China’s recent steps to cool its property market have taken the shine off China-linked property counters in Singapore, with analysts seeing limited upside for many stocks.
For now, experts prefer property stocks with more Singapore-based portfolios.
They said these currently offer more potential growth, thanks to exposure to hot sectors like residential and hospitality.
China has been clamping down on its red-hot residential property sector. And some China-linked Singapore property counters are feeling the pinch.
Some analysts have put out “hold” calls on stocks like Yanlord Land and Allgreen Properties due to their large exposure to the China residential market.
Instead, analysts favour companies with more diverse markets.
Lock Mun Yee, VP Research, DBS Vickers, said: “From the Singapore-listed developer’s perspective, which tends to be more diversified in the first place, companies such as CapitaLand, which we like, generally have a multi-sector, multi-country approach, which is more balanced. And it has a strong balance sheet.”
Analysts also like property stocks with a local flavour.
They pick City Developments and SC Global because they are involved in Singapore’s residential and hospitality sectors, which are booming now.
Both DBS Vickers and DMG & Partners have “buy” calls on City Developments, with a target price of up to S$12.47, from the current S$10.84.
SC Global also as a “buy” call from the two houses, with a target price of up to S$2.26. It is currently trading at S$1.79.
And experts said that if the government does implement further cooling measures for the property market in the future, the policies will most likely target the mid- to mass-market segment. They said this will be good news for City Developments and SG Global as they have more high-end exposure.
Analysts added that investors can get alternative exposure to Singapore’s property market through REITs, which are currently sporting some very decent leads, as well as providing exposure to a wide variety of sectors.
Lock Mun Yee said: “At dividend yields of about six to seven per cent, that is fairly attractive as well. And the same sub-sectors echo into the REITs sector. We like the hospitality, retail, and also the industrial sub-sectors.”
DBS Vickers cites CDL Hospitality and Frasers Centrepoint as picks for the REIT sectors.
Source: Channel News Asia, 23 Apr 2010