CGS-CIMB analyst Lock Mun Yee has kept her “overweight” recommendation on the Singapore property sector despite a quieter February for home sales.

“Developers’ valuations still look inexpensive to us, trading at a 50%discount to revalued net asset value (RNAV), close to 1.5 standard deviation (s.d.) below long-term mean discount,” writes Lock in a March 15 flash note.

“We prefer developers with a high recurring cashflow base and strong balance sheets that would enable them to tap into any opportunities during this slower cycle,” she says.

To this end, Lock has identified her preferred developer picks as CapitaLand, UOL and City Developments Limited (CDL), with “add” calls for all three.

Lock has also pegged target prices for CapitaLand, UOL and CDL at $3.42, $7.91 and $8.97 respectively.


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“As Asia’s largest diversified real estate group, CapitaLand's strong capital recycling and deployment into new investments would continue to drive its ROE, in our view. The stock is trading at a 48% discount to RNAV,” she says.

UOL, which has “good office exposure through United Industrial Corp (UIC), has a “high recurring income base, supported by rentals, hotel operations and investment holdings.” The counter is now trading at a 44% discount to RNAV.

“In our view, CDL’s land restocking activities would extend its residential earnings visibility. New investments in Europe would enable the group to deploy balance sheet capacity. The stock is trading at a 54% discount to RNAV,” Lock adds.

Lock’s note comes as private home sales – excluding executive condominiums – fell 34% y-o-y and 60% m-o-m to 645 units, mainly due to lower major new launches during the month.

In February, only 167 units were put up for sale, making this the lowest number since December 2018

Projects that saw the highest number of unit sales include The Reef at King’s Dock, Normanton Park and Treasure at Tampines.


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City fringe projects made up 50% of sales while suburban projects accounted for another 40% of volume sales.

“Transactions in the first 2 months of 2021 totalled 2,254 units, up 41% yoy and made up 22-25% of our full-year expectation of 9,000-10,000 units,” notes Lock.

Lock has also forecast a 0% to 5% hike in private home prices for the FY2021, thanks to robust demand.

“According to SRX, overall resale prices ticked up 1% m-o-m bringing year-to-Feb 2021 prices up 2.3% compared to end-2020,” she says.

“Overall, we expect prices to pace economic recovery as developers continue to move inventory,” she adds.

As at 3.14pm, shares in CapitaLand, UOL and CDL are trading $3.30, $7.62 and $7.53.