SINGAPORE (Dec 11): DBS Group Research is maintaining UOL Group at “hold” given there is limited catalysts amid fears of a slowdown ahead in the local property market.

“We see limited catalysts for the stock and sector given expectations of a property market slowdown which historically implies that UOL's share price will likely be trading in a range,” says lead analyst Rachel Tan in a Monday report.

Nevertheless, Tan believes UOL may be less impacted as being the earliest to land bank at a lower price would offer more room in pricing its properties. In addition, upward trends in office rents and hotel RevPAR bode well for UOL’s office and hotel investment properties.

UOL also made its first acquisition of an office building in Sydney, Australia recently for A$155 million ($153 million), with 100% occupancy and lease expiring in 2028.

“This is in line with its plans to build its recurring income as sentiment on Singapore property weakens and could lead to further expansion and diversification of its assets in Australia.

UOL acquiring eight-storey office building in Sydney for $153 mil

Downside risks include slower than DBS projected residential sales and commercial properties and hotel operations impacted by slower than projected growth in room rates.

UOL has a lower target price of $7.15, pegged to a 40% discount to RNAV, taking into account the heightened uncertainty from government tightening measures.

Year to date, shares in UOL are down 34.5% at $6.06 or 15.6 times FY19F earnings.