SINGAPORE PROPERTY | OVERWEIGHT
CIMB Research, March 15
Market sentiment appears to have improved following the adjustment of the sellers' stamp duty from March 11, although the impact would likely be felt from the medium term.
We expect at least three more new projects to be rolled out in H1 2017.
Hence, we anticipate primary market volume transactions to remain fairly buoyant over the next few months.
However, we think price recovery is likely to lag given the current elevated inventory and vacancy levels. Property stocks are currently trading at 30 per cent discount to RNAV (revalued net asset value) on improved market newsflow and potential M&A activities.
We think catalysts such as increased landbanking could emerge as the market continues to digest existing high inventory.
We maintain our overweight stance with our top picks of UOL, CityDev, Capitaland and Wing Tai. Downside risk to sector call includes higher than projected interest rate hike which would erode affordability, and a slower than projected economic growth.
Citi Research, March 15
THE March 15 FOMC meeting confirmed a 25 basis point Fed hike, but with no change to the 2017 median "dots" leading the market to price a less aggressive path of rate hikes.
We remain positive: US reflation is a multi-year theme.
If global interest rates normalise over three to four years, developed-market banks (including Singapore) will enjoy a secular lift to ROEs; oil support service asset quality is a near term concern but easing credit costs should be an earnings tailwind as 2017 progresses. GDP data suggests Singapore banks no longer deserve "recession" valuations of three months ago, although Q1 2017 results may remain soft.
SINGAPORE HOSPITALITY | NEUTRAL
OCBC Investment Research, March 16
For fiscal 2017, with a forecasted 5.9 per cent growth in hotel rooms and tepid economic growth outlook, revenue per available rooms (RevPARs) are expected to continue their decline, and especially so for hotels that rely on corporate demand.
Given the challenging operational outlook this year, coupled with the prospect of RevPAR stabilisation next year, we encourage investors to buy into the sector on dips.
Within the hospitality sub-sector in the Reits space, our top pick is OUE Hospitality Trust, as we expect it to be buffered by inorganic contributions from its recent acquisition.
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