Business

Brokers' take

SINGAPORE PROPERTY DEVELOPERS | OVERWEIGHT

DBS Group Research, June 2

Looking at the way these en blocs and land bids are transacted, we believe that developers seem to be pricing in a price recovery in 2018 in their bids, implying the bullish sentiment towards land-banking good quality sites in Singapore.

This could imply upward pressure on prices in the medium term. We believe that the Government will stand ready to taper any signs of over-zealousness from developers looking to land-bank in Singapore. This will likely come from (i) raising the number of available land sites in the H2 2017 government public land tender, and/or (ii) raising the number of confirmed sites in the pipeline.

This will, in our view, signal the Government's readiness to tackle any unintended "bubble" that could form in Singapore land prices if such aggressive bids continue.

We believe we will see such signals as early as in the H2 2017 government land sales programme.

Our "overweight" stance for developers remains, with City Developments and UOL being the key beneficiaries of a rise in prices given the existing unsold stock and potentially better margins for recently land-banked projects.


SINGAPORE OIL AND GAS | NEUTRAL

OCBC Investment Research, June 2

For all its political troubles, Brazil's petroleum and other liquids supply grew the most among non-Opec countries from Q1 2016 to Q1 2017, reaching 2.98 million barrels per day in Q1 2017.

The UK offshore sector also did well from Q1 2015 to Q1 2017.

Within Opec, Iran saw the greatest increase in crude oil production to 4.46 million barrels/day in Q1 2017 for both time frames with the lifting of its oil embargo.

As for Brazil, Keppel Corp and Sembcorp Marine are big players in the country and look set to remain entrenched beyond the country's current political volatility.

Both companies also have a long track record in the UK offshore sector.

Maintain "neutral" on the broader sector, with a preference for larger caps such as Sembcorp Industries ("buy", fair value: $3.48) and Keppel Corp ("buy", fair value: $7.36) given undemanding valuations.

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