Stock Summary M to sector - March 24 : Various Brokers

MACQUARIE MEAG PRIME REIT, daiwa downgrade to HOLD with target price $1.33
- Investment case: Core holdings of two prime Orchard Road commercial
properties; trading at a discount to NAV (of S$1.61 as at the end of
December 2007); positive rental reversions from 14% Singapore office
exposure and strong DPU growth of 43.9% for 2008 (based on Daiwa forecast)
and attractive yield. However, MMP's discount to NAV is no longer excessive
in our view, with office S-REITs trading at even bigger discounts to NAV.
One could view MMP as a perennial hostile takeover play, but the framework
for hostile takeovers for S-REITs is still untested, and we do not believe
MMP's NAV discount is wide enough to enable a buyer to mount a successful
takeover.
- Asset profile: Portfolio predominantly retail property (70%, with the
rest in office properties) and Singapore (87%) exposure.
- Risk profile/major risk factor: Concentrated in two major properties,
Wisma Atria and Ngee Ann City; the market might never give MMP's management
or sponsor the respect they deserve; Orchard Road supply addition in late
2008 could lead to major tenant reshuffle.
- Daiwa RNG valuation assumptions for target price: A weighted average
leasehold period of 71 years, an effective cap rate of 6.4% (an un-levered
opportunity cost of capital of 8.9% and an assumed growth rate of 2.5%), a
target debt-to-asset ratio of 30%, and a WACC of 7.13%.

MANDARIN ORIENTAL, lehman initial coverage OVERWEIGHT with target price
$2.28
-We regard Mandarin Oriental Int'l Ltd (MOIL) as one of the world's
best-managed luxury hotel groups. Its earnings risk from US economic
problems is mitigated by several well-executed disposals of US assets and a
more resilient management contract business. We view MOIL as a key
beneficiary of tight luxury room supply in Hong Kong. We initiate coverage
of the stock with a 1-Overweight rating and a 12-month price target (PT) of
US$2.28, representing 37% potential upside.
-Combining quality and growth. Leveraging its high-quality assets, MOIL is
expanding globally with management contracts that allow higher returns with
lower capital.
-Improved resilience to economic downturns. MOIL's outlook remains strong,
thanks to its growing management contracts, tight high-end room supply in
Hong Kong (structural support to margins), and strong financial strength.
- Favorable risk/reward balance. Our PT of US$2.28 is based on a historical
average of 12x 2008E attributable EV/EBITDA, in line with its peers and
implies a conservative 0.9x 08E adjusted NAV. MOIL's current valuation is
already at the 1991 US recession level and 11% away from its trough of 8x
attributable EV/EBITDA (implying US$1.47). Positive catalysts will be if
its earnings prove to be more resilient than the market expects.

MAPLETREE LOGISTICS TRUST, daiwa maintain BUY with target price $1.25
- Investment case: Diversified exposure across emerging and developed
markets in Asia fuelled by an acquisition-growth strategy, supported partly
by a development pipeline from its sponsor (a wholly-owned subsidiary of
Temasek Holdings). The unit price has been hit by EFR uncertainty, but we
expect the manager to scrap the rights issue option and adopt a flexible
and nimble EFR stance for 2008, and this development could surprise the
market positively, in our view. We believe MLT's 12-month forward yield of
over 7.9% (based on our estimates) is another investment attraction.
- Asset profile: 100% logistics properties (distribution centre, free-trade
zone, non-free trade zone, food and cold storage, oil and chemical
logistics, industrial warehousing); 52% (by 4Q07 net-property income) in
Singapore, 28% in Hong Kong, 13% in Japan, 4% in Malaysia, and 3% in China.

- Risk profile/major risk factor: Significant logistics-property exposure
in mature Asian markets, with minor but increasing exposure to developing
Asian markets. Major short-term risk, in our view, is if the manager
relents and proceeds with a dilutive rights issue.
- Daiwa RNG valuation assumptions for target price: A weighted-average
leasehold period of 67 years, an effective cap rate of 6.3% (an un-levered
opportunity cost of capital of 8.3% and an assumed growth rate of 2.0%), a
target debt-to-asset ratio of 47%, and a WACC of 6.19%.

MAPLETREE LOGISTICS TRUST, jpm downgrade to NEUTRAL with target price $1.07

- We downgrade MLT to N from OW, on the back of heightened financial risks.
MLT has underperformed the JPMorgan S-REITs index by 2% since the
withdrawal of its equity fundraising plans, leaving its gearing at 53%.
With reduced risk appetites in real estate equity capital markets at the
moment, we see little opportunity for MLT to reduce its gearing in the
short run, leaving the financial risk profile of the trust at elevated
levels.
- Acquisitions continue and risk profile on the rise: Despite running at an
elevated gearing level, MLT continues to acquire assets using its remaining
debt headroom, getting ever closer to 60% S-REIT gearing limit. We believe
that the accretion from the acquisitions, if any, will be more than
outweighed by the increase in MLT's risk profile, which could cap the
trust's performance.
- Refinancing risks remain: We estimate that the trust will need to
refinance close to S$600 million in debt this year. Although we believe
that the trust is likely to obtain its refinancing, the cost of the renewed
debt is still an open question; especially given that the trust is on
rating watch.
- Our Dec-08 price target is unchanged at S$1.07/unit, based on our DDM
model. We downgrade the trust to Neutral given the increase in risk profile
and little share price catalysts in the short run. Key risks to our rating
and price target include any possible increase in borrowings costs, and
management's inability to raise funds for a prolonged period.

OLAM, cl maintain BUY with target price $2.61
- Olam trades on the futures exchanges through up to ten brokers.
- Exposure to MF Global is 3% of their total hedge, at less than US$750k as
of Wednesday.
- This is a balance on their margin account, which Olam will receive today
as MF Global continues to honour the futures.
- Olam will have no more exposure to MF Global after this.
- In all futures trade counterparty is the Exchange, not broker. The
exposure is only the cashline/margin surplus account at any point in time.
- As of 18 March, credit lines total S$3.32bn, up to 54% is used at the
moment because of peak procurement season.
- Working capital requirement will come down after 3Q07 (end March).
- Sufficient for working capital, despite high commodity prices.
- No problem meeting margin calls or obligation.
- Customers are not shying away from soft commodities, but need to rely on
Olam to supply to them and help them manage delivery costs.
- These customers are big global food companies with pricing power.
- Olam, most of them are 8-9mths forward, have good visibility of their
order book.
- In case of working capital issues on the customer' side, the risk lies in
the some postponement of delivery but any default will give Olam a windfall
gain.
- Generally, customers are more concerned about getting their supplies.
- Company continues to provide 1-2week advances to village level agents,
who charges money on a commission basis.
- Other trade houses not on Olam's model may have working capital
constraint.
- On capital raising, it will be within the next 12 months, but this will
continue to cause an overhang on the share price.
- Healthy M&A pipeline, targets are getting cheaper, but it depends on size
of transaction and their ability to raise money. Any changes to M&A policy
will be announced in 3Q results (around mid May).

OLAM by ubs
- Olam: Concerns appear overdone. Olam was down 12.6% yesterday. We believe
there may be concerns about its working capital requirements given its high
gearing levels and high commodity prices. We believe the concerns are
overdone and the stock should bounce back post fund raising. Olam said it
has been able to increase its working capital facilities with banks by
cS$420m to S$4.8b.
- Olam: Needs to raise equity soon. We believe the stock has been on a
downward spiral recently due to overhang from impending fund raising. We
understand Olam has c6 months to raise further equity and is waiting for an
opportune time to raise the funds. We do not believe fund raising is a
concern per se and Olam should be able to raise additional equity at close
to prevailing share price.
- Wilmar: concerns remain. On Wilmar, our key concern is increasing
percentage of profits which may be volatile in the medium term. We believe
the company should be able to weather price controls in China well. We
adjust Wilmar's valuation for de-rating of plantation stocks.
- Valuation: Reducing Price Target for Wilmar in line with sector derating.
We have reduced our target for Wilmar by 20% to account for fall in prices
of Indonesian and Malaysian plantation companies. We retain our target
price for Olam at S$3.75 and see 4% downside if the company raises S$450m
at today's price (due to higher dilution).

RAFFLES EDUCATION, csfb maintain OUTPERFORM with target price $1.70($2.13)
- We have revisited our assumptions for Raffles Education (RLS) after a
recent meeting with management, imputed an earnings model for the
recently-sealed Oriental University City deal into our forecasts, and
assumed that the guaranteed profit contribution kicks in from Jan-08
(Oct-07 previously).
- Although this lowers FY08 earnings by 6%, we raised estimates from FY10E
given greater clarity on the deal metrics, and now see 43% earnings CAGR
from FY08 through FY10E, versus our earlier expectations of 32% CAGR.
- While RLS remains, in our view, a defensive business model given the
secular demand for private education services in Asia, coupled with its
franchise and scale, its China exposure has played against it in recent
months, as risk-adverse investors realise profit on a stock that has
delivered one of the highest returns in the market.
- Our TP downgrade to S$1.70 (from S$2.13), based on 1x PEG (from 1.8x),
reflects a waning premium on growth, even as we continue to see many
positive catalysts beyond the immediate months, driven by optimism that
management is firming up new growth initiatives in China, India and
Vietnam.


SGX, jpm maintain OVERWEIGHT with target price $10.00($20.00)
- We are reducing FY08E-FY10E estimates for SGX by 26%- 28% and reduce
Dec-08 PT to S$10 from S$20 as our blue skies assumptions for the stock do
not hold any more. Key changes include reduction in average daily turnover
(ADT) expectation for CY08 to S$2.15bn from average of S$3.4bn previously
and removal of stake sale probability from the PT.
- The stock in near term acts as a high beta proxy to trading volumes,
which is a function of system liquidity and investor confidence. Since both
of these factors are volatile at this point in time, we expect the stock to
trade in a range between S$5-S$8 over next few months, before recovering in
2H08.
- Despite the near term risks, we maintain positive view on the stock as we
see higher revenues from initiatives like introduction of new trading
engine, single stock derivatives and new board – Catalist' which should
lead to 1) higher algorithmic trades, 2) improved derivatives turnover and
3) increased number of listings.
- Biggest upside potential for ADT is return to volumes above S$2bn, as
currently several investors prefer OW cash positions. We believe this
should change in 2H08, leading to higher volumes and consequently
turnaround in SGX stock price.
- Our S$10 Dec-08 PT is based on relative valuation, where we assume 25%
normalized RoE and 3.5% terminal growth, leading to 21.4x 1 year forward PE
multiple. Key risk to our call include lower than expected average daily
turnover and slower growth in the derivatives business at SGX.

SGX, mac maintain NEUTRAL with target price $6.90($10.20)
- We lower our forecast assumptions for Singapore Exchange in light of the
more sombre outlook and events in the US. Consequently, we have also
lowered our target price from S$10.20 to S$6.90, indicating little
potential share-price upside for now. We are maintaining our Neutral
recommendation.
- The average daily trading value has trended down from S$2.32bn in January
to S$1.81bn in February. March trading value is expected to remain below
S$2bn, driven in part by the potential effect from the US slowdown.
- We believe there is no good news in the offing for trading volume and
value given the US slowdown could have a negative effect here. Accordingly,
we have lowered our FY6/08 forecast assumption from S$2.10bn to S$2.03bn.
Further out, we have lowered our FY6/09 daily securities trading-value
assumption from S$1.80bn to S$0.98bn.
- With the introduction of more derivatives products, we believe the share
of revenue will enlarge, providing some cushion to slowing securities
revenue. However, it will not be sufficient to prevent a potential decrease
in earnings in FY6/09.
-Earnings revision. We lowered our net profit forecasts for FY6/08 and
FY6/09 by 9.1% and 40% because of lower securities and derivatives
trading-value assumptions.


SMRT, cl downgrade to UNDERPERFORM with target price ($1.87)
- Since our re-initiation on SMRT, its share price has outperformed the
market by 9% on a 1-month basis and 25% on a 3-month basis.
- Our 14% upside on initiation has narrowed to a mere 8%, which is half
that of the estimated 15% upside that we have on the STI, based on a bottom
up valuation approach.
- This drives our change in recommendation, which is downgraded to an
Underperform.

SUNTEC REIT, daiwa maintain OTPERFORM with target price $1.75
- Investment case: Prime and well-located core assets (Suntec City shopping
mall and office towers and a one-third stake in the One Raffles Quay (ORQ)
office building in Marina Bay). Balance sheet remains strong after the ORQ
acquisition, with the end-2007 debt-to-asset ratio at 31.4% (aggregate
leverage ratio, including deferred units, at 35.1%). Office-rental
reversions at Suntec City will underpin strong DPU growth (18.9% for FY08,
based on our forecasts). A unit-price catalyst for 2008 could be the
disclosure of plans for the Park Mall property asset enhancement or
redevelopment with adjoining land acquisitions.
- Asset profile: Located entirely in Singapore with an estimated 66%
exposure to the office segment (including its share of ORQ) and the
reminder in the retail-property segment.
- Risk profile/major risk factor: Suntec depends largely on the
contributions of two major (albeit grade-A and well-located) assets, so any
negative property-specific issues (which we do not expect) with these
assets might affect its unit-price performance.
- Daiwa RNG valuation assumptions for target price: A weighted-average
leasehold period of 81 years, an effective cap rate of 5.0% (un-levered
opportunity cost of capital of 7.0%, and an assumed growth rate of 2.0%), a
target debt-to-asset ratio of 30%, and a WACC of 5.89%.

SWIBER, amfraser maintain BUY with target price $4.08
- FY07 net profit surged 310% to US$49.7m, however this was below our
forecast due to three factors. Swiber recognised a lesser US$24m in
exceptional gains from vessel sale and leaseback transactions (S&L), while
we were expecting US$36m. The booking of revenues from the Brunei Shell
project was also lower at US$50m (due to delay caused by adverse weather)
compared to forecasted US$70m; but the largest impact came from sharply
lower-than-expected margins.
- For the year as a whole, less usage of third party vessels helped improve
gross profit margin (GPM) to 28% in FY07 from 23% in FY06, as Swiber took
deliveries of 17 vessels in FY07. However, GPM was sharply lower than our
forecast of 32%, as 4Q GPM of 24% lagged behind the average 30% achieved in
the nine months to Sept-07, due to the additional charter of a third party
accomodation barge for the Brunei Shell project. Overall, we think our
previous GPM forecast for 32% over the next two years seem aggressive and
we are reducing GPM to 28% in FY08 and 30% in FY09.
- Prospects for Swiber have brightened further with an order book that has
ballooned to US$756m, significantly higher than the US$263.1m at end-07.
Its largest EPCIC contract for Brunei Shell, was extended by another
US$53.4m in Dec-07, which brings the total value to US$200m. A vessel
chartering customer, BG Exploration of India, awarded Swiber its second
largest project at US$127m in Mar-08, and this also marks Swiber's first
foray into the India market. These project values are noteworthy, as
typically, Swiber's contracts are less than US$50m. It is also encouraging
that Kruez Shipyard (previously North Shipyard, acquired in 2007), will
contribute to FY08 earnings, with its first contract (US$21m) for works on
an SPM buoy and construction and installation of two floating crane barges.
Swiber's latest contract is a new turn as it helps to build a longer-term
stream of revenues, given that the bulk of its orders on hand complete by
FY09. Its latest customer CUEL Limited, an offshore contracting specialist,
awarded Swiber a five-year contract to deliver US$50m of work a year until
the end of 2013.
- We are raising our revenue forecast by 33% to US$400m in FY08 and 23% to
US$480m in FY09, which we believe is achievable. Current contracts on hand
already account for 90% of FY08 and 40% of FY09 revenue. Net profit is
revised up marginally by 5% to US$97.1m in FY08 and US$110.5m in FY09.
While GPMs are reduced, more S&L bookings are pushed into FY08 and FY09.
- Stripping out S&L contributions to arrive at its core operational EPS,
Swiber is currently trading at a low 8.9x FY08 PER and 6.7x FY09 PER. We
maintain fair value at 13x FY09 PER on core earnings which translates to
target price of S$4.08. Given that Swiber has a rapidly expanding fleet
which may provide a recurrent base for S&L contributions, raising the base
of Swiber's net earnings, valuations may be deemed to be even lower at 6.7x
FY08 and 5.9x FY09, which provide the buffer to the higher execution risks
for its projects.

SYNEAR, cimb downgrade to UNDERPERFORM with target price $0.35($0.77)
-1Q08 sales to fall by up to 10% yoy. Synear issued a profit warning for
1Q08 yesterday. Management guided that 1Q08 sales could fall by up to 10%
yoy, implying sales of around Rmb647.9m. The weakness was blamed on snow
storms in January, which hurt transportation and sales.
-Margins under pressure. The company also faced margin pressure from the
rising prices of key raw materials such as pork, flour and packaging
materials. This suggests that 1Q08 gross margin is likely to be thinner
than the 27.6% in 4Q07.
-Reiterate aggressive advertising efforts. Despite the weak sales in 4Q07
and expected weakness in 1Q08, management reaffirmed its plans to spend
aggressively on advertising, especially TV ads, in order to capitalise on
the upcoming Beijing Olympics, where the company is the sole sponsor of
quick freeze foods.
-Update on new plants. Management disclosed that the Chengdu plant remains
on track to achieve capacity utilisation of 30% in FY08, up from the 20%
achieved at the end of FY07. Meanwhile, the Huzhou plant is scheduled to
begin trial production at end-Mar 08.
-Reducing FY08-10 EPS estimates. While we had expected FY08 to be
challenging, the potential sales decline of up to 10% yoy in 1Q08 is
steeper than what we had anticipated. We are concerned that the poor
performance might also be due to runaway inflation in China which has
reduced real disposable income, as well as the company's premium branding
strategy, which might have priced the company's products out of the reach
of consumers. We are reducing our FY08-10 EPS estimates by 7.3-8.2% on
lower sales volume and margin assumptions.
-Downgrade to Underperform from Trading Sell; lower target price of S$0.35
(from S$0.77). In light of the dismal near-term outlook and execution risks
from the company's aggressive expansion plans, we have lowered our target
valuation to 6x CY09 P/E from 12x, now valuing the company on par with Pine
Agritech (PAG SP, Underperform, S$0.155, target price S$0.16), which we
also think has a challenging near-term outlook. With our lower target and
our earnings downgrade, our target price for Synear falls to S$0.35 from
S$0.77. Downgrade to Underperform.


TIONG WOON, kim eng maintain BUY with target price $1.23
- Business on track. A recent meeting with Tiong Woon Corporation (TWC)
confirms that its core businesses of heavy lift/haulage and marine
transport are doing well on the back of the buoyant activities in the
Offshore Oil & Gas sector. Within this industry as well as the domestic
construction industry, equipment supply continues to be tight while demand
remains high. Tiong Woon therefore expects rental rates to rise 10-15% pa.
This is in line with previous guidance as well as our current forecast
assumptions.
- Expanding its options. Given the higher pricing and long lead time
(around 2 years) to procure new cranes from Europe and Japan, Tiong Woon is
exploring the option of buying from China manufacturers. However, quality
and maintenance issues are key considerations, although Chinese cranes are
40% cheaper and delivery time lag is only 8-12 months, according to
management. If these quality issues can be addressed, management would
consider trading part of its existing crane fleet (bought at low costs) in
favour of cheaper ones.
- Moving up the learning curve on its newbuild. As for its Fabrication &
Engineering business at its Bintan yard, progress of its maiden contract -
the pipelay vessel - is on track. However, 2H08 is likely to see a small
loss due to start-up costs. Towards June 08, the yard should be breaking
even through a higher percentage of revenue recognition from the newbuild
contract. This is within expectations. Based on the experience that it is
garnering from this initial project, Tiong Woon is actively negotiating for
additional newbuilding contracts, where it hopes to achieve gross margin of
15%, after going through its current gestation stage.
- Maintain Buy, TP S$1.23. We are maintaining our June FY08 forecast of
S$24.8m/EPS 7.4cts per share versus consensus of 7.5cts. Furthermore, our
forecast also includes the potential gain on the sale of older cranes -
core EPS stands at 6.6cts per share. Tiong Woon carries its assets in its
balance sheet at book value (depreciated by around 40%), whereas the strong
demand for cranes puts market prices at a minimum of 2x book value. On this
basis, revaluing Tiong Woon's crane fleet to market value yields a RNAV of
S$0.66 per share. At its current share price level, Tiong Woon is trading
at a 23% discount to its RNAV - we believe that this limits the downside on
its price. Current FYJun08 PE is also at 6.8x. Our full target price of
S$1.23 is based on a PEG of 0.4x. 3-year earnings CAGR stands at 28% p.a.




[ SECTOR ]

PROPERTY by csfb
- The close of tender for a suburban residential site at West Coast
Crescent raised some interesting trends . a foreign developer topping the
bids of a suburban site usually dominated by local developers; and while
there were more bids, they implied flat to 20% lower selling prices.
- Reversing the earlier trend of only 2-6 bidders, there were 12 bidders
for the site, but only the top three submitted bids within the range
expected by property consultants of S$260-400psf ppr; and the top bid of
S$305psf ppr, submitted by Cheung Kong (CK), was also at the lower end.
- At S$305psf ppr, we expect breakeven price to be S$600-650psf for CK and
a selling price to be S$750psf (comparable to Blue Horizon next door),
which should generate a pre-tax profit of 15%.
- The bottom 9 bidders submitted bids lower than S$240psf, with the lowest
at S$138psf (55% below top bid). Assuming they were imputing a 15% margin,
their assumed selling price of the project would be as low as S$600psf or
20% below current price; or they were making allowance for higher
construction costs.
- After this, we expect another c.1,225 residential units from 3 Government
Land Sales to close for tenders over the next month; and weak tender
results will likely dampen sentiment further. Though developer prices are
still holding up in thin volumes, anecdotally, secondary prices have
started to come off. We maintain Market Weight on the sector.

PROPERTY by uob
-According to The Urban Development Authority, the 99-year leasehold 1.2ha
residential site at West Coast Crescent received the highest bid of
S$110.4m or S$305psf ppr with a total of twelve bids in the S$138-305psf
ppr range. We estimate the breakeven cost for the project at S$670-700psf.
The average selling prices (ASP) in nearby West Cove, Blue Horizon,
Clementiwoods and Varisity Park condominiums have been in the S$605-765psf
range. Assuming a development margin of 12% at the least for the
mass-market site, the selling price expectations are upwards of
S$760-800psf. With breakeven close to the current price levels in that
area, the bid is very competitive, after pricing in a 10-15% price
appreciation from the current levels.
-The West Coast site has generated keen developer interest due to its easy
accessibility to major arterial roads and expressways, proximity to
schools, good recreational facilities at the nearby West Coast Park and
numerous shopping, dining and entertainment outlets in the vicinity. The
competitive bidding is indicative of the developers' confidence in the
mass-market segment due its favourable demand-supply dynamics. We expect
demand to outpace supply in the mass-market segment well into 2009. We
think the selling price expectations should be achievable with the
re-rating of the coastal stretch along the west coast by the end of next
year when the integrated resorts are expected to come in operation.
Allgreen (BUY/S$1.13/Target: S$1.60) offers good exposure to the
mass-market segment.



PROPERTY by dbs
-Story: The tender of a Government Land Sale (GLS) site for a private
residential development at West Coast Crescent closed yesterday. In total,
12 bids were received for this decidedly mass-market site located next to
the Blue Horizon condominium development, affirming our view that
developers might be focusing their attention to the mass-market segment,
believing that any upside in the residential sector is likely to come from
this segment.
-Point: The top bid came from Billion Rise Limited, a company believed to
be linked to Hong Kong's Cheung Kong Holdings. It submitted a bid of
S$110.4m for the site and the next highest bid was also strong, at just
S$1.5m lower. The site can yield around 300 residential units, and this
works out to be around S$305 psf ppr in terms of land cost. Breakeven price
would hover around S$650-700 psf, which was exceeded by launches last year
in the West Coast Area - like Botannia (by City Dev; 93% sold) and
Carabelle (by Sim Lian; 100% sold) of around S$800 psf.
-We believe that, going forward, developers will be more selective with
their choice of sites to bid for under the GLS, borne out by the strong
response to this West Coast site compared with the lackluster bids received
for the Westwood Avenue (Jurong West) landed housing site earlier this
month, which incidentally, was not awarded by the Government. There is
every reason to believe that this West Coast site will be awarded. The good
location of West Coast (close to universities and business parks like
one-north) coupled with the proven sales for developments in this area
could have explained the strong response to this land tender. Other
developers that threw their bids into this tender box included (in
descending order of bid price): MCL Land, Sim Lian, F&N (through its
Frasers Centrepoint Limited subsidiary), Brothers, Allgreen and City Dev.
-Relevance: We read this as a sign of faith by developers in the relative
prospects of the mass-market segment, particularly projects in more
desirable locations like West Coast. We continue to favour developers with
greater exposure to this segment, and we continue to like Allgreen
Properties (BUY, TP S$1.66).

PROPERTY by lehman
-The tender for the West Coast Crescent land parcel attracted a total of 12
bids and a top bid of S$305psfppr. While the level of participation has
markedly improved from the three bids that were submitted for the Simei
site in January and the top bid is within market expectations of
S$260-400psfppr, we believe on average the bids still reflect a cautious
mood in the market. We expect the project to yield a decent embedded margin
of 10%, based on the top bid of S$305psfppr and using the latest average
transacted price of S$750psf at next-door Blue Horizon as a reference, but
think prices could be higher judging from the current rents in the West
Coast area. The tender shows that developers are still keen to acquire
mass-market sites albeit cautiously and City Developments' upcoming Hong
Leong Garden redevelopment could benefit if the actual prices fetched by
this project surprised on the upside.
-Top bid of S$305psfppr for land parcel at West Coast Crescent – Higher
level of participation from developers but bids still reflect cautious
stance. The tender for a land parcel (99-year LH, maximum allowable GFA
361,536sf) at West Coast Crescent under the government land sales program
has closed. In all, 12 bids were submitted with the highest bid at
S$305psfppr and the lowest bid at S$138psfppr. The average bid works out to
be S$219psfppr and seven out of the 12 bids submitted fell within 1SD of
the mean. This is the second residential land parcel tender closed since
the beginning of the year – the first was the tender for a larger plot at
Simei Street 4 (99-year LH, maximum allowable GFA 797,144sf) that closed on
January 4 this year. The Simei tender attracted just three bids with the
top bid at S$296psfppr. Therefore in terms of participation, we think
developers definitely showed more enthusiasm this time round.