CGS-CIMB Research analyst Lock Mun Yee is remaining “overweight” on Singapore’s property sector as new home sales rose 71% month-on-month (m-o-m) in July.
The higher figures were thanks to the good take-up for AMO Residence in Ang Mo Kio in District 20, which accounted for 44% of July’s transactions.
AMO Residence is a joint development by UOL Group, Singapore Land Group and Kheng Leong Co.
With the latest data released by the Singapore Real Estate Exchange (SRX), home sales year-to-July stood at 52% of Lock’s full-year expectations for the FY2022.
As such, the analyst has kept her primary home sales volume projection unchanged at 10,000 for the FY2022.
According to data from the SRX, private resale home prices inched up by 1.2% m-o-m in July, bringing year-to-date (ytd) improvements to 5.4%.
HDB resale prices during the month rose 0.7% m-o-m.
On the back of this, Lock has upped her private home price projections from 0% - 5% to 5% - 8% in FY2022.
Within the sector, Lock likes developers’ valuations as they still look “inexpensive”. At their prices as at Aug 15, the developers are trading at a 42% discount to their revised net asset value (RNAV), close to 1 standard deviation (s.d.) below the long-term mean discount.
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“We prefer developers with visible residential pipelines and strong balance sheets that would enable them to tap into any opportunity during this slower cycle,” Lock writes.
In her report, the analyst has indicated her preferred picks as CapitaLand Investment (CLI), City Developments Limited (CDL) and UOL Group with “add” calls.
Lock’s target prices for CLI, CDL and UOL Group are at $4.59, $8.97 and $8 respectively.
To Lock, CLI’s growth in its funds under management (FUM), fee income, as well as its efficient capital deployment and improved operating performance of its investment and lodging properties would likely underpin its return on equity (ROE) expansion and share price re-rating.
In her view, CDL’s land restocking activities with a potential launch pipeline of 2,000 units, would extend the visibility of its residential earnings.
“Value-unlocking activities and the nascent recovery of the global hospitality industry could catalyse its share price,” says Lock.
Finally, the analyst likes UOL Group for its high recurring income base and good office exposure through the Singapore Land Group.
As at its shares on Aug 15, CLI is trading at a 25% discount to its RNAV, while CDL is trading at a 48% discount to RNAV. UOL Group is trading at a 45% discount to its RNAV.
As at 2pm, shares in CLI, CDL and UOL Group are trading at $3.76, $8.17 and $7.15 respectively.
