Maintain BUY With Lower Target Price of SGD3.05

• We trim RNAV by 0.3% after ASP downgrades. With Singapore’s residential market accounting for less than 10% of its valuation, the impact of ASP cuts to its RNAV is relatively muted.
• Ho Bee is our sole BUY amongst mid-cap developers. We believe its efforts to diversify away from Singapore’s residential market is paying off.
• With strong recurring income stream from a large pool of investment properties, we cut EPS by less than 5%. io. Nonetheless, we cut Target Price to SGD3.05, based on a revised 35% discount (from 30%) to its RNAV of SGD4.71.
• Maintain BUY.

Cut ASPs; Limited Downside

With 5-10% increases in the ABSD for property investors, we expect developers to lower their ASPs to stimulate demand. While higher ABSD for property investors will dampen demand for its Sentosa properties, we see small downside as our ASP assumptions were already fairly conservative.

We cut ASPs for its Sentosa properties by 3% to SGD1,750-1,850 psf.

Sector Report

• Singapore Property Sector : Back To Tightening Mode ~ Let The Dust Settle; Downgrade To NEUTRAL 

Other Property Developer Stocks

• Bukit Sembawang - Most Exposed To Singapore’s Residential Market

• UOL Group Ltd - Oversold

• City Developments - Policy Overhang

• Oxley Holdings - Highly Exposed To Residential Headwinds

• CapitaLand - Small Exposure To SG Residential

• GuocoLand - Limited Upside

Source: Maybank Kim Eng Research - 06 Jul 2018