Compiled by Lee Meixian
GUOCOLAND | ADD
TARGET PRICE: $2.88
MARCH 20 CLOSE: $2.14
CGS-CIMB Securities, March 19
GuocoLand on Monday announced it has, with Intrepid Investments and Hong Realty, successfully tendered for the collective sale of the Pacific Mansion condominium site.
The deal follows the success of the nearby Martin Modern launch and underlines the developer's confidence and optimism on the Singapore private residential market outlook.
In addition, it would extend GuocoLand's residential development income visibility. We think the project could likely be launch-ready only from 2019.
Assuming an average selling price of $2,700 psf, this project could add another four cents to GuocoLand's current revalued net asset value (RNAV) of $3.84.
We continue to like GuocoLand for its attractive valuations and high recurrent income base. The stock is trading at a 46 per cent discount to RNAV and offers 39 per cent upside to our target price of $2.88.
A potential re-rating catalyst could come from rising average selling prices for its projects, while downside risk could be a slower-than-expected recovery in the Singapore office and residential markets.
CITY DEVELOPMENTS | BUY
TARGET PRICE: $15.00
MARCH 20 CLOSE: $13.45
RHB Research, March 20
As one of the largest residential landbank owners in Singapore, City Developments (CDL) remains the best proxy for investors looking to tap into the residential segment's recovery.
Its listed subsidiary Millennium & Copthorne's hotel operations are also poised to benefit from strong global economic growth aiding the hospitality sector.
CDL has a current unsold inventory of about 3,859 units, making it one of the developers with the highest unsold units.
While it has been fairly aggressive in recent land bids, we believe its strong brand positioning and established track record should aid in its projects commanding premium prices.
Our channel checks revealed that its recent preview of The Tapestry condominium drew a strong response, with more than 5,000 people visiting the show units during the launch on March 10.
We understand launch prices are expected to be around $1,300 psf, which translates into a healthy margin of more than 20 per cent.
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