recovery period although it was more volatile during the downturn. He added that the property counter has outperformed the KLCI Index before the economy took a turn for the worse in late-2008.

For the full coverage of The Edge Investment Forum on Real Estate 2010, read the April 19 issue of City & Country, the property pullout of The Edge Malaysia.