Apr 3, 2018 - Singapore's private residential property price index grew. 3.1% QoQ in 1Q18 ... Asia Pacific Equity Resear
Asia Pacific Equity Research | Singapore
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Morning Call 3 Apr 2018
Key Idea Singapore Residential Sector: Momentum garnering strength Based on URA's flash estimates released yesterday, Singapore's private residential property price index grew 3.1% QoQ in 1Q18 (transactions up till mid-Mar). This was the third consecutive quarter of sequential growth and also represents the highest QoQ increase since 2Q10 (+5.3%). We deem this as a strong set of numbers as we were previously projecting residential prices to grow 3% - 8% this year. We now expect the full-year growth figure to come in at the upper-end of our forecast or even potentially exceeding it. As a breakdown, prices of non-landed private residential properties jumped 5.0% QoQ in Core Central Region (CCR); prices in Outside Central Region (OCR) rose 3.8% while prices in the Rest of Central Region (RCR) increased by 1.1%. We view sector valuations as compelling and maintain OVERWEIGHT on the Singapore residential sector. Our top picks are City Developments Limited [BUY, FV: S$15.91], UOL Group Limited [BUY, FV: S$10.63] and CapitaLand Limited [BUY, FV: S$4.26]. News Headlines Far East Hospitality Trust has completed the acquisition of Oasia Hotel Downtown on 2 Apr 2018. ASTI Holdings Limited has entered into a SPA in relation to the disposal of the entire issued and paid-up share capital of several wholly-owned subsidiaries for a total consideration of S$90m. Tianjin Zhong Xin Pharmaceutical Group Corporation Limited’s FY17 revenue fell 9% to RMB 5.7b while PATMI rose 12% to RMB 476.1m. Charisma Energy Services Limited has entered into a SPA and an addendum for the purchase of target companies that hold 12 power purchase agreements to operate 12 mini hydropower plants in South Asia for US$1.875m.
Research Team (65) 6818 4815 e-mail:
[email protected]
Sources: MasNet, Bloomberg, Business Times, Straits Times and other media
Please refer to important disclosures at the back of this document.
MCI (P) 005/06/2017
OCBC Investment Research Market Pulse 3 Apr 2018
Singapore Residential Sector: Momentum garnering strength Strongest growth since 2Q10 Buyer sentiment to remain firm Top picks: CDL, UOL and CAPL 3.1% QoQ growth in 1Q18 URA flash estimates Based on URA's flash estimates released yesterday, Singapore's private residential property price index grew 3.1% QoQ in 1Q18 (transactions up till mid-Mar). This compares to the 0.8% QoQ increase registered in 4Q17 and was the third consecutive quarter of sequential growth. We deem this as a strong set of numbers as we were previously projecting residential prices to grow 3% - 8% this year, while 1Q18’s flash estimates also represent the highest QoQ increase since 2Q10 (+5.3%). We now expect the full-year growth figure to come in at the upper-end of our forecast or even potentially exceeding it. Increase driven largely by Core Central Region As a breakdown, prices of non-landed private residential properties jumped 5.0% QoQ in Core Central Region (CCR); prices in Outside Central Region (OCR) rose 3.8% while prices in the Rest of Central Region (RCR) increased by 1.1%. We believe the firm CCR price increase was driven largely by City Developments Limited’s (CDL) New Futura and GuocoLand’s Martin Modern. We note that buyer sentiment remains buoyant. CDL announced late last month that The Tapestry project sold 70% of the 450 units released (total: 861 units) over the first weekend of launch (as at 5pm on 25 Mar) at an average selling price of S$1,310 psf. Upcoming launches such as Park Place Residences (second phase) by Lendlease would likely generate keen interest, in our view. Valuations remain compelling for developers The FTSE ST Real Estate Holding & Development Index (FSTREH) is currently trading at a blended forward P/B ratio of 0.67x. We view this as compelling as it comes in at 0.84 standard deviations below the 10-year average (0.80x). Maintain OVERWEIGHT on the Singapore residential sector. Our top picks are City Developments Limited [BUY, FV: S$15.91], UOL Group Limited [BUY, FV: S$10.63] and CapitaLand Limited [BUY, FV: S$4.26]. One potential downside risk could come from further tightening measures introduced by the government if prices continue to gain traction strongly, but this may be mitigated by more supply from upcoming government land sales and re-launches from en-bloc projects. (Wong Teck Ching Andy)
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OCBC Investment Research Market Pulse 3 Apr 2018
Calendar of key events 2-Apr-18
4-Apr-18
5-Apr-18
6-Apr-18
US Mar Manufacturing PMI
US Mar Mortgage Applications
US Mar Initial Jobless Claims
US Mar Change in Nonfarm Payrolls
US Feb Construction Spending
US Feb Factory Orders
US Feb Trade Balance
US Mar Unemployment Rate
CN Mar PMI Manufacturing
US Feb Durable Goods Orders
9-Apr-18
3-Apr-18
SPHREIT 2Q18
10-Apr-18
11-Apr-18
12-Apr-18
13-Apr-18
US Mar PPI Final Demand
US Apr Mortgage Applications
US Apr Initial Jobless Claims
CN Mar Money Supply (10 Apr - 15 Apr)
US Feb Wholesale Inventories
US Mar CPI
US Mar FOMC Meeting Minutes
CN Mar Trade Balance
SPH 2Q18
CN Mar PPI
SG Feb Retail Sales
SG 1Q18 GDP (6 Apr - 13 Apr)
CN Mar CPI
16-Apr-18
17-Apr-18
18-Apr-18
19-Apr-18
20-Apr-18
US Mar Retail Sales Advance
US Mar Industrial Production
US Apr Mortgage Applications
US Apr Initial Jobless Claims
SGX 3Q18
M1 1Q18
CN 1Q18 GDP
KEP 1Q18
CN Mar Retail Sales SG Mar Non-oil Domestic Exports 3311 HK 1Q18
23-Apr-18
24-Apr-18
25-Apr-18
26-Apr-18
27-Apr-18
US Apr Manufacturing PMI
US Mar New Home Sales
MAGIC 4Q18
US Mar Wholesale Inventories
US 1Q18 GDP Annualised
US Mar Exisiting Home Sales
US Mar Durable Goods Orders
SG 1Q18 Unemployment
SG Mar CPI
US Apr Initial Jobless Claims
MINT 4Q18
SG Mar Industrial Production
30-Apr-18
1-May-18
2-May-18
3-May-18
4-May-18
CN Apr Manufacturing PMI
US Apr Manufacturing PMI
US Apr Mortgage Applications
US May FOMC Rate Decision
US Apr Change in Nonfarm Payrolls
SG Mar Money Supply
US Mar Construction Spending
CN Apr Manufacturing PMI
US Apr Initial Jobless Claims
US Apr Unemployment Rate
US Apr ISM Manufacturing
SG Apr Purchasing Managers Index
US Mar Trade Balance US Mar Factory Orders US Mar Durable Goods Orders
Notes:
Sourced from Bloomberg All US Tech results dates have been adjusted to Singapore dates. US Initial jobless claims are released every Friday. MBA mortgage applications are released every Wednesday.
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OCBC Investment Research Market Pulse 3 Apr 2018
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