SINGAPORE (Apr 11): Maybank Kim Eng Research is reiterating its “positive” stance on Singapore property developers, amid fresh data points which reinforce its predictions of a property price rebound.
“New launches this year have achieved significant premiums over comparable projects launched in recent years. The price rebound appears to be broad-based with strong performance across all market segments,” says analyst Derrick Heng in a sector report on Tuesday.
Using housing transactions data up to mid-March, the Urban Redevelopment Authority (URA) has released preliminary estimates its private residential property price index (PPI) will rise by 3.1% q-o-q in 1Q18.
“Developers can capitalize on the strengthening market by acquiring 15 residential sites currently up for tender,” says Heng. “These deals represent significant revenue opportunities that developers can pursue to capitalize on the market rebound.”
According to the analyst, the 15 sites could add some 4,900 units to the pipeline for developers.
“With significant exposure to Singapore’s residential market, Bukit Sembawang and City Developments are the biggest beneficiaries of this trend,” Heng says.
Maybank has “buy” calls on both Bukit Sembawang Estates and CityDev, with target prices at $8.55 and $14.20, respectively.
However, Heng cautions that the market could focus on potential weakness from late-2020 on the back of an expected surge in the supply of private homes in 2021.
As at 11.47am, shares of Bukit Sembawang are trading 2 cents up at $6.10 while shares of CityDev are trading flat at $12.73. This implies price-to-earnings ratios of 9.9 times and 17.5 times in FY18 for Bukit Sembawang and CityDev, respectively.
