Saturday, July 11, 2009

City Dev - Buy by DBS Vickers (7 July 2009)

DBS Vickers gave a buy call on City Dev. How will the new ruling on the tax of property gains affect property stocks? I am not too sure also. Below is the report by DBS Vickers

Singapore Smorgasbord

• Launches galore from the listed developer with the largest Singapore residential landbank
• Take your pick from a varied mix of upcoming projects
• 20% Premium to RNAV Maintained, in line with our upgrade of sector to Overweight back in Apr
• Reiterate BUY, TP of S$10.67 offers 27% upside; City Dev is our top big-cap pick for the developers

A Stamp of Confidence. Attracting one of the strongest client interests at our ‘Pulse of Asia’ conference, City Dev stamped its confidence in the demand fundamentals underlying the mass and mid-tier residential market, even if the high-end segment may take a couple more quarters before seeing a re-ignition of interest. It continues to be business as usual for City Dev, as it readies new launches with an array of projects catering to every market segment.

Something For Every Appetite. Having already sold 500 units in 1H09, it is poised to sell another 500 units in 2H09. On the menu are high-end Volari in Jul/Aug (former Garden Hotel at Balmoral Road), a mass-mid market project at the former Hong Leong Garden in Sep, and two mass-market sites – The Gale in July (33% stake, at Upper Changi) and another Pasir Ris project at year-end. And if buying appetites aren’t sufficiently sated, high-end Quayside at Sentosa is launch-ready.

BUY, 27% Upside to TP of S$10.67. After adjusting ASPs for Hong Leong Garden and marking-to-market its listed entities, our RNAV is revised up to S$8.90 (from S$8.79). We keep a 20% premium on the stock, which is close to historical +1SD levels, for a TP of S$10.67 (prev S$10.55) giving a 27% upside. Reiterate BUY on our top big-cap pick for the property developers.

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