Which Blue-Chip Property Developer Is The Cheapest Now?
- Original Post from The Motley Fool Sg

Property stocks took a beating in July when the Singapore government implemented additional property cooling measures. Since then, private condominium prices have declined for two straight months, and analysts expect further corrections in the months ahead.

That said, I still believe the long-term prospects of property in Singapore remains sound. The Monetary Authority of Singapore has said that it wants property prices to rise reasonably and in tandem with wage increases. As such, over the much longer time frame, property prices should increase as wages rise in Singapore.

With property stocks trading some way off their peak, now may be a good time to look for bargains. Here’s a quick look at how the three blue-chip property stocks are valued now.

Price-to-book ratio

The price-to-book ratio is a comparison between the price of a stock and its book value per share. In theory, a stock that is trading at a discount to its book value can pose good value. If a company liquidates its assets and returns the cash to shareholders, investors stand to gain from the price-book value mismatch.

The three property stocks that are part of the Straits Times Index (SGX: ^STI)UOL Group Limited (SGX: U14), CapitaLand Limited (SGX: C31) and City Developments Limited (SGX: C09) – each trade below their book values. The table below shows the price-to-book ratios of the three companies right now.

Source: Author’s compilation and computation of data from Morningstar

As you can see, all three property stocks are trading well below their book values and also below their five-year average. On average, they are selling at a 21.8% discount to their respective averages, with City Developments currently trading at the biggest discount compared to its past.

UOL, however, has the lowest price-to-book ratio currently.

The Foolish bottom line

Clearly, the market does not seem to like Singapore property stocks right now. There is minimal visibility on how the property market in Singapore will move over the next few quarters, and the government has shown that it is not afraid to step in to cool the market if optimism goes out of hand.

However, over the longer time frame, properties in Singapore are most likely going to appreciate as population and wages grow. The long-term fundamentals are intact for these three companies that own, manage and develop properties in Singapore and regionally. With prices well below their historical average, now may be an opportune time to get in cheap.

$CityDev(C09.SI) $CapitaLand(C31.SI) $UOL(U14.SI)

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The Good and Bad Aspects of CapitaLand Limited
- Original Post from The Motley Fool Sg

CapitaLand Limited (SGX: C31) is one of Asia’s largest diversified property groups and owns and manages a global portfolio worth S$129.1 billion as of 30 June 2019. The group has a presence in more than 200 cities in over 30 countries, and its portfolio spans diversified real estate classes such as commercial, retail, and industrial.

As with any investment, there are both positive and negative aspects. While CapitaLand is a strong conglomerate with diverse business divisions, I decided to look for aspects of the business that may not be so attractive in order to balance my view of the group. I believe it’s important to be able to view both sides of a potential investment in order to size up both its strengths and its risks.

The good: Diversified asset base

Source: CapitaLand’s H1 2019 Presentation Slides

CapitaLand has an impressive asset base with total assets of S$81.5 billion. This is spread out among many countries and provides the group with diversified exposure to assets located internationally. From the diagram above, Singapore, Malaysia, Indonesia, and China make up the bulk of the group’s total assets, at S$63.3 billion, or around 77.7%. This wide-ranging geographical exposure allows CapitaLand to tap on pockets of growth in various regions.

The good: Exposure to different property sub-types

Another strength of CapitaLand is its exposure to many different property classes and sub-types. The group owns both development properties (which are developed and then sold for a profit) and investment properties (i.e., properties held on the balance sheet and rented out for income).

CapitaLand has residential projects in Singapore, Malaysia, and Indonesia; retail and commercial properties in Singapore; and serviced residences in regions such as Europe, China, and India. This wide breadth of property types gives the group exposure to growth drivers from a variety of sources, and the diversification also cushions it from a downturn in any particular sub-sector.

The bad: Size is a limiting factor

One negative aspect of CapitaLand is its size. With total assets of S$81.5 billion, it’s difficult to meaningfully add to its asset size and earnings base unless the group undertakes a significant transaction. Smaller real estate companies will find it easier to grow in percentage terms because they have a smaller asset size to begin with. Size itself can become a limiting factor as larger companies have to seek out larger deals to even move the needle when it comes to increasing both asset size and earnings base.

The bad: Share-price performance

CapitaLand’s share price has been unimpressive over the most recent five-year period. Shares were trading at S$3.36 back in September 2014 and closed recently at S$3.53. This represents a compound annual growth rate (CAGR) of just 1.0% per annum over five years. A total of S$0.52 in dividends was paid out over this 5-year period, which increases the total CAGR (inclusive of dividends) to 3.8%, barely beating the average long-term inflation rate of 3% to 4%.

A transformational transaction with strong future potential

Though CapitaLand’s share-price performance has been lacklustre in the last few years, its recent combination with Ascendas-Singbridge, completed in June 2019, has created one of Asia’s largest diversified real estate groups with a total AUM of S$129.1 billion. This has grown CapitaLand’s portfolio significantly and may re-ignite growth. Investors can, therefore, look to better days ahead for the group.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of CapitaLand Limited. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.


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Better Buy: City Developments vs. Hongkong Land
- Original Post from The Motley Fool Sg

Two of the largest property development and investment companies in Singapore’s stock market are City Developments Limited (SGX: C09) and Hongkong Land Holdings Limited (SGX: H78).

Unfortunately, both have produced lacklustre returns for their investors over the past five years. Adjusting for dividends, City Developments’ shares have generated a paltry gain of 3.6%, according to S&P Global Market Intelligence, while Hongkong Land’s shares have produced a slight loss of 2.6%. Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), has climbed by 12.5% in the same period, even after including gains from dividends.

So it’s clear that both real estate giants have not given much reasons for their long-time investors to smile. But which of the two property companies would likely be the better investment for the next five years? Let’s take a look.

Business basics

City Developments’ business spans a wide range of real estate classes, such as residences, offices, hotels, serviced apartments, integrated developments, and shopping malls. As of 30 June 2019, the company had total assets worth S$23.2 billion, of which 40% came from its property development business. The remaining 60% are from recurring-types of businesses, including hotel operations, rental properties, management and consultancy services, and more.

For a geographical perspective, 48% of City Developments’ total assets reside in Singapore as of 30 June 2019, with the rest spread across the UK (15%), China (12%), the US (7%), and other countries (18%).

Meanwhile, Hongkong Land ended the first half of 2019 with US$41.9 billion in gross assets (excluding cash). 88% of its gross assets are in investment properties, and the lion’s share of these properties are office and retail assets in Hong Kong. Hongkong Land also has investment properties – again mostly office and retail properties – in other parts of Asia including Singapore, mainland China, Macau, and more.

The remaining 12% of Hongkong Land’s gross assets are in development properties. The company’s main geographical market for this business is mainland China.

Historical growth

A key gauge of the underlying economic value of a real estate company is the NAV (net asset value) per share, or book value per share.

Over the past five years, City Developments’ book value per share has increased by a respectable 5.4% annually from S$8.67 to S$11.29, according to data from S&P Global Market Intelligence. Hongkong Land has done better, growing its book value per share by 7.4% per year from US$11.53 to US$16.50.

Winner: Hongkong Land

Current financial strength

The net debt to shareholders’ equity ratio is a useful metric to gauge the financial strength of a company.

On this count, both City Developments and Hongkong Land have robust balance sheets, but the latter does have the better number – their net debt to shareholders’ equity ratios are currently just 53% and 10%, respectively.

Winner: Hongkong Land


Given the importance of the book value per share in gauging the underlying economic values of City Developments and Hongkong Land, the price-to-book (PB) ratio is a suitable valuation metric for the pair.

Both companies have PB ratios of less than 1 at the time of writing, signifying that investors are getting a bargain on the assets that the two companies own. But Hongkong Land’s PB ratio looks significantly more attractive than City Developments’. The former has a PB ratio of just 0.35 at a share price of US$5.73 whereas the latter’s share price of S$9.43 gives it a PB ratio of 0.84.

Winner: Hongkong Land

Final call

Both City Developments and Hongkong Land have a respectable track record of growth, a robust balance sheet, and a low valuation. But Hongkong Land has the better performance on all three counts.

It’s worth noting too that what ultimately drives the share prices of the two companies is their business performances. If they can manage to increase the value of their investment properties over time while being opportunistic and prudent in their property development activities, both City Developments and Hongkong Land could beat the market comfortably over the next five years given their low valuations at the moment.

Want to read about another Singapore stock we love? Read about one of our stock picks that has shot up 78% in just 2 years. We reveal the amazing story behind this stock …and how you can potentially profit from it. Click here to download the free report now.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares ofCity Developments and Hongkong Land. The Motley Fool Singapore writer Chong Ser Jing does not own shares in any companies mentioned.

$CityDev(C09.SI) $HongkongLand USD(H78.SI)

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The Better Dividend Share: Hongkong Land Holdings Limited vs. UOL Group Limited
- Original Post from The Motley Fool Sg

Hongkong Land Holdings Limited (SGX: H78) and UOL Group Limited (SGX: U14) are both property giants that are listed on the Singapore stock market. Over the last five years, Hongkong Land’s shares have declined 16% while UOL Group Limited shares have risen 11%.

While the duo’s shares have had contrasting fortunes in the past five years, what investors really want to know is which would make the better dividend investment now. Let’s find out.

Introducing the contenders

On the surface, Hongkong Land and UOL are similar businesses, since both are property developers and also own their own investment properties. But there are important differences to appreciate.

In one corner, Hong Kong office assets account for 79% of Hongkong Land’s entire office portfolio. In addition, it has around 165,000 square metres of office space in Singapore held through joint ventures. Hongkong Land also has around 5,984,000 square meters in area to be developed or under development around the world. In 2018, it secured four new residential sites in mainland China, adding to its land bank.

UOL owns a wide range of investment properties, including five commercial offices, five shopping malls and four serviced suites in Singapore, along with two commercial properties in the United Kingdom. It recently acquired 180 apartment units and ancillary facilities in Jakarta and an office property in Sydney.

UOL also has a hotel management operation through its Pan Pacific and Parkroyal brands where it manages or owns more than 30 hotels.

Historical track record

As both companies develop, invest and manage properties, a useful metric to gauge their historical track record is the net tangible asset value per share.

UOL has managed to increase its net tangible asset value per share from S$8.73 at end-2013 to S$11.56 as of 30 June 2019, which translates to an annualised growth rate of 5.2%.

Hongkong Land’s net tangible asset value per share increased from US$11.41 at the end of 2013 to US$16.50 as of 30 June 2019, which is good for a 6.9% annualised growth rate.

Winner: Hongkong Land

Growth prospects

There are many factors to consider when gauging a property company’s growth prospects. Analysis should include its development pipeline, growth in valuation of its properties, potential growth in rental income and management contracts.

UOL has launched seven projects, with three other residential projects in the pipeline. It also has two retail investment properties under development. In addition, UOL has 11 hotels in the pipeline.

On the other hand, Hongkong Land’s investment properties saw positive rental reversion in its main geographical segments — Hong Kong and Singapore. Its 49%-owned British Embassy in Bangkok and 30%-owned mixed-use property, CBD Z3, is also expected to be completed in 2023/24.

Hongkong Land also has a much larger development pipeline, with twenty projects in China alone. In Singapore, Hongkong Land has four residential properties under development.

While Hongkong Land has a larger development pipeline, it is also worth noting that the Hong Kong property giant is also comparatively larger in size. Its market cap is more than twice that of UOL.

All things considered, it is too close a call to declare a winner here.

Winner: It’s a tie


Given the importance of the net asset value per share and the dividend yield in gauging the underlying economic values of property company, two useful metrics to compare are the price-to-book ratio and the dividend yield.

Based on current share prices, Hongkong Land has a trailing dividend yield of 3.8% and a price-to-book ratio of 0.35.

UOL has a dividend yield of 2.4% and a price-to-book ratio of 0.62. Hongkong Land’s shares may be trading at a slight discount on the back of uncertainty in rental rates in Hong Kong due to the ongoing protests there. Nevertheless, on a purely numerical standpoint, Hongkong Land has the cheaper valuation.

Winner: Hongkong Land

Final call

Both property companies have managed to grow their book value per share at fairly reasonable rates in the past. On top of that, they both have substantial development pipelines, and have grown their recurring income through expanding their investment and management portfolios.

Although I believe both companies can continue to provide decent returns to shareholders, Hongkong Land, with its better track record of growing its book value per share, and its higher dividend yield, looks to be the better dividend share at the moment.

Want to read about another Singapore stock we love? Read about one of our stock picks that has shot up 78% in just 2 years. We reveal the amazing story behind this stock …and how you can potentially profit from it. Click here to download the free report now.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended shares of Hongkong Land Holdings.

$HongkongLand USD(H78.SI) $UOL(U14.SI)

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UOL’s Strong Investment Property Portfolio and Equity Investments Hold the Fort
- Original Post from The Motley Fool Sg

UOL Group Limited (SGX: U14) reported a slight decline in net profits excluding one-offs for the second quarter of 2019.

UOL is a Singapore-listed property company with S$20 billion of assets under management. The property group has its fingers in many aspects of the property market, such as property development, property investments, and hotels operations.

Muted financials, but bright outlook

Let’s start with some numbers. For the quarter ended 30 June 2019, UOL group reported a 7% decline in pre-tax profit to S$141.8 million, excluding fair value gains. This decline in earnings was due to lower profit from property development and higher finance expenses. Including fair-value gains, the group saw a 50% increase in pre-tax profit to S$323.7 million.

Property development revenue and profit are often lumpy because developers can only recognise them once the development has been completed. Because of this accounting requirement, investors need to be patient and look at revenue and profit growth over a longer time frame instead of on a quarterly basis.

Another way investors can assess the company is by looking at its property sales figures. This should give investors an indication of how well the business is doing. On this front, UOL reported in that it saw a 6% increase in project uptake in the first half of 2019. Two of its projects, Amber45 and The Tre Ver, are about 80% sold, and they are targeting the launch of a new project (Avenue South Residence) by the end of the month.

Additionally, UOL expects steady demand and lower vacancy levels for offices to support rental rates, while noting that retail rents will remain under pressure thanks to tepid economic growth.

Stability from investments

While revenue and profit saw declines during the quarter due to the property development segment, UOL’s solid results were due to its investments.

The first of these was from the revaluation of its properties, which came in at S$195.4 million. This was on the back of a world-class portfolio of properties that UOL owns.

Secondly, UOL also saw a bump due to higher dividend income from to its stakes in UOB Bank and Haw Par Corporation. These two listed companies have seen growing dividends over the past year, which has led to a higher income for UOL. These investments thus provide UOL’s financials with stability due to the lumpy nature of property development.


To sum up, while UOL reported a decline in revenue, it was mostly due to lower revenue recognition from its property development segment. With its wide property asset base and investments in other listed entities, investors should remain patient, because when one segment underperforms, other segments can help to hold down the fort, as seen in its latest earnings report.

Want to better understand how to benefit from the investing landscape here in Singapore? Click here now for your FREE subscription to The Motley Fool’s investing newsletter. ‘Take Stock’ lets you know exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead here

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Motley Fool writer Esjay contributed to this article. Esjay does not own shares in UOL Group.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Tim Phillips doesn’t own shares in any companies mentioned.

$UOL(U14.SI) $Forterra Trust(LG2U.SI)

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CapitaLand Limited’s Latest Earnings: Headline Numbers Down, but Future Looks Bright
- Original Post from The Motley Fool Sg

CapitaLand Limited (SGX: C31) released its results for the second quarter of 2019. Revenue and profit after tax and minority interest were down 19.3% and 4.2%, respectively. On the surface, it looked disappointing, but there are good reasons to believe the future will be better. Here’s why.

Ascendas Singbridge acquisition will improve cost efficiencies

CapitaLand completed its much-anticipated acquisition of Ascendas Singbridge on 28 June 2019. The combined entity now has a much larger asset base and cements the group’s position as one of the largest real estate groups in Asia.

Group CEO of CapitaLand Group Lee Chee Koon said, “The enlarged and more diversified combined entity provides opportunities for enhanced growth, value creation and the unlocking of value.”

The acquisition of Ascendas Singbridge increases CapitaLand Limited’s real estate assets under management by 25% to S$129.1 billion and adds an additional asset class of business park, logistics, and industrial real estate to its portfolio.

Business parks, in particular, are expected to benefit from changing economic trends such as the growth in e-commerce and knowledge economies.

Scaling up its management business

A real estate company’s operations can be divided into development properties, investment properties, and real estate management. CapitaLand has been keen to scale up its management business as this is an asset-light, high-returns business.

The purchase of Ascendas Singbridge includes the management of three real estate investment trusts, Ascendas India Trust, Ascendas Real Estate Investment Trust, and Ascendas Hospitality Trust.

In addition to managing these REITs, CapitaLand also signed management contracts and franchise agreements for 23 new properties earlier this year.

Investors should be pleased to note that as CapitaLand scales its management business, the group will increase its reliable recurring income that will result in a smoother quarterly profit.

Proven track record of recycling assets

CapitaLand has a proven track record of recycling assets opportunistically. So far this year, the real estate giant has divested S$3.4 million worth of assets, meeting its long-term annual target of S$3 billion.

There will also be future revenue recognition as the group sold 203 units of One Pearl Bank, which was launched only in July 2019.

Its other investment projects have also done very well, with the group selling 70% of the 505-unit Park Regent in Malaysia and 3,025 units with a sales value of RMB6.4 billion in China in the first six months of 2019.

7,300 units in China are expected to be handed over from the third quarter onwards, with 50% of the sales value expected to be recognised over the next six months.

The Foolish bottom line

Despite lower net profits, CapitaLand is in a fantastic position for better earnings in the future. Besides growing recurring management income, the group also now boast increased scale and has exposure to the fast-growing business park space.

From what I have seen, CapitaLand will likely continue to provide shareholders with decent returns well into the future.

Want to read about another Singapore stock we love? Read about one of our stock picks that has shot up 78% in just 2 years. We reveal the amazing story behind this stock …and how you can potentially profit from it. Click here to download the free report now.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of CapitaLand Limited. Motley Fool Singapore contributor Jeremy Chia does not own shares in any of the companies mentioned.


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