OUE

OUE: CLSA initiates at Outperform with $4.16 TP. Note that OUE is its top sector pick and has been completely transformed since Lippo's entrance as a controlling shareholder with properties undergoing major revamps while it has also been successful in making large-scale acquisitions. Believe OUE is well positioned to enjoy strong growth in the office and hospitality segments where 50% and 22% of its GAV respectively reside……

Add that says its target implies 39% upside, and is pegged at a 15% discount to its $4.89/share RNAV estimate. OUE's strategy of building strong recurring income, while enhancing old assets and identifying undervalued assets in the market is similar to what CapitaLand did especially between 2004 and 2006, over which period the stock returned 65% (per annum). Office and hospitality remain house most preferred segments in the property sector, while asset recycling is potential share price catalyst.