Singapore’s residential developer stocks have been dubbed as the cheapest in the region, after witnessing the region’s worst downgrade in price-to-book valuation since 2009, according to media reports citing Nomura.
The banking company noted valuations among Singapore developers, in relation to other developers in ASEAN, have de-rated the most over the last 10 years. The valuation downgrade coincided with the poorest showing in terms of Return on Equity (ROE) generation amongst Asian peers.
Specifically, the city-state’s three largest listed residential developers – CapitaLand, City Developments and Keppel Land – were “amongst the worst in ASEAN in terms of valuation downgrade over the past 10 years,” it said.
In 2009, CAPL, CIT and KPLD were ranked in the 30th, 50th and 20th percentile, respectively, in terms of P/B valuation in ASEAN, but “have since dropped to the 10th, 20th and bottom percentile, respectively in 2014.”
While the bulk of this [de-rating] is driven by relatively weak ROE performance, Nomura believes that “the potential ROE turnaround for Singapore developers such as CAPL in FY14-16F could offer superior risk-reward to investors.”
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
