Singapore’s property market is on the cusp of recovering, thus leading to an influx of investments into property stocks listed on SGX. However, the attention is still pretty much on the large caps.
Yet, CIMB believes that there are small cap property players with strong underlying net asset values that could make decent investments in 2018. Based on comparable market values of their properties, these small caps are trading at discounts between 12 to 60 percent to their revised net asset value (RNAV).
Investors Takeaway: 5 Property Plays Few Investors Know About
- Heeton Holdings
Heeton Holdings (Heeton) is a property developer and investor with assets in both Singapore and overseas. Its developments in Singapore are typically boutique projects.
Heeton has been expanding its landbank recently by acquiring stakes in the Serangoon Ville enbloc and Woodleigh Lane plots. The recovering property market in Singapore has allowed Heeton to monetise its completed properties at higher value recently. Heeton is progressively recognising profits from High Park Residences. At the same time, Heeton sold its The Woodgrove development at 79 percent above its fair value.
At $0.595, Heeton is currently trading at 0.5 times its book value and at a 60 percent discount to RNAV of $1.48.
- Keong Hong Holdings
Keong Hong Holdings (Keong Hong) is primarily a construction and building company that has projects in Singapore, Japan and Maldives. Keong Hong has a 20-percent stake in both Parc Life and Seaside Residences condo projects. These two projects are quite well received by the market and have sold at least 65 percent in September 2017. Keong Hong is expected to obtain Temporary Occupancy Permit (TOP) in 2018 for Parc Life and 2020 for Seaside Residences.
In terms of valuation, Keong Hong has a 3.2 percent dividend yield in FY17 and trades at 0.76 times its book value.
- KSH Holdings
KSH Holdings (KSH) is a well-established construction, property development and property investment group in Singapore. Most of its revenue is generated by its construction business segment. KSH has been venturing into China’s Gaobeidian project through joint ventures. With the announcement that China will set up a new special economic zone in Xiongan New Area in Hebei near Gaobeidian, the Gaobeidian project could benefit from rising house prices in the area.
In terms of property development in Singapore, its current development pipeline includes residential projects High Park Residences, Rezi 3TWO and commercial project Trio. KSH also recently landbanked by en blocing the Rio Casa site with potential 1.1m sq ft GFA in residential space. KSH owns a 35 percent stake in the Rio Casa site. (Current Share price: $0.785)
- Lian Beng Group
Lian Beng Group (Lian Beng) is a well-diversified property play that generates revenue from construction/property development, asphalt operations, civil engineering and machinery leasing business. Like KSH and Heeton, Lian Beng also owns a stake in the Rio Casa and Serangoon Ville site via the same en bloc last year. Lian Beng also owns ten percent stake in the Gaobeidian Township Project where housing prices have doubled from 2014 to 2017.
Over the course of the last five years, Lian Beng has seen its investment properties in Australia gained $156 million in fair value. Its total investment properties have grown from $66 million at end-FY12 to $704 million at end-FY17.
Lian Beng is exploring the possibility of spinning off its property development business and list it on the SGX-Catalist board. Not only will this allow the group to raise funds, it can also help shareholders to unlock value in the company. (Current share price: $0.77)
- SingHaiyi Holdings
Singhaiyi Holdings (Singhaiyi) is a real estate specialist, with exposure to property development, property investment, property management and real estate fund management, in Singapore, Malaysia and the US. Like most of the property plays in Singapore, SingHaiyi has also been landbanking. This is done via the tender for the Sun Rosier, How Sun Park and Park West en bloc sites.
SingHaiyi is also a commercial property player with a 35 percent stake in the 9 Penang Road commercial project. Right now, development works for the new Grade A office block is underway. Upon completion at end-2019F, the property will have a net leasable area of 352,000 sqft commercial space and 15,000 sqft of retail area on the ground floor. This will help SingHaiyi diversify its earnings base with potential to realise value through asset sales in medium term. (Current share price: $0.118)