UOBKayhian on 10 Mar 2014
Following Wheelock Properties’ S$110m provision for The Panorama, we sift through
Government Land Sales (GLS) projects to identify projects which may be at risk of
provisions.
Among GLS projects already launched, The Panorama would be the most impacted in a
price correction, with 92% unsold units and estimated margins of below 10%. Lower-
margin projects such as Eight Riversuites (30% unsold, 14% margins) and Sky Vue
(31% unsold, 16% margins) would be less impacted by a fall in property prices due to
substantial pre-sales. A higher margin buffer (20-25%) should provide some headroom
for price trimming for The Glades (83% unsold, 20% margins) and The Skywoods (85%
unsold, 23% margins).
We see limited risk of significant provisions - similar to Wheelock’s - for other developers
under our coverage, based on our view of a healthy 5-10% correction in property prices.
We believe the market has over-discounted the negative prospects for the residential
sector, pricing in a 40-50% fall in prices. We prefer deep-value and diversified
developers. Keppel Land, Ho Bee and Wing Tai are our preferred picks.
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