United Engineers (UE): submits the highest bid of $543m ($774 psf GFA) for a 99-year leasehold Govt Land Sale (GLS) site at Bendemeer Road. The site is one of the larger and better-located ones on the GLS programme (walking distance from Boon Keng MRT). It is designated for a 780-unit development...
Nevertheless, UE’s bid is 13% above the next highest bid, and appears aggressive. CIMB expects margins to be tight. Estimates breakeven at $1,150-1,200 psf, which implies possible pricing of S$1,300 - 1,400 psf, assuming typical developers’ profit margins of ~15%. This compares with nearby projects along St. Michael’s Road and Nin Residence (Potong Pasir) fetching ASPs of $1,000-1,400 psf (the top end dominated by smaller-unit projects)...
Still, house keeps TP at $3.21, and Outperform rating. Sees value in its current valuation of 0.6x P/B, which is underpinned by its chief commercial asset, UE Square. Investment properties (both completed and under construction) will also account for more than 60% of UE’s GAV even after the acquisition. Catalysts to come from rising commercial capital values.
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