We believe that OUE’s shares offer attractive risk-reward at current levels, now trading at steep 63% discount to book value and some 8.5% above its 12 month low of S$1.47. While the company does face headwinds in a muted property market, we see current share prices to be overly pessimistic.

The group’s recent efforts to market its OUE Twin Peaks project have met with significant success, with over 265 units sold out of 462 total units at an ASP above S$2.5k psf, which will significantly reduce the risk in the group’s asset valuations in our view.

Looking ahead, we expect sales at Twin Peaks to continue into 2H16 and also look forward to the completion of asset enhancement works at OUE Downtown which is on track to complete by end 2016. Maintain BUY with an unchanged fair value estimate of S$2.17.  

Source: OCBC Research - 22 Sept 2016