SG Property

SG Property: With a dearth of upcoming projects in the Orchard retail space pipeline over 2015-17, OCBC believe there could be a greater impetus for strategic redevelopments along the western end of Orchard Road - a neglected area with relatively dated assets. In particular, Hotel Properties Ltd (HPL), which owns a large combined site in that area, has been long reported in the media to be considering a mega-development and recently saw a general offer made by a consortium comprising strategic partners, Mr. Ong Beng Seng and Wheelock Properties Ltd. (Wheelock). The house research reveals the meaningful confluence of fundamental drivers supporting the revitalization of West Orchard ahead, and identify four developers with key assets in the area. Initiate coverage on HPL with a BUY with fair value of $5.32 (35% RNAV disc.), and on Wheelock with a BUY with fair value of $2.38 (30% RNAV disc.). Other potential beneficiaries in West Orchard include Hong Fok (unrated) and Bonvests (unrated), which are trading at 35%-47% discounts to RNAV.