CapitaLand Investment, CDL, UOL are top property picks on trading discount: CGS-CIMB

CGS-CIMB on Thursday (Mar 16) reiterated its “overweight” view on Singapore’s property sector, eyeing opportunities amid trading discounts in counters such as CapitaLand Investment, City Developments Ltd (CDL) and UOL Group.

The brokerage still considers the developers’ valuations “inexpensive”, given that they were trading at a 47 per cent discount to revalued net asset value – close to one standard deviation below the long-term mean discount.

This comes as the analysts noted a rebound in home sales in February, when 470 units were transacted.

Excluding executive condominiums, private home sales stood at 432 units, the highest in terms of volume since property cooling measures were announced last September.

However, CGS-CIMB also cautioned that price growth among private homes is likely to moderate in 2023, based on historical data in January and February this year. The research house expects prices to rise by a moderated zero to 3 per cent this year.

Despite this, investors can still seek out opportunities in developers with visible residential pipelines and strong balance sheets that would enable them to tap any opportunity during this slower cycle, noted CGS-CIMB.

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Top picks listed by the brokerage include CapitaLand Investment, with a target price of S$4.50; CDL, with a target price of S$8.97; and UOL Group, with a target of S$8. All three were given an “add” recommendation.

CDL, the analysts noted, has a potential launch pipeline of about 2,000 units. Share price catalyst for the group – which currently trades at a 57 per cent discount – could come from the recovery of the global hospitality industry.

However, demand for housing could be dampened by faster-than-expected interest rate hikes, slower economic outlook and property cooling measures, added CGS-CIMB.