Excerpts from UOB Kay Hian report

Strong 2015 election mandate could pave way for regulatory changes. Regulatory changes could also be in the pipeline following the strong general election win in 2015.

Le Nouvel Ardmore (on Ardmore Road, Singapore) is Wing Tai’s trophy development in collaboration with Jean Nouvel, globally renowned architect and winner of the Pritzker Architecture Prize 2008 and Wolf Prize in Arts 2005. Photo: Company.This could pave the way for potential changes in the regulatory framework for selected sectors including property development and land transport. For the property sector, we believe the authorities may review and relax selected residential property cooling measures.

Based on our estimates, physical property prices could decline by up to 15% in 2Q16 (from the peak in 2013) and this could be a catalyst for selected cooling measures, such as additional buyer's stamp duty (ABSD), to be reviewed in 2H16.

Stock Recent price Target price
CityDev $7.53 $10.75
Wing Tai $1.705 $2.50
ComfortDelGro $3.02 $3.30
SMRT $1.455 $1.46

Having said that, we think some measures, such as total debt service ratio (TDSR), would be a permanent measure, which is a prudent move.

Developers would benefit and the stocks we favour include City Developments (CDL) and Wing Tai Holdings (Wing Tai), both for their significant exposure to the Singapore residential segment compared with more geographically-diversified developers (such as CapitaLand).

Another sector is land transport. Following the restructuring of the bus segment, we think the rail financing framework would be reviewed in the near term.

SMRT Corporation (SMRT) would be a beneficiary since ComfortDelGro Corporation’s (CD) rail assets are already under the revised asset-light framework. However, we continue to prefer CD over SMRT due to the former’s earnings diversification, strong financials and track record.

Full report here.

Share Prices

Counter NameLastChange
AEM Holdings4.530-0.010
Avi-Tech Electronics0.295-
Broadway Ind0.1490.003
China Sunsine0.480-
Food Empire0.535-
Fortress Minerals0.365-
Geo Energy Res0.385-0.005
Golden Energy0.495-
GSS Energy0.053-0.002
ISDN Holdings0.475-
IX Biopharma0.166-
Jiutian Chemical0.092-
KSH Holdings0.3500.010
Leader Env0.059-
Medtecs Intl0.1790.002
Meta Health0.0340.001
Moya Asia0.060-0.001
Nordic Group0.425-
Oxley Holdings0.170-0.005
REX International0.225-0.005
Sinostar PEC0.225-
Southern Alliance Mining0.670-
Straco Corp.0.390-
Sunpower Group0.3900.005
The Trendlines0.096-
Totm Technologies0.1320.005
UG Healthcare0.2150.005
Uni-Asia Group1.110-
Wilmar Intl4.170-
Yangzijiang Shipbldg0.930-0.005

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  • Lionel Lim