Regional Daily Ideas Troika

Transcription

Regional Daily, 16 December 2014
5
Regional Daily
Ideas Troika
Top Stories
Amata Corporation (AMATA TB)
Property - Real Estate
BUY THB16.50 TP: THB21.00
Mkt Cap : USD536m
Pg2
We believe 4Q may be Amata’s peak quarter for 2014 but weak land sales
YTD may lead to an unexciting core profit outlook. Maintain BUY, with a
THB21.00 TP (27% upside) at a 15% discount to its NAV, which reflects a
2.3x 2015F P/BV (-0.5SD from its long-term mean).
Analyst: Wanida Geisler ([email protected])
China Railway & Construction Sector
OVERWEIGHT
Pg3
The Star reported on 13 Dec that a consortium comprising China Railway
Construction Corp (CRCC) (1186 HK, BUY, TP: HKD10.97) and CSR Corp is
hopeful of winning the construction and equipment tender for the high-speed
railway (HSR) between Kuala Lumpur and Singapore (KL-SGP line).
Analyst: Winston Cao ([email protected])
Bangchak Petroleum (BCP TB)
Energy & Petrochemicals - Oil & Gas Services
NEUTRAL THB32.00 TP: THB29.52
Mkt Cap : USD1,344m
Pg4
We have revised down our 2015F crude oil price to USD80/bbl from
USD95/bbl, which results in EPS declining by 14.8% to THB3.60. Maintain
NEUTRAL with lower TP of THB29.52 (from THB32.88, 7.8% downside)
based on 1x 2015 P/BV 2014F net profit unchanged.
Analyst: Kannika Siamwalla CFA ([email protected])
Pg5
Beneficiary Of a Strong USD
Other Key Stories
Malaysia
Timber
NEUTRAL
Analyst: Hoe Lee Leng ([email protected])
Malaysia Airports Holdings (MAHB MK)
Transport – Aviation
BUY MYR6.66 TP: MYR8.05
Pg6
Wins Doha Job
Analyst: Ahmad Maghfur Usman ([email protected])
Singapore
Singapore Real Estate
See important disclosures at the end of this report
Pg7
The Real Estate Pulsebeat: Nov 2014 homes sales – EC market was the
clear winner
Analyst: Ivan Looi ([email protected])
Powered by EFATM Platform
1
Company Update, 15 December 2014
Buy (Maintained)
Property - Real Estate
Market Cap: USD536m
Target Price:
Price:
THB21.00
THB16.50
Macro
Risks
Trading At Discount To NAV
Growth
Value
Price Close
Relative to Stock Exchange of Thailand Index (RHS)
19.0
116
18.0
112
17.0
107
16.0
103
15.0
99
14.0
94
13.0
90
12.0
85
11.0
30
81
25
20
15
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
5
Dec-13
Vol m
We believe 4Q may be Amata’s peak quarter for 2014 but
weak land sales YTD may lead to an unexciting core profit
outlook. Maintain BUY, with a THB21.00 TP (27% upside) at
a 15% discount to its NAV, which reflects a 2.3x 2015F
P/BV (-0.5SD from its long-term mean). Recovery could
take place once overall capacity utilisation improves to
>65% from 60% currently. The major earnings driver for
2015
could
be the
gains
on the
sale9M14
of assets
intowere
a REIT
 Slow
recovery
in land
sales.
Amata’s
land sales
at 331 rai
and(~1,600
the listing
of
Amata
VN.
sq m) (-42.5% YoY). Whether this year’s land sales can reach
its 1,000-rai target would be highly dependent on the signing of new
contracts in 4Q14. It may announce its 2015 land sales target in end2014 or early 2015. Still, real recovery could take place once overall
capacity utilisation increases to more than 65% from the current 60%.
Despite the slow land sales, it recently raised the price of its land at the
Nakorn estate to THB7.5m/rai in 2015 from the current THB7m/rai,
although it kept the land price at its City estate at THB3.2m/rai.

10

Source: Bloomberg
Avg Turnover (THB/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (THB)
Free float (%)
Share outstanding (m)
Shareholders (%)
Vikrom Kromadit
Thai NVDR
60.0m/1.84m
8.5
27.3
11.9 - 18.1
70
1,067
20.2
8.2
Share Performance (%)





Recurring income continues to grow at a double-digit rate. Amata’s
recurring income consists of water, rental and service incomes. The 3year CAGR of this business is 20%, while recurring income for 9M14
grew 12% YoY despite the poor buyer sentiment.
Asset monetisation programme over the next six months. It has
delayed selling factory rental space of 150,000 sq m in its Nakorn estate
to a newly set-up REIT worth THB4.5bn to 1Q15 from end-2014. Amata
VN, its 44%-owned associate company, will be listed in 2Q15 and the
proceeds used to fund the development of its new industrial estate,
Amata City Long Thanh. Our earnings estimates for 2014-15 have yet to
include any gain from the asset sale.
Expect an unexciting core earnings outlook. Amata believes its 2014
performance will peak in 4Q, when it may record the highest proceeds
from land sales and transfers. We note that 60% of Amata’s backlog
(worth THB4.6bn) should be realised as revenue in 4Q14. However,
because of the weak land sales to date, its core earnings outlook is likely
to be unexciting. The major earnings driver for 2015 may be gains on the
sale of assets into a REIT and the listing of Amata VN. Its long-term
focus is on expanding regionally into Vietnam and Myanmar.
YTD
1m
3m
6m
12m
19.6
1.2
(2.4)
(1.2)
10.0
Forecasts and Valuations
(4.1)
Total turnover (THBm)
Dec-11
Dec-12
Dec-13
Dec-14F
Dec-15F
3,647
5,613
7,262
5,942
6,537
Reported net profit (THBm)
901
1,501
1,515
1,111
1,201
Recurring net profit (THBm)
901
1,290
1,515
1,111
1,201
Recurring net profit growth (%)
37.8
43.2
17.4
(26.7)
8.1
Recurring EPS (THB)
0.84
1.21
1.42
1.04
1.13
Wanida Geisler 66 2862 9748
DPS (THB)
0.34
0.55
0.50
0.36
0.39
[email protected]
Recurring P/E (x)
19.5
13.6
11.6
15.9
14.7
P/B (x)
2.23
2.39
2.12
1.96
1.80
2.0
3.3
3.0
2.2
2.4
13.5
19.7
19.3
12.9
12.8
Absolute
Relative
(0.5)
2.4
(0.9)
(8.2)
Shariah compliant
Dividend Yield (%)
Return on average equity (%)
Return on average assets (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
5.1
7.2
7.0
4.9
5.1
42.2
51.4
48.9
43.9
42.5
(8.7)
(13.4)
Source: Company data, RHB
2


3

.
3
0
.
1
0
0
.
2
0
0
.
0
0
0
Sector News Flash, 15 December 2014
China Railway & Construction Sector
Overweight (Maintained)
Macro
Risks
More Overseas Contract Wins
Growth
Value
China Railway Group’s share price movement
Price Close
Recommendations & Target Price
6.55
na
7.00
What’s new?

Frontrunner for KL-SGP tender. The Star reported on 13 Dec that a
consortium comprising China Railway Construction Corp (CRCC) (1186
HK, BUY, TP: HKD10.97) and CSR Corp (1766 HK, NEUTRAL, TP:
HKD7.47) is hopeful of winning the construction and equipment tender
for the high-speed railway (HSR) between Kuala Lumpur and Singapore
(KL-SGP line). The investment for the line – the first HSR line in SouthEast Asia – could reach CNY68bn.
5.00
4.00
3.00
2.00
Neutral
Sell
Mar-11
Trading Buy
Take Prof it
Jun-12
Not Rated

Oct-13
Wins new job in Argentina. CSR also announced today that it has
secured a new railway locomotive contract worth CNY1.7bn for
Argentina’s Belgrano railway line. This is the third new contract win for
the company since it ventured into Argentina in 2006.
Source: Bloomberg
China Railway Construction Corp’s share price
movement
Maintain OVERWEIGHT on the sector. We see three major catalysts
that may continue to drive the re-rating of the sector:
11.0
na
12.5 Recommendations & Target Price
11.5
10.5
9.5
8.5
7.5
6.5
5.5
4.5
3.5
Buy
Neutral
2.5
Dec-09
Mar-11
Our view

Price Close
Sell
Trading Buy
Take Prof it
Jun-12
i.
Positive domestic railway FAI prospects. We expect China’s
domestic railway fixed asset investments (FAI) to keep increasing in
2015 and hit a historic new high of CNY950bn.
ii.
China’s active expansion in overseas investments. The Central
Government will announce the detailed plan of the “One Belt One
Road” initiative around the end of 2014.
iii.
Valuations remain attractive. The sector is still trading at 1-1.5SD
below its past 5-year historical mean. Sector re-rating is likely to
continue, driven by the above-mentioned increasing demand,
domestically and overseas.
Not Rated
Oct-13
Source: Bloomberg
China CNR’s share price movement
Price Close

Recommendations & Target Price
8.47
na
8.30
7.80
7.30
6.80
6.30
5.80
5.30
4.80
Buy
Neutral
May-14
Sell
Jul-14
Trading Buy
Sep-14
Take Prof it
Not Rated
Nov-14
Source: Bloomberg
Winston Cao +852 2103 9414
[email protected]
CRG still our Top Pick and the only stock now trading. CSR Corp,
China CNR (6199 HK, BUY, TP: HKD8.47) and CSR subsidiary Zhuzhou
CSR (3898 HK, NR) remain suspended from trading due to the potential
merger between two companies – and will not likely resume trading
before end-2014, according to announcements made by both
companies. As CRCC is also suspended from trading due to a potential
A-share private placement, China Railway Group (CRG) (390 HK, BUY,
TP: HKD6.55) is the only stock in the sector that is not suspended. We
remain bullish on CRG as it is the direct beneficiary of China’s domestic
and overseas infrastructure FAI. We also prefer CRG over its direct peer
CRCC, as we: i) forecast a faster 19% EPS CAGR for FY13-16F vs 15%
for CRCC, and ii) see its balance sheet improving more than CRCC’s.
Note that CRG's share price is now approaching our current TP (which is
under review) after rallying 57% YTD.
Company Name
Ticker
Price
(HKD)
Target P/E (x)
(HKD) Dec-14F
P/E (x)
Dec-15F
Rating
China Railway Group
390 HK
6.04
6.55
9.2
7.4
BUY
China Railway Construction
1186 HK
9.44
10.97
7.8
6.4
BUY
China State Construction Int'l
3311 HK
11.20
14.63
12.0
8.4
BUY
China CNR
6199 HK
7.66
8.47
11.6
10.9
BUY
CSR Corp
1766 HK
7.89
7.47
14.5
12.7
NEUTRAL
China Communications Construction
1800 HK
8.55
5.82
8.6
8.1
NEUTRAL


3

1

3
3
6.00
Buy
1.00
Dec-09




3
Neutral (Maintained)
Energy & Petrochemicals - Oil & Gas Services
Market Cap: USD1,344m
Target Price:
Price:
THB29.52
THB32.00
Macro
Risks
Downwards Earnings And TP Revision
Growth
Value
Price Close
Relative to Stock Exchange of Thailand Index (RHS)
38.0
104
36.0
100
34.0
95
32.0
91
30.0
87
28.0
83
26.0
78
24.0
25
74
0
0
.
2
0
0
We have revised down our 2015F crude oil price to USD80/bbl from .
0
USD95/bbl, which results in EPS declining by 14.8% to THB3.60 from 0
our previous forecast. Maintain NEUTRAL with lower TP of THB29.52 0
(from THB32.88, 7.8% downside) based on 1x 2015 P/BV. We leave
2014F net profit unchanged as earnings preview nears. Yet, stock loss
could be as high as ~THB1.8bn for 4Q14, assuming no hedging gains.

20
15

Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
5
Dec-13
Vol m
10

Source: Bloomberg
Avg Turnover (THB/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (THB)
Free float (%)
Shareholders (%)
PTT
Ministry of Finance
Thai NDVR
170m/5.23m
20.9
-7.8
25.5 - 37.3
63
1,377
27.2
10.0
5.2
YTD
1m
3m
6m
12m
Absolute
14.3
(6.6)
(5.2)
8.5
(1.5)
Relative
(3.3)
(4.3)
(1.7)
3.7
(14.1)
Crude oil price expectations. We expect crude oil prices to close at
around USD60-65/barrel (bbl) for end-2014. We also forecast for higher
crude oil prices for 2015 and 2016, at USD80/bbl (from USD95/bbl
previously) and USD95/bbl respectively. As a result of this outlook, the
refinery and petrochemical stocks under our coverage should see
abysmal earnings for 4Q14 and to improve from 1Q15 onwards. Share
prices that have been badly beaten down should also slowly improve.
Worst case scenario analysis. We have assumed a 2015 stock loss of
THB2.3bn, spreads falling 20% and a re-rating of Bangchak Petroleum
under our worst case scenario. Our TP under these assumptions is
THB25.89/share, ie 0.9x 2015 P/BV.
Earnings and TP revision: We have cut down our 2015 crude oil price
forecast to USD80/bbl from USD95/bbl. This crude oil price revision
results in Bangchak Petroleum’s 2015F EPS declining by 14.8% to
THB3.60 from our previous forecast. We leave 2014F net profit
unchanged as earnings preview nears. However, stock loss could be as
high as around THB1.8bn for 4Q14, assuming no hedging gains. We
have not factored into our assumptions any stock gains/losses going
forward. We lower our TP for Bangchak Petroleum to THB29.52/share
(from THB32.88/share) based on 1x 2015 P/BV. We maintain our
NEUTRAL recommendation.
Dec-11
Dec-12
Dec-13F
Dec-14F
Dec-15F
158,610
165,246
186,514
267,343
272,600
Reported net profit (THBm)
5,610
4,273
4,653
4,265
4,965
Recurring net profit (THBm)
6,916
2,635
4,753
4,265
4,965
157.3
(61.9)
80.3
(10.3)
16.4
Recurring EPS (THB)
5.02
1.91
3.45
3.10
3.60
DPS (THB)
1.58
1.24
1.35
1.24
1.44
6.4
16.7
9.3
10.3
8.9
P/B (x)
1.48
1.37
1.27
1.18
1.09
P/CF (x)
22.5
4.8
11.9
4.5
5.8
5.0
3.9
4.2
3.9
4.5
Total turnover (THBm)
Recurring P/E (x)
Shariah compliant


2

.
2
0
.
2




Kannika Siamwalla, CFA 66 2862 9744
Dividend Yield (%)
[email protected]
EV/EBITDA (x)
6.49
9.78
7.53
5.43
5.15
21.4
13.8
13.9
11.8
12.8
48.7
34.0
38.8
25.5
16.3
0.0
0.0
0.0
4
Sector Update, 15 December 2014
Timber
Neutral (Maintained)
Macro
Risks
Beneficiary Of a Strong USD
Growth
Value
Malaysian log exports - YTD 2014
Japan, 4.5%
Others, 8.8%
Taiwan, 11.6%
Korea, 0.9%
Thailand,
0.7%
China, 9.5%
India, 64.0%
Source: ITTO
CPO price chart
Jan-90
Jul
Jan-91
Jul
Jan-92
Jul
Jan-93
Jul
Jan-94
Jul
Jan-95
Jul
Jan-96
Jul
Jan-97
Jul
Jan-98
Jul
Jan-99
Jul
Jan-00
Jul
Jan-01
Jul
Jan-02
Jul
Jan-03
Jul
Jan-04
Jul
Jan-05
Jul
Jan-06
Jul
Jan-07
Jul
Jan-08
Jul
Jan-09
Jul
Jan-10
Jul
Jan-11
Jul
Jan-12
Jul
Jan-13
Jul
Jan-14
Jul-14

Source: Bloomberg
Japan consumer and business spending

Source: Japan’s Ministry of Finance

Hoe Lee Leng +603 9207 7605
[email protected]


2

2

2
While we continue to like the still-promising prospects of the log subdivision, this is offset by the sombre outlook for the plywood segment
as the Japanese economy has fallen back into a recession on top of
weaker CPO prices. One bright spot, however, is the positive impact of
a stronger USD on timber exports, given that costs are mostly in MYR.
Maintain NEUTRAL on the sector.

4,200
4,000
3,800
3,600
3,400
3,200
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0




Prices of Malaysian tropical logs have risen by 18% YoY. This was
partly due to the impact of the ban on log exports from Myanmar, which
was implemented from 1 Apr 2014, and stronger demand from India (as
Sarawak’s log exports to the South Asian nation rose to 64% of total
exports from 61% in 2013). We maintain our assumptions of a 6-8% per
annum increase in log prices for 2014 and 4-6% for 2015-2016, to be
conservative. In the longer term, investors should look out for the impact
of the recent new timber licensing policy in Sarawak, which enforces
sustainable certifications as well as the crackdown on illegal logging in
the state.
The economic recovery in Japan has seemingly reversed. This is on
the East Asian nation technically falling back into a recession in 3Q14.
Housing starts have reflected this, with a further decline of 7.1% YoY in
9M14 from the -3.4% recorded in 1H14. The Japanese Government
intends to address this issue by: i) delaying the second consumption tax
hike (to 10% from 8%) to Apr 2017 (from Oct 2015), ii) implementing
some strategies to revive home sales, and iii) calling for a snap election,
which was held on 14 Dec. This should translate to lacklustre plywood
prices in the medium term. Plywood prices have not moved much, as a
result. We are leaving our average plywood price assumptions at +2-3%
YoY for 2014-2016.
Saving grace is the strengthening USD. The saving grace for the
timber industry is now the exchange rate. While weaker consumer
spending in Japan – a result of a weakening JPY against the USD – has
affected plywood sales volumes, this is more than offset by the impact of
the strengthening of the USD against the MYR. Timber companies
export their products in USD while their costs are mostly in MYR. While
we continue to assume exchange rates of MYR3.15-3.20/USD, we
estimate every MYR0.10/USD change in the exchange rate affects
timber companies’ earnings by 10-17% per annum.
We maintain our NEUTRAL stance on the timber sector. We maintain
our target 2015F P/Es of 10-12x for the timber divisions and 16x for the
plantation businesses. We have one BUY recommendation, Ta Ann
(TAH MK, TP: MYR4.40). We are NEUTRAL on WTK Holdings (WTKH
MK, TP: MYR1.25) and recommend SELL on Jaya Tiasa (JT MK, TP:
MYR1.70).
Company Name
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
MYR1.70
16.2
1.0
1.2
MYR3.65
MYR4.40
11.6
1.2
2.7
BUY
MYR1.06
MYR1.25
8.5
0.3
2.4
NEUTRAL
Price
Target
Jaya Tiasa Holdings
MYR1.95
Ta Ann Holdings
WTK Holdings
Rating
SELL
5
2
Malaysia Airports Holdings (MAHB MK)
Transport - Aviation
Market Cap: USD2,618m
Buy (Maintained)
Target Price:
Price:
MYR8.05
MYR6.66
Macro
Risks
Wins Doha Job
Growth
Value
Malaysian Airports (MAHB MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
10.00
114
9.50
108
9.00
103
8.50
97
8.00
92
7.50
86
7.00
80
6.50
75
6.00
25
69
0
0
.
2
0
0
The Doha job win will add MYR6m annually in earnings for FY15-20. .
0
Maintain BUY as Malaysia Airport’s recent perpetual sukuk issue 0
nudges up FY15/FY16 “accounting” earnings by 24%/11% but 0
marginally raises our DCF-derived TP to MYR8.05 (vs MYR8.04, 20.9%
upside). While Nov 2014 traffic dropped, it was not as bad as expected.
YTD Nov 2014 traffic growth stands at 5.2% vs our FY target of 4.37%.

20
15

Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
5
Dec-13
Vol m
10
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Shareholders (%)
Khazanah Nasional
Permodalan Nasional
Employees Provident Fund
7.82m/2.36m
12.8
20.9
6.43 - 9.78
33
1,374
36.6
13.0
11.3
YTD
1m
3m
6m
12m
Absolute
(26.0)
(2.6)
(14.3)
(13.5)
(26.0)
Relative
(19.4)
1.4
(8.3)
(6.6)
(21.1)


Wins second job from Doha Airport. Malaysia Airports’ joint-venture
(JV) company Malaysia Airports Consultancy Services Middle East LLC
(MACS ME) won a letter of award from the New Doha International
Airport Steering Committee to provide airport special systems repair &
maintenance services at Hamad International Airport. MACS ME is 51%owned by Watad Group Enterprises LLC (Malaysia Airports: 49%). The
3-year MYR192.1m contract comes with a 2-year extension option. This
is the group’s second contract win from the airport. We assume the job
fetches a 20% net margin, which effectively translates into MYR6m
annual contribution to earnings (on its stake) over the next five years.
November numbers down. Malaysia Airport’s Nov 2014 traffic dropped
by 2.6% YoY (YTD: +5.2%), ie better than management expected. We
expect December traffic to drop by a similar quantum YoY, with ending
2014 passenger traffic to grow at 4.37% (from our earlier 4%). We
expect FY15 and FY16 traffic growth to be unchanged at 6% and 5%
respectively, as the shaky consumer sentiment on the goods and
services tax (GST) implementation could cap the upside to growth. We
also lower our 2014 aircraft traffic growth estimate to 7.2% YoY from
12%. Our FY15F/FY16F at 5%/4% growth respectively are unchanged.
Perpetual sukuk. Malaysia Airport’s recently issued MYR1bn perpetual
sukuk (yield at 5.75%, AA2 rating, 10-year non-callable) will remove the
need for fundraising via bank borrowings, where interest expense will hit
its income statement. It will be treated as an equity from an accounting
perspective and its interest payments will not hit earnings (as deductions
will be on statement on changes of equity). We have adjusted our model
accordingly, as we earlier assumed no perpetual sukuk would be raised.
Maintain BUY. Adjustments on earnings for FY14: -7% (due to lower
aircraft traffic), FY15: +24% and FY16: +11% (largely due to reduced
“accounting” interest expense from the perpetual sukuk and Doha job
win). Our DCF-derived TP (WACC of 8.3%) only nudges up to MYR8.05
(from MYR8.04) as, theoretically, interest expense is unchanged on DCF
computation. We maintain our BUY call.
Dec-12
Dec-13
2,163
2,463
2,776
3,084
3,272
Reported net profit (MYRm)
331
306
38
87
160
Recurring net profit (MYRm)
402
331
84
87
160
1.5
(17.8)
(74.6)
3.3
84.7
Recurring EPS (MYR)
0.33
0.27
0.06
0.06
0.12
DPS (MYR)
0.14
0.12
0.11
0.14
0.14
20
25
109
106
57
P/B (x)
1.85
1.75
1.65
1.44
1.45
P/CF (x)
12.5
9.2
9.4
9.6
9.4
2.0
1.9
1.7
2.1
2.2
12.3
14.4
14.4
10.6
10.2
Total turnover (MYRm)
Shariah compliant
Ahmad Maghfur Usman +603 9207 7654
[email protected]
Recurring P/E (x)
Dividend Yield (%)
EV/EBITDA (x)


2

.
2
0
.
2




Dec-14F
Dec-15F
Dec-16F
8.4
6.8
0.7
1.5
2.5
57.4
77.9
63.6
36.6
35.3
(42.5)
(59.9)
(51.8)
6
Sector News Flash, 16 December 2014
Singapore Real Estate


1

1

1
The Real Estate Pulsebeat: Nov 2014 homes sales –
EC market was the clear winner
1
Rental pulsebeat:
2Q/3Q14
SGD psf/mth/Index QoQ (%) YoY (%)
Office Grade A
Retail Orchard Rd
10.60
34.20
3.4
0.0
11.0
3.3
Biz Park (City Fringe)
Multi-user factory (B1)
median rent
5.50
1.9
3.8
2.15
(2.2)
(2.3)
Warehouse median rent
Residential median rent
2.05
3.74
0.0
(1.1)
(1.3)
(2.2)
SRX Rental Index (Nov)
121.7
(0.8)
(5.3)
Source: OSK-DMG, URA, HDB, CBRE
New home sales for Nov 14 at 412 (excl. EC) were down 46.1% MoM and
67.6% YoY. Year-to-date, 7,296 units (excl. EC) have been registered sold,
down 52.1% YoY and a far cry from the peaks levels (over 22k) attained in
2012.


Price pulsebeat:
2Q/3Q14
Office Grade A
Retail Orchard Rd
SGD psf/Index
2,750
7,200
QoQ (%) YoY (%)
0.0
12.2
0.0
2.9
Multi-user factory (B1)
637
(1.8)
3.4
Warehouse median
URA Residential PPI
HDB Resale
SRX Price Index (Nov)
857
207.9
192.5
167.5
3.2
(0.7)
(1.6)
(1.1)
(11.3)
(3.9)
(6.0)
(3.4)
Source: OSK-DMG, URA, HDB, CBRE
Residential price & rental indices (4Q98 = 100)
250
207.9
200
160.6
150

Top-selling projects. Lake Life EC exceeded 97% sold over its first
weekend launch – locking in a median selling price of SGD869 psf. As
mentioned in our Journey to the West – “Sutra” seekers in Jurong Lake
District piece, this was expected as Lake Life is strategically located within
the Jurong Lake District, which was highlighted by our Prime Minister
during the National Day Rally 2014; the region will be revitalized in years to
come. In addition, projects like Bellewaters, Bellewoods, Tre Residences
and LakeVille came in as the top five-selling projects in Nov.
Developers released more units before the holiday season.
Developers launched 859 units (excl. EC) in Nov 14 (up 32.4% MoM but
down 40.3% YoY) and above the year-to-date average of 697. Including
ECs, the total number of launched units shot up to 2,617 in Nov 14 (up
303.2% MoM and 12.9% YoY). Consistent with the past few years,
developers are ramping up supply before the holiday season in Dec. For
Nov, including ECs, the high-end segment accounted for 19% of the
launches. Mass-market accounted for 71% (mostly ECs), and mid-market
accounted for the remaining 10%.
Lifeless property market. We expect the EC market to do better than the
private non-landed/landed market in the last month of 2014 and project
new homes sales (incl. ECs) to hit 8,500-9,500 units (YTD Nov 14: 8,716).
We reiterate that the three-party Catch-22 situation amongst
homebuyers, developers and authorities will still persist. Homebuyers are
holding back in anticipation of the surge in physical completions in 2015-16
(Figure 19) and prospective price declines. Developers are dragging
launches, with an eye on government stepping in to reverse some of its
anti-speculation measures. From the authorities’ perspective, without a
significant drop in property prices, it will be difficult to justify any easing of
cooling measures, when prices are in general only slightly off their peaks in
3Q13 (down 3.9%). Our top pick are still regionally diversified developers
such as KPLD (BUY, TP:SGD3.88) and CAPL (Buy, TP SGD3.54).
100
50
4Q98
3Q99
2Q00
1Q01
4Q01
3Q02
2Q03
1Q04
4Q04
3Q05
2Q06
1Q07
4Q07
3Q08
2Q09
1Q10
4Q10
3Q11
2Q12
1Q13
4Q13
3Q14
0
Residential Price Index
Residential Rental Index
Source: URA
Ivan Looi +65 6232 3841
[email protected]
Singapore Research +65 6533 0781
[email protected]
Top-selling project in Nov 14: Lake Life sold 533 units out of 546 units launched
last month (cumulative 97.6% sold)
7
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Regional Daily Ideas Troika

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