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STOCKS NEWS SINGAPORE-OCBC upgrades residential sector

Source : REUTERS
Last Updated: Tue, Jun 26, 2012 02:20 hrs

OCBC Investment Research has upgraded Singapore residential sector to overweight as it expects mass market prices to stay buoyant and sees value in shares of high-end developers.

OCBC forecasts mass market price to grow by up to 5 percent this year, as there is ample liquidity still, with interest rates expected to stay low until 2013.

The brokerage said it favours City Developments Ltd for its mass market exposure and upgraded it to 'buy' from 'sell' and raised its target price to S$11.53 from S$8.92.

CityDev shares were 0.1 percent up at S$10.57, and have risen about 19 percent since the start of the year, versus the Straits Times Index's 6 percent gain.

High-end home prices are expected to fall 10-20 percent this year, but OCBC said it sees value in shares of high-end property developers. SC Global, Wing Tai and Ho Bee together are valued at 0.54 times their book value, below average levels seen in 2008's global financial crisis.

"We believe that luxury developers' equities have baked in excessively pessimistic expectations," OCBC said in a report.

OCBC downgraded UOL Group to 'hold' from 'buy' and kept its target price at S$4.80, citing its limited exposure to the mass market residential segment.

"With only one domestic site in UOL's land-bank currently, we view land acquisitions to be key requirements for share price outperformance ahead," OCBC said.

UOL shares are up 1.7 percent at S$4.80, and have gained 20 percent since the start of the year.

0949 (0149 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)

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9:38 STOCKS NEWS SINGAPORE-K-REIT Asia up on Ocean Fin stake hike

Units of K-REIT Asia, a real estate investment trust managed by Keppel Land, rose as much as 3.4 percent to a 9-month high after it said it raised its stake in a Singapore office property to nearly 100 percent.

By 0123 GMT, K-REIT Asia units were 2.4 percent higher at S$1.05, with 426,000 units traded, compared to its full-day average of 589,800 over the last five sessions.

K-REIT said on Monday it will buy 12.39 percent of the partnership that owns Ocean Financial Centre, raising its stake to 99.9 percent.

The acquisition price works out to S$261.6 million or about S$2,380 per square foot of net lettable area, net of rental support of S$24.1 million.

CIMB Research increased its target price for K-REIT Asia to S$1.17 from S$1.14, and kept its outperform rating to factor in the accretion from the purchase.

"We are net positive on K-REIT's acquisition...with increased control and good placement price outweighing slight negatives from higher asset leverage," CIMB said in a report.

0925 (0125 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)




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