SINGAPORE (Aug 7): Maybank Kim Eng Research says UOL Group remains its top pick in the Singapore real estate sector, with the developer looking set to ride on a rebound in property prices.

“Buoyant sentiment has enabled UOL to raise average selling prices (ASPs) for its residential projects in Singapore,” says analyst Derrick Heng in a Monday report.

Maybank is keeping its “buy” call on UOL with an unchanged target price of $9.05.

Heng opines that part of UOL’s success can be attributed to its “astute and cautious” approach to land banking.

“UOL has been ahead of the curve in identifying the potential of the Bidadari area,” says Heng.

“Riding on the success of Botanique at Bartley, it acquired the Raintree Gardens site at a relatively low price. Since then, land prices have shot up and we believe it is in a very comfortable position due to its relative cost advantage,” he adds.

In addition, Heng points out that a buoyant sentiment and escalating land prices in the market has also allowed UOL to raise ASPs at Principal Garden and Clement Canopy.

UOL in the 2Q ended June saw earnings soar 59% to $109.4 million on the back of higher progressive recognition of revenue from its projects.

See: UOL 2Q earnings rise 59% to $109.4 mil

Meanwhile, Heng reiterates that UOL’s share swap deal with Haw Par Corporation to increase its stake in United Industrial Corporation (UIC) to 48.94% from 44.71% via a remains a “paper exercise” for now.

“We see this deal among the related parties of Dr Wee Cho Yaw as a paper exercise with minimal impact on UOL,” Heng said in a report on June 23.

See: UOL a step closer to achieving ‘statutory control’ of UIC in share swap deal with Haw Par

However, Heng adds that the eventual control of UIC would allow UOL to unlock the potential in its assets.

“We see this as a less-risky and cheaper way to create shareholders’ value in time of elevated land prices,” he says.

Update: Shares in UOL closed 10 cents higher at $8.16.