OUE has most opportunities for RNAV crystallisation, says Deutsche

OUE has most opportunities for RNAV crystallisation, says Deutsche

PC Lee
06/03/17, 11:58 am

SINGAPORE (March 6): Deutsche Bank likes OUE for having the most opportunities for RNAV crystallisation among the developers under its coverage.

Given the likelihood of the US Bank Tower divestment and thus a special dividend, Deutsche ranks OUE our top Singapore mid-cap pick.

In a Friday report, Deutsche also reiterates its strategy to “hold the developers and trade the REITs” through this RNAV upgrading cycle.

“Our top picks for the developers are CapitaLand and City Developments,” says Deutsche.

And although UOL has lagged behind CapitaLand and City Developments and is trading at 0.65x price-to-book,  Deutsche sees less likelihood of value unlocking in the near term, given the complex holding structure.

“We believe that the key catalyst for OUE will be the crystallisation of RNAV. With the completion of asset enhancement exercises at US Bank Tower and OUE Downtown, we believe there is increased potential for divestments and potential special dividends,” says Deutsche.

Currently, US Bank Tower has achieved 80% committed leasing, while OUE Downtown is 87% occupied for the office space and 70% pre-committed for the retail space.

With progressive leasing, Deutsche believes these two assets could be divested over the next two years.

Progressive sales at Twin Peaks could also provide an additional catalyst, and recent offers for International Healthway Group could help OUE restock its land bank in prime locations.

Meanwhile at developer Wing Tai, the key swing factor remains the sales progress for its two remaining projects, Le Nouvel Ardmore and The Crest.

While sales remain moderate, Deutsche is encouraged by the acceleration in luxury demand.

With Wing Tai set to swing into a net cash position, Deutsche believes the key focus will be on the redeployment or return of capital, and potential funds management platform.

“With significant YTD share price movements, and with a likely quiet March, we think there could be near-term share price consolidation for the developers − the large-cap stocks in particular,” says Deutsche.

While the bank does not expect a sharp rebound in asset value, it does see a recovery and bottoming-out of the sector, which will return the developers to an RNAV upgrading cycle.

“We therefore see any near-term consolidation as a good buying opportunity for the developers,” says Deutsche.

OUE, CapitaLand, City Developments are higher at $1.98, $3.56 and $9.63 respectively.

Counsels argue over how witnesses' conditioned statements were prepared and used

SINGAPORE (May 23): The prosecution and defence in the 2013 penny stock crash trial on Thursday crossed swords over how conditioned statements had been prepared, and the relevancy of questions raised in cross-examination of these statements. Deputy public prosecutor Peter Koy said questions by the defence counsels for alleged co-conspirators John Soh Chee Wen and Quah Su-Ling were a “distraction from the facts”. “Questions as to what was shown to the witness, what trade and telephone data were shown to the witness, which data was filtered and shown to the witness, are irrelevant to....

Boustead Projects records 2% dip in 4Q earnings to $5.7 mil despite revenue surge

SINGAPORE (May 23): Real estate solutions specialist Boustead Projects posted a 2% drop in earnings to $5.7 million for the 4Q19 ended March, compared to restated earnings of $5.8 million for 4Q18. This brings full year earnings for FY19 to $30.6 million, some 5% higher than earnings of $29.2 million a year ago. The group recorded earnings per share (EPS) of 1.8 cents for 4Q19, the same as a year ago. For FY19, EPS rose to 9.8 cents, compared to 9.1 cents for FY18. The decline in 4Q earnings was mainly due to lower gross margins in design-and-build projects and depreciation incurred o....

Sunpower wins $8.7 mil contract from repeat customer

SINGAPORE (May 23): Sunpower Group, the environmental protection solutions specialist, has signed a RMB43.56 million ($8.7 million) contract with repeat customer Zhejiang Petrochemical Co. Sunpower will provide high-efficiency heat exchangers for one of China’s largest domestic atmospheric and vacuum pressure units with an annual capacity of 10 million tons, which is part of Phase 2 of Zhejiang Petrochemical’s refinery and chemical integration project. The project is part of China’s 13th Five-Year National Petroleum and Chemical Plan. Sunpower started its partnership with Zhengj....