Singapore is just ~9% of their market.
According to CIMB, they expect this new policy event to lead to a sector wide sell-down in the near-term. In this scenario, the firm advocates accumulating the following names that are expected to be less affected by policy changes in the Singapore residential sector.
CapLand: Singapore residential segment accounts for only 9% of its GAV. The share price catalysts for CapLand in 1) recovering China volumes, 2) potential asset recycling moves, and 3) a potential restructuring of its business units, remain unchanged. CapLand remains our top big cap pick in the sector.
UOL: Singapore residential accounts for 8% of its GAV, 70% of which have been sold. Commercial, hospitality and retail assets/developments form 82% of its value. Its share price heavily discounts its commercial and hotel assets under the cumbersome UOL/UIC/SL shareholding structure.
With a more active management and a consistent build up of investment properties in the last 5-7 years, we believe valuation discounts should narrow. UOL remains our top mid cap pick.
GLP: The group has no assets in Singapore and should not be affected in the expected sell-down. But if it does, we believe its asset recycling and China recovery themes remain intact and would advocate investors accumulate the stock.
UE: Residential developments make up 29% of UE’s gross value, though more than 50% has been sold. The group is an investment property play (>60% of GAV), with more asset completions coming in 2014. We see potential for accretive asset divestments and redevelopment of old assets.
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