Maybank is maintaining its ‘positive’ rating on developer stocks and is picking City Developments as its top ‘buy’ with $9.04 target price.
In a Friday note, analyst Derrick Heng expects the market to focus on value-unlocking deals.
This is because the sector continues to trade at material discounts to physical assets and Heng believes developers will continue to seek deals to unlock underlying property values.
“Sales of mature commercial properties are the low-hanging fruits, though we also see opportunities in the residential market. Time pressure from looming QC and ABSD deadlines could motivate more developers to pursue bulk sales or structure deals for high-end homes, in our view,” says Heng.
The analyst thinks CityDev being the best proxy for, given its AUM target of $5 billion by 2018.
Meanwhile, Maybank is remaining positive on developers as flash estimates of home prices released last week indicated a small price fall.
“A recent reversal of interest rates should support prices, we believe,” says Heng. This also implies that a review of cooling measures may not be a near-term catalyst.
To recap, URA’s flash estimates of private residential price index in 1Q16 was down 0.7% to 140.6 from last quarter. Prices in the Core Central Region (CCR) rose 0.4% q-o-q, their first uptick in 12 quarters. In the Rest of Central region (RCR) and Outside Central Region (OCR), prices slid 0.4% and 0.9% q-o-q respectively.
The UPA PPI is now down for the 10th straight quarter and 9.1% off its 3Q13 peak. Flash estimates for HDB prices were down 0.1% q-o-q, suggesting resilience.
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In a Friday note, analyst Derrick Heng expects the market to focus on value-unlocking deals.
This is because the sector continues to trade at material discounts to physical assets and Heng believes developers will continue to seek deals to unlock underlying property values.
“Sales of mature commercial properties are the low-hanging fruits, though we also see opportunities in the residential market. Time pressure from looming QC and ABSD deadlines could motivate more developers to pursue bulk sales or structure deals for high-end homes, in our view,” says Heng.
The analyst thinks CityDev being the best proxy for, given its AUM target of $5 billion by 2018.
Meanwhile, Maybank is remaining positive on developers as flash estimates of home prices released last week indicated a small price fall.
“A recent reversal of interest rates should support prices, we believe,” says Heng. This also implies that a review of cooling measures may not be a near-term catalyst.
To recap, URA’s flash estimates of private residential price index in 1Q16 was down 0.7% to 140.6 from last quarter. Prices in the Core Central Region (CCR) rose 0.4% q-o-q, their first uptick in 12 quarters. In the Rest of Central region (RCR) and Outside Central Region (OCR), prices slid 0.4% and 0.9% q-o-q respectively.
The UPA PPI is now down for the 10th straight quarter and 9.1% off its 3Q13 peak. Flash estimates for HDB prices were down 0.1% q-o-q, suggesting resilience.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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