SINGAPORE (Aug 30): KGI Securities is recommending “buy” for Sing Holdings with a fair value estimate of 54 cents, based on an implied 0.83 times P/B FY16 earnings, as well as a 30% discount to the property developer’s revalued net asset value (RNAV) estimate of 77 cents.

In a Wednesday report, analyst Joel Ng says he expects the group’s upcoming launch of its 735-unit private residential project at Fernvale Road to sell well, given the recent upturn in new property sales transactions in Singapore.

Ng has assumed an average selling price (ASP) of $1,000 per sq ft compared to recent transactions around the area, which range from $970 to $1,060 per sq ft.

“Singapore property prices have declined for a consecutive 15 quarters, with home prices lower by around 12% from their peak in 2013. However, sentiments have started to improve lately, going by the increased transactions and slower decline of property prices in the last two quarters,” says Ng.

With new home sales growing 50% y-o-y to date against the backdrop of flattish private residential property prices, he believes that property prices may be able to start moving up again even as most of Singapore’s property cooling measures remain in place.

Ng further notes that Chip Eng Seng’s High Park Residences, which is located just next to the project by Sing Holdings, was fully sold within 20 months even in spite of the weak property market over 2015-2016.

However, the analyst cautions that Sing Holdings does not have any projects in its pipeline after its Fernvale development, and this may pose risks to his view.

“The company has diversified into the Australian hospitality business, but upside may be limited in the short-mid term in this business segment,” he adds.

As at 4.32pm, shares of Sing Holdings are up 2 cents at 41 cents.