OUE

OUE (Update of OUE Downtown): Daiwa received an update recently on the ‘revitalisation’ of OUE Downtown 2 from OUE. Downtown Gallery is expected to be completed in 4Q16, with 160,000 sq ft of retail space (wide array of retail, dining and entertainment) added from B1 to level 5. In addition, OUE recently received approval to replace current aluminium-cladded façade with a new glass curtain wall façade. Low and mid zone of Downtown 1 is transformed into Meritus Serviced Suites, 265 fully-furnished apartments with swimming pool and gym.

The House reiterates their BUY rating and believe OUE remains one of their deep value stocks. Price target of $3.30, up 50% from its current price of $2.18 (highest among 12 brokers on Bloomberg). Risks to their call include delays in the completion of its refurbishment activities or a poorly perceived investment initiative.

OUE (Deutsche Asia Conference 2015 highlights): Management looking into making acquisitions in order to replenish its asset pipeline. One Raffles Place could be sold in 2H15. Management stated that CPF building would be an attractive acquisition given its location next to OUE Downtown. OUE looks to acquire a platform where they could add value by repositioning or re-developing assets. The House has a 12 month price target of $2.49, up 14% from its current price of $2.18.