Continue reading this on our app for a better experience

Open in App
Floating Button
Home Capital Broker's Calls

OUE has most opportunities for RNAV crystallisation, says Deutsche

PC Lee
PC Lee • 2 min read
OUE has most opportunities for RNAV crystallisation, says Deutsche
SINGAPORE (March 6): Deutsche Bank likes OUE for having the most opportunities for RNAV crystallisation among the developers under its coverage.
Font Resizer
Share to Whatsapp
Share to Facebook
Share to LinkedIn
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

SINGAPORE (March 6): Deutsche Bank likes OUE for having the most opportunities for RNAV crystallisation among the developers under its coverage.

Given the likelihood of the US Bank Tower divestment and thus a special dividend, Deutsche ranks OUE our top Singapore mid-cap pick.

In a Friday report, Deutsche also reiterates its strategy to “hold the developers and trade the REITs” through this RNAV upgrading cycle.

“Our top picks for the developers are CapitaLand and City Developments,” says Deutsche.

And although UOL has lagged behind CapitaLand and City Developments and is trading at 0.65x price-to-book, Deutsche sees less likelihood of value unlocking in the near term, given the complex holding structure.

“We believe that the key catalyst for OUE will be the crystallisation of RNAV. With the completion of asset enhancement exercises at US Bank Tower and OUE Downtown, we believe there is increased potential for divestments and potential special dividends,” says Deutsche.

Currently, US Bank Tower has achieved 80% committed leasing, while OUE Downtown is 87% occupied for the office space and 70% pre-committed for the retail space.

With progressive leasing, Deutsche believes these two assets could be divested over the next two years.

Progressive sales at Twin Peaks could also provide an additional catalyst, and recent offers for International Healthway Group could help OUE restock its land bank in prime locations.

Meanwhile at developer Wing Tai, the key swing factor remains the sales progress for its two remaining projects, Le Nouvel Ardmore and The Crest.

While sales remain moderate, Deutsche is encouraged by the acceleration in luxury demand.

With Wing Tai set to swing into a net cash position, Deutsche believes the key focus will be on the redeployment or return of capital, and potential funds management platform.

“With significant YTD share price movements, and with a likely quiet March, we think there could be near-term share price consolidation for the developers − the large-cap stocks in particular,” says Deutsche.

While the bank does not expect a sharp rebound in asset value, it does see a recovery and bottoming-out of the sector, which will return the developers to an RNAV upgrading cycle.

“We therefore see any near-term consolidation as a good buying opportunity for the developers,” says Deutsche.

OUE, CapitaLand, City Developments are higher at $1.98, $3.56 and $9.63 respectively.

Highlights

Re test Testing QA Spotlight
1000th issue

Re test Testing QA Spotlight

Get the latest news updates in your mailbox
Never miss out on important financial news and get daily updates today
×
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
© 2024 The Edge Publishing Pte Ltd. All rights reserved.