Singapore Property - Maybank Kim Eng 2017-06-15: Developer Sales On Track

Singapore Property - Maybank Kim Eng 2017-06-15: Developer Sales On Track Singapore Property Developers UOL GROUP LIMITED U14.SI HO BEE LAND LIMITED H13.SI CAPITALAND LIMITED C31.SI CITY DEVELOPMENTS LIMITED C09.SI

Singapore Property - Developer Sales On Track


Price inflection ahead; Stay POSITIVE

  • URA reported that developers sold 1,024 private homes and 370 ECs in the month of May. This brings total private home sales to over 5,700 units YTD and is on track for our forecast of 10,000 units this year (+25% vs 7,972 in 2016). 
  • We believe robust sales should drive a further decline in unsold stock in the market and the ensuing improvement in inventory-to-sales ratio should allow developers to lift home prices. 
  • Maintain POSITIVE on property developers with catalysts from an impending rebound in home prices. 
  • UOL (Rating: BUY, Target Price: SGD9.05) and CDL (Rating: BUY, Target Price: SGD12.05) offer the best proxy to this inflection point. 
  • Risks to our positive view include a surprise tightening of policy measures and a sharp spike in interest rates. See our recent sector upgrade (Report: Singapore Property - Price Inflection Point; U/G to POSITIVE) for further details.


Slight moderation in May; Still on track for 10k/yr 

  • Developers sold 1,024 private homes in May. This is a slight moderation from high comparable bases in Apr 2017 and May 2016, where 1,558 and 1,058 units were sold respectively. 
  • Developers launched fewer units in May after aggressive launches in the past two months to capture market exuberance from the first sign of policy easing. This brings developer sales to over 5,700 units YTD and is on track for our forecast of 10,000 units this year.


Read-through for covered developers 

  • Mid-to-mass market projects continue to drive sales with 341 and 617 units sold in the RCR and OCR segments. Sales remain fairly slow in the high-end with 66 units sold in the CCR. 
  • CDL’s project, Commonwealth Towers, was the third best seller with 53 units sold in the month. We also noticed further improvement in sales at The Santorini and The Alps, two mass market projects located next to CDL’s recently acquired land parcel in Tampines, which implies less competition when the project gets launched next year. 
  • UOL’s projects Principal Garden and The Clement Canopy are also among the best-selling projects.


Escalating land prices signal higher home prices 

  • With the pick-up in private home sales, developers have turned increasingly positive on the sector’s outlook with more aggressive pricing seen at recent land deals. 
  • With improving affordability, ample liquidity and a decline in unsold stock, we see scope for developers to raise prices in the coming year and see the escalating land prices as a harbinger of higher home prices. This inflection point in home prices should be a catalyst for the sector.







Derrick Heng CFA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-06-15
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 9.050 Same 9.050
BUY Maintain BUY 3.000 Same 3.000
HOLD Maintain HOLD 3.750 Same 3.750
BUY Maintain BUY 12.050 Same 12.050



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