SG Property

SG Property: HSBC thinks that sector valuations are attractive as assets are headed for a soft landing, and prefers developers over Reits, citing developer’s steep RNAV discounts as a good entry point for those with long term horizon. The house says expectations on developers are low and issues around capital allocation capital management are well known; therefore, surprise risk favours the upside. Also, Developers have also progressively diversified and pared down their direct exposure to Singapore in the event asset and land prices correct substantially. Contrastingly, the house feels Reits are fairly valued with a sector DPU yield of 6.5% and two-year DPU growth of 1.9% Preferred Developers – Capitaland (O/W, TP $3.70) Keppel Land (O/W, TP $3.95) City Dev (Neutral, TP $11.55) Preferred REITs- Ascendas REIT (O/W, TP $2.35) FCT (O/W, TP $1.95) Capitamall Trust (O/W, TP $2.10)