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CapitaLand, CDL, UOL: What’s next for Singapore property giants?

Major Singapore-listed property groups CapitaLand, City Developments Limited (CDL) and UOL are facing better days ahead, analysts believe.

  • CapitaLand Ltd (SGX: C31) share price soars 16.3% last week
  • City Developments Ltd (SGX: C09) hits S$7.92 per share
  • UOL Group Ltd (SGX: U14) shares rise 1.2% to a two-month high
  • Analysts expect gains from CapitaLand’s restructuring, CDL’s new condominiums, and UOL’s redevelopments
  • Trade Singapore's top property stocks with an IG account

Property plays’ stock prices climb

CapitaLand jumped 1.3% to a one-year high of S$3.85 last Friday (26 March 2021). The counter spiked 16.3% over the week, boosted by the property giant’s restructuring announcement.

CDL ended at S$7.92, advancing 0.8% on the day and 3.4% week-on-week, achieving its strongest close since end-2020.

UOL shares rose 1.2% day-on-day to a two-month peak of S$7.86.

CIMB recommended ‘overweight’ on Singapore’s property stocks. The three developers are CIMB’s preferred picks in the sector, given their ‘high recurring cash-flow base and strong balance sheets’.

What does CapitaLand’s deal mean for its peers?

CapitaLand plans to split itself into a privately-owned development business and a listed entity, CapitaLand Investment Management (CLIM), comprising investment management and lodging.

Jefferies said the sector may see more such deals as developers cater to demand for asset-light entities and/or buy impaired assets inexpensively. It recommended ‘buy’ on CapitaLand with a target price of S$2.55.

However, market watchers said replicating the deal may be difficult for developers that lack a similar scale and size, The Business Times reported. Smaller peers may not have a large asset-management platform or access to capital recycling via multiple Reits, said RHB.

UOB analysts upgraded CapitaLand to ‘buy’ and raised their target to S$3.81. UOB expects CapitaLand shares to trade at a premium to its price-to-earnings and price-to-book ratios in the near to medium term, boosted by the restructuring and the potential return of the hospitality business amid the Covid-19 vaccine rollout.

CDL to see uplift from condo launches

RHB reiterated ‘buy’ on CDL with a reduced target price of S$8.70. RHB believes downside risk to the share price is ‘minimal’, as most of the Sincere investments have been written down.

RHB foresees strong demand for CDL’s launch of Irwell Hill Residences condominium in April 2021, and for Canninghill Pier, the residential component of the Liang Court redevelopment by CDL and CapitaLand, launching in 2H2021.

CIMB believes CDL’s land restocking activities will extend its residential earnings visibility. It recommended ‘add’ with a S$8.97 target on CDL.

Jefferies also rated the stock a 'buy' alongside a price estimate of S$8.80.

Redevelopment projects to refresh UOL’s portfolio

For UOL, CIMB analysts favour its high recurring income base, supported by rentals, hotel operations and investment holdings.

The company also has ‘good office exposure’ through United Industrial Corp, CIMB said, rating UOL ‘add’ with a S$7.91 target price.

OCBC’s research team gave a ‘buy’ call and fair value of S$8.91 on UOL, as the developer’s healthy balance sheet will enable it to embark on redevelopment projects and asset enhancement initiatives to rejuvenate its portfolio.

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