Property Developers
Property Inventories
CAPITALAND LIMITED
C31.SI
CITY DEVELOPMENTS LIMITED
C09.SI
UOL GROUP LIMITED
U14.SI
FRASERS CENTREPOINT LIMITED
TQ5.SI
Property Devt & Invt - Taking A Small Breather
- Slower May volume on absence of new launches, ongoing projects seeing more traction.
- Developers continue to increase inventory ahead of sector recovery.
- Maintain Overweight; UOL, City Dev, FCL and Capitaland remain top picks.
Slower May volumes on lack of new launches
- May home sales came in at 1,394 units, of which 370 units were executive condominiums (ECs). This headline number was 28% lower mom but unchanged from a year ago.
- Stripping out ECs, sales would have dipped 34% mom and 3% yoy. The slower May transactions are not surprising given the strong sales in Mar and Apr.
- With few new project launches, volume sales were 3x the number of new units marketed.
Ongoing projects seeing more buying traction
- Ongoing projects that generated good sales volume include Parc Riviera, The Santorini, Commonwealth Towers and Sims Urban Oasis.
- Outside Central Region (OCR) sales accounted for 60% of non-EC take up while city fringe projects in the Rest of Central Region (RCR) made up 33%, with the balance from core central areas.
Volume transactions to remain brisk
- Total ex-EC sales to May totalled 5,723 units, making up 50-60% of our full-year volume projection and was 75% higher than the transaction volume over the same period last year.
- We anticipate volume transactions to remain brisk for the remainder of this year with improved market sentiment post the adjustment of Sellers’ Stamp Duty in Mar.
Buoyant restocking activity
- With low inventory levels, developers have been actively restocking, through government land tenders and enbloc transactions.
- We estimate that S$1.4bn worth of residential enbloc deals have been done year to date and anticipate more projects to be similarly monetised.
- We believe there is also a possibility for increased land offerings in the 2H17 government land sale programme for developers to restock.
Anticipate residential price recovery from next year
- That said, residential prices have yet to recover as average prices continue to slip 0.3% since end-2016. The rental market remains weak and vacancy in the private market remains above 8%.
- With the Singapore economy projected (by the private sector economists) to grow at consensus c.2.5% this year and given the slower wage expansion, we anticipate a more gradual price recovery, from next year.
Stay Overweight
- Property stocks are trading a c.28% discount to RNAV, midway between the long-term average and -1 s.d. discount to mean.
- We think catalysts such as increased land banking would continue to boost RNAV and share prices as developers continue to restock. Hence, we maintain our sector Overweight call.
- We continue to favour UOL, City Dev, FCL and Capitaland as our top picks.
- Key risks include faster-than-expected rise in interest and mortgage rates, which would erode affordability.
Highlighted companies
CapitaLand
- ADD, TP S$4.19, S$3.60 close
- We like CAPL for its ROE-boosting capital recycling activities. The stock is trading at 32% discount to RNAV.
City Developments
- ADD, TP S$11.63, S$10.70 close
- Overseas and Singapore residential earnings to continue to underpin near-term growth. CIT’s active capital recycling, low gearing and resumption of land bank restocking activity should underpin RNAV expansion, in our view.
UOL Group
- ADD, TP S$7.96, S$7.61 close
- UOL has a high recurring income base, underpinned by rentals, hotel operations and investment holdings. The stock is trading at 24% discount to RNAV.
LOCK Mun Yee
CIMB Research
|
YEO Zhi Bin
CIMB Research
|
http://research.itradecimb.com/
2017-06-15
CIMB Research
SGX Stock
Analyst Report
4.190
Same
4.190
11.630
Same
11.630
7.960
Same
7.960
2.050
Same
2.050
