Brokers' take

Bukit Sembawang | Buy Dec 13 close: S$5.93 Target price: S$8.25 Maybank Kim Eng, Dec 13

Bukit Sembawang is a concentrated proxy for Singapore's residential market, which we believe is at an inflection point after four years of price falls. We expect a cyclical earnings rebound in FY2019/2020E, reversing its earnings contractions of the past six years.

The stock is attractively priced at a 42 per cent discount to RNAV, larger than the 14 per cent trading discounts of its large cap peers. This is despite its prospects of stronger returns. We believe its market-leading dividend yields of 5.6 per cent can be sustained by a pristine balance sheet and improving earnings. While poor corporate access, low stock liquidity and the long time needed to fully develop its legacy land are possible reasons to overlook this stock, we believe its attractive valuations more than compensate for these.