Sector Overview

The Property Sector in our Singapore coverage consists of Property developers engaged in businesses of property development, trading, management and services.

Summary

Diversified developers performed well in 3Q12 amid policy risks overhang over the Singapore and China residential markets. CapitaLand 3Q12 earnings beat our expectation with higher progressive recognition of sales from its residential projects, strong performance of shopping malls and fee-based business. CMA earnings improved due to newly acquired assets as well as better performance from shopping malls in China.

Keppel Land sold more residential units q-q in Singapore, but in China sales were below expectation. CapitaLand on the other hand saw improvement in China sales with both value and volume trending higher.

Occupancy growth for new office towers were still making progress amid weak demand as hiring sentiments stayed low in the quarter.

Most of the big cap developers saw net gearing trended up in the quarter, in particular CapitaLand and CMA, as the group continued to deploy capital with the series of acquisitions over the past 2 years.

We continue to like CapitaLand for its diversified portfolio.

Rating and Target Price:

• CapitaLand - Accumulate, Target Price: $3.55
• CapitaMalls - Asia Accumulate, Target Price: $1.93
• Ho Bee Investment - Neutral, Target Price: $1.44
• Keppel Land - Neutral, Target Price: $3.28
• OUE - Neutral, Target Price: $2.83
• SC Global - Neutral, Target Price: $1.15

Source: PhillipCapital Research - 27 Nov 2012