The following posting was made this morning by Kevin Scully, executive chairman of NRA Capital, on his blog. For his full article, go to www.nracapital.com


kevin_aice_350
Prior to founding NRA Capital, Kevin was head of research at various houses - Schroder Securities, Kay Hian and HSBC Securities. NextInsight photo

I suspect overall sentiment towards the property sector with be negative to neutral given the mood and the threat of further measures if the market doesnt check its heady rise.   

But within this, discerning investors have a great buying opportunity because not all property companies will be equally affected by the measures which have a very specific target (investment property buyers).

 

I have two property stocks in my Stock Picks - Allgreen and Sing Holdings and I recently made a positive comment on new IPO Oxley Holdings.

a) AllGreen - I still like it.  It's not a pure residential property play with office and hotels as well and its residential property are positioned at the mid to high end which attracts less speculative investment buying.   

b) Sing Holdings - they have only made one purchase to rebuild their landbank at Robin Court and only plan to launch that in 2014/2015.....its a small development and also high end so its both far down the road and in my opinion unlikely to be impacted by these measures.  

In fact weaker prices and sentiment might assist Sing Holdings in rebuilding its landbank.

 

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There is a large upcoming supply due for completion in 2013 of 11.6k private and 18.3k HDB units. Photo by Leong Chan Teik.

c) Oxley Holdings - not a stock pick but I recommended it recently, I think it's only fair to make a comment.  I think the positioning of Oxely in small "shoebox developments in prime locations" means that their residential units are unlikely to be affected. 

The day before round 4 measures were announced Oxely sold 100% of its Lofts@Holland in a couple of hours. 

But that was before the measures - it launched Vibes@Kovan over the weekend and I was informed that more than half were already sold before the official launch.   Oxley's other big assets are NOT Residential - its Ubi Industrial project and its two office projects in Robinson Road at 138 and 144.   

If I add 144 Robionson Road to my forward profit stream and apply the same discount rate as 138 Robinson Road, I would be looking at a fair value of about S$0.55 up from S$0.51.

 

I am generally comfortable with my two property Stock Picks and recent recommendation Oxley Holdings as I believe they are in different unique positions in the property sector which are more insulated to these measures. 

Any sector based price weakness provides a medium to long term buying opportunity.  As to who will be most badly affected, history tells us its probably the new players in the property sector, ie companies which are not traditionally in property but have seen how "easy" it is to make money as a developer. 

They start with small developments and after these small successes, start to buy bigger sites - aggressive land prices and a weak balance sheet could be their downfall. 


Recent story: LATEST SINGAPORE PROPERTY CURBS: What analysts say…


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