With a 5-10% increase in ABSD for property investors, we expect developers to lower ASPs to stimulate demand.
We cut ASP for The Tre Ver (former Raintree Gardens) by 5% to SGD1,560 psf. As the site was acquired prior to land price escalation in the vicinity, we continue to see double digit margin for this project.
We cut our assumptions for Silat Avenue site by 7% to SGD2,050 psf. Nanak Mansion, a high-end project in the East Coast is cut by 13%.
Including its pro-rata stake in UIC, UOL offers a 29% aggregate exposure (by value) to Singapore’s office market. At 0.6x P/BV and 42% discount to its RNAV, we believe UOL is a much cheaper proxy to a recovering office market than office REITs which are trading close to book values.
Furthermore, with the company recently gaining statutory control of UIC, repositioning and redevelopment potential within its commercial portfolio remains an attractive medium term theme.
Source: Maybank Kim Eng Research - 06 Jul 2018
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