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COMMENT
Developer
Nouvel 18
CDL & Wing Tai
TwentyOne Angullia Park
China Sonangol
Le Nouvel Ardmore
Wing Tai
Ardmore Three
Wheelock Properties
d'Leedon
CAPL/Hotel Properties
The Interlace
CAPL/Hotel Properties
iLiv @ Grange
Heeton Holdings
Michaels' Residences
SCB Terraform
Goodwood Residence
Guocoland
Robin Residences
Sing Holdings
Total ABSD charges for our full list of properties
Total QC charges for our full list of properties
%
Est 2016
Unsold
fees
100%
38.2
83%
15.2
91%
14.6
95%
13.7
11%
11.9
13%
11.8
100%
11.7
73%
9.1
20%
8.7
46%
6.6
137.5
88.2
^excludes Echelon and Seventy Saint Patrick's (both have 3 units remaining as at Dec-15).
Source: Company data, URA, Credit Suisse estimates
business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision.
BEYOND INFORMATION
Client-Driven Solutions, Insights, and Access
03 February 2016
180
Rates
Com m ents
Seller's
Stamp Duty
(SSD)
If property is sold in: 1st year - 16% Rates applicable from Jan-11. To cool the property
2nd year - 12%
market and provide a strong disincentive for
3rd year - 8%
investors looking to make short term gains
4th year - 4%
Total Debt
Max 60% of gross monthly income
TDSR applies from Jun-13. Refinancing of
Servicing
used to service loans & mortgages
investment property loans above 60% only
Ratio (TDSR)
allow ed up to 30-Jun-17, s.t. other conditions
160
140
120
100
80
CCR
OCR
Mar-16
Mar-15
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
60
Additional
Buyer's
Stamp Duty
(ABSD)
Qualifying
Certificate
(QC)
Extension charge: 8%/16%/24% of Any foreign developer must apply for a QC w hen
land cost, pro-rated on % of unsold
acquiring private land for development.
units, for 1st/2nd/3rd and Developers must complete and receive TOP w ithin
subsequent year 5 years and sell all units w ithin 2 years from TOP
RCR
5.0
4.5
4.0
3.5
3.0
D e a dline
t o s e ll
Unit s
uns o ld
% Uns o ld
2 0 16 f e e s
156
16-No v
156
100%
38.2
China So nango l
54
16-A pr
45
83%
15.2
Wing Tai
43
16-A pr
39
91%
14.6
84
16-Dec
80
95%
13.7
D e v e lo pe r
No uvel 18
TwentyOne
A ngullia P ark
Le No uvel
A rdmo re
3.74
3.38
T o tal
unit s
P ro je c t
2.5
d'Leedo n
1,715
16-Oct
190
11%
11.9
The Interlace
1,040
15-Sep
140
13%
11.8
1.25
iLiv @ Grange
Heeto n Ho ldings
30
15-Oct
30
100%
11.7
M ichaels'
Residences
Go o dwo o d
Residence
Ro bin
Residences
SCB Terrafo rm
40
16-Dec
29
73%
9.1
1Q16
2.27
2.0
Guo co land
210
15-Jun
41
20%
8.7
Sing Ho ldings
134
16-Dec
61
46%
1.5
1.0
0.5
0.0
3Q16
3Q15
1Q15
3Q14
1Q14
3MSIBOR
3Q13
1Q13
3Q12
1Q12
3Q11
Islandwide
1Q11
3Q10
1Q10
3Q09
1Q09
3Q08
Prime
1Q08
3Q07
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
Luxury
CS 3M SIBOR Estimate
6.6
13 7 .5
8 8 .2
launch]^
As at Dec 2015
Units
% Unsold
unsold
(%)
80
Deadline to
sell
Area
Units sold
Far East
54
Sep-17
CCR
31
23
43%
2,270
1,737
-23%
60
CapitaLand
64
Mar-15
CCR
62
3%
2,755
2,248
-18%
40
Hijauan
41
Feb-17
CCR
38
7%
2,342
1,921
-18%
20
One Surin
ACT Holdings
27
Sep-17
OCR
21
78%
768
678
-12%
Mon Jervois
SingLand
109
Feb-17
CCR
46
63
58%
2,053
1,838
-11%
The Trilinq
IOI
755
Jan-17
OCR
220
535
71%
1,508
1,356
-10%
-20
260
Sep-17
RCR
116
144
55%
1,628
1,487
-9%
-40
The Skywoods
420
Sep-17
OCR
368
52
12%
1,280
1,178
-8%
-60
MCL Land
32
Feb-17
CCR
27
16%
1,159
1,067
-8%
Robin Suites
92
Feb-17
CCR
65
27
29%
2,520
2,340
-7%
Developer
The Siena
Urban Resort Condominium
First 3
months
Total units
Project
17.7
-7.2
-32.2
-45.5
-52.8
-80
Dec-90
Dec-94
Dec-98
Dec-02
Dec-06
Dec-10
Mean - (7.2)%
Dec-14
1 std
2005
2006
2007
2008
2009
2010
2011
2012
2013
DPS
12.5
25
30
7.5
18
18
13
16
16
22
38
80
59
65
71
56
60
55
50
56
56%
65%
38%
13%
12%
25%
32%
22%
29%
32%
29%
Core EPS
Payout
2014 2015E
16
03 February 2016
Index
180
160
(%)
Overall
17.6
5.9
2.8
1.1
-4.0
--3.7
-7.5
High-end (CCR)
14.2
4.0
0.8
-1.9
-4.1
-2.5
-5.0
Mid-market (RCR)
17.6
4.5
1.6
-0.1
-5.3
-4.3
-7.5
Mass-market (OCR)
15.0
7.6
6.5
6.5
-2.2
-3.7 -10.0
140
120
100
80
CCR
OCR
Mar-16
Mar-15
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
60
RCR
Units
30,000
Units
40,000
100
30,000
25,000
98
20,000
14,351
2019E
2018E
2017E
2016E
2014
2015E
Completions - 10 yr avg
2013
88
2012
Under Construction
-40,000
2011
2020E
90
2010
2019E
2009
2018E
2008
Planned
2017E
-30,000
2007
Completed
2016E
249
>2020E
2006
2,351
1,018
Government
undersupplied
the market
2005
2,573
92
-20,000
2004
3,369
94
-10,000
2003
7,309
8,700
2015
11,890
2002
9,882
1,702
2001
14,283
5,000
96
10,000
10,402
2000
10,000
68
1999
21,906
1998
18,971
1997
20,000
15,000
03 February 2016
Date
st
1 round
Rationale
19-Feb-10
st
nd
2 round
rd
3 round
As such, we believe that there could be further selling pressure from residential property
investors from 2016, especially from investors who bought their units closer to the peak in
2013, against the expectations of further price declines, weak economic and employment
outlook impacting holding power and negative rental carry from rising interest rates and
softening rents.
Investors who bought their properties above the 60% TDSR threshold prior to the
introduction of the TDSR framework may be particularly susceptible, as they may face
difficulties refinancing their investment property loans despite rising rates, as we approach
the 30 June 2017 transition period deadline. (The MAS allowed a transition period during
which a borrower may refinance his investment property loans above the 60% threshold,
subject to certain conditions.)
Figure 14: Private residential transactions
Units
Index
100.0
90.0
14,117
80.0
5,531
6,677
70.0
7,316
7,440
60.0
2014
2015
22,719
16,736
20,000
7,771
12,847
15,000
22,197
15,904
Mar-15
Mar-14
2013
Secondary sales
Mar-13
2012
Primary sales
Mar-12
2011
Mar-11
2010
Mar-10
Mar-09
14,948
Mar-08
16,292
5,000
Mar-07
10,000
110.0
15,676
22,608
Mar-06
25,000
%
10
32,640
35,000
30,000
120.0
37,873
Mar-05
38,900
Mar-04
40,000
Vacancy [RHS]
Source: URA
03 February 2016
SingHaiyi's proposed project disposal to avoid QC charges: "not the first time such
an application has been rejected"
Listed developers have in the past avoided QC penalties through bulk sales, such as Hiap
Hoe's sale of all 48 units in Treasure on Balmoral to its parent company, or through
delistings, including Popular Holdings which was delisted in January 2015 and SC Global
which was delisted in Dec 2012.
However, SingHaiyi Group recently announced on 18 Jan 2016 that its application to
dispose of its stake in City Suites (Cosmoloft), a residential development in Balestier, has
been rejected by the Controller of Residential Property. SingHaiyi had earlier intended to
dispose of its stake to ACG Construction, the main contractor of the project, "in view of the
possible levy as a result of the Qualifying Certificate (QC) on unsold units".
We expect the authorities to continue enforcing the strict conditions imposed by the
regulatory framework, thus adding pressure to affected developers to offload their pipeline
of unsold units.
Sizable pipeline of projects subject to QC & ABSD charges
Based on our estimates, we estimate ~S$1.3 bn of QC & ABSD charges could be imposed
on developers, should they be unable to sell the remaining unsold units by their respective
project deadlines. A list of key residential projects which are subject to the financial
charges can be found in figures 20 and 21 below:
Expect developers to increasingly adopt price cutting strategies
While primary sales volumes continue to be lacklustre, resale volumes have seen a
sizable 24% YoY pickup from 4,964 units in 2014 to 6,160 units in 2015, albeit from a low
base. We believe this could be due to buyers continuing to seek better value propositions
in the secondary market, amidst the weak market environment. Anecdotally, we believe
03 February 2016
that the price declines thus far have been led by the secondary market, as developers
have been reluctant to cut prices for their new launch projects despite tepid sales.
Figure 17: Number of private residential units transacted
(units)
4Q14
3Q15
4Q15
QoQ
YoY
2014
2015
YoY
New sale
1,376
2,410
1,603
-33.5%
16.5%
7,316
7,440
1.7%
Sub-sale
129
130
132
1.5%
2.3%
567
517
-8.8%
Resale
1,255
1,619
1,464
-9.6%
16.7%
4,964
6,160
24.1%
Total sales
2,760
4,159
3,199
-23.1%
15.9%
12,847
14,117
9.9%
Sub-sale as % of total
4.7%
3.1%
4.1%
4.4%
3.7%
45.5%
38.9%
45.8%
38.6%
43.6%
Resale as % of total
Source: URA
CDL
stake
100%
Nouvel 18
50%
New Futura
100%
Bartley Ridge
30%
Area
CCR
CCR
Total
units
174
Units
%
unsold Unsold
174
100%
Est ABSD
Year 3 & charge
Year 2
beyond (S$ mn)
61.3
91.9
n.a.
76.4
114.6
n.a.
156
156
100%
38.2
124
100%
23.0
46.0
69.0
868
0%
n.a.
n.a.
n.a.
n.a.
49.5
CCR
RCR
287
388
2018
Jan-17
124
Echelon
50%
RCR
396
Dec-16
508
1%
n.a.
n.a.
n.a.
50.5
Jewel @ Buangkok
100%
OCR
301
Jun-17
616
48
8%
n.a.
n.a.
n.a.
38.4
60%
RCR
245
Sep-17
266
162
61%
n.a.
n.a.
n.a.
31.3
Note 1: fees/charges are calculated on a 100% basis and assumes no additional units are sold. ABSD calculations also include a 5% interest
rate over 5 years. Source: Company data, Credit Suisse estimates
03 February 2016
For CapitaLand, both Urban Resort Condominium (2 units left as at Dec 2015) and The
Interlace (140 units left, 13% of total) have started to incur QC extension charges in 2015,
with d'Leedon next in line in 4Q16. Any impact from ABSD might only take place at end2017, as three of its projects are potentially subject to ABSD (Sky Vue and Somerset
Grand Cairnhill in 2017, and Victoria Park Villas in 2018). All in all, however, for 2016, we
note that our estimated QC and ABSD charges represent only 0.1% of CAPL's book value,
and 3.1% of our 2016E Core PATMI, and assumes no additional units are sold for the
impacted projects this year.
Figure 19: CapitaLand's projects which may be subject to QC or ABSD charges
As at Dec-15
Project
d'Leedon
CAPL
stake
35%
Area
CCR
Total
units
1,715
Units
%
unsold Unsold
190
11%
Est ABSD
Year 3 & charge
Year 2
beyond (S$ mn)
n.a.
23.7
35.6
n.a.
11.8
17.7
The Interlace
60%
RCR
548
Sep-15
1,040
140
13%
6.9^
100%
CCR
161
64
3%
0.5^
0.8
1.2
n.a.
Marine Blue
100%
RCR
101
124
93
75%
6.0
12.1
18.1
n.a.
The Nassim
100%
CCR
60
Mar-15
4Q20182019*
4Q 2017
55
55
100%
4.8
9.6
14.4
n.a.
Sky Vue
75%
RCR
505
Dec-17
694
103
15%
n.a.
n.a.
n.a.
64.5
Cairnhill
100%
CCR
336
4Q 2017
268
100%
n.a.
n.a.
n.a.
42.9
100%
CCR
366
June-18
109
100%
n.a.
n.a.
n.a.
46.7
Note 1: fees/charges are calculated on a 100% basis and assumes no additional units are sold. ABSD calculations also include a 5% interest
rate over 5 years. *Marine Blue's deadline will depend on when the project receives its temporary occupation permit (TOP). ^Charges were
incurred in 2015. Source: Company data, Credit Suisse estimates
Figure 20: List of projects potentially impacted by the Qualifying Certificate (QC) extension fees (sorted by largest fees)
Land cost Deadline to
(S$ mn)
sell#
Project
Developer
Area
OUE Ltd
CCR
625
Nouvel 18
CCR
478
Leedon Residence
TwentyOne Angullia
Park
Le Nouvel Ardmore
Guocoland
CCR
China Sonangol
Ardmore Three
As at Dec 2015
Units
unsold
392
%
Unsold
85%
Year 1
Year 2
Feb-17
Total
units
462
42.4
84.8
Year 3 &
beyond
127.3
Nov-16
156
156
100%
38.2
76.5
114.7
n.a.
n.a.
n.a.
835
Jun-17
381
161
42%
28.2
56.5
84.7
1,960
1,887
-4%
CCR
228
Apr-16
54
45
83%
15.2
30.4
45.6
4,143
n.m.
n.m.
Wing Tai
CCR
201
Apr-16
43
39
91%
14.6
29.2
43.8
n.m.
n.m.
n.m.
Wheelock Properties
CCR
180
Dec-16
84
80
95%
13.7
27.4
41.1
n.m.
n.m.
n.m.
d'Leedon
CCR
1339
Oct-16
1,715
190
11%
11.9
23.7
35.6
1,555
1,724
11%
The Interlace
RCR
548
Sep-15
1,040
140
13%
5.9
11.8
17.7
1,037
1,199
16%
iLiv @ Grange
Heeton Holdings
CCR
73
Oct-15
30
30
100%
5.8
11.7
17.5
n.a.
n.a.
n.a.
CCR
279
Jun-15
210
41
20%
4.4
8.7
13.1
2,316
2,285
-1%
Starlight Suites
Waterscape At
Cavenagh
Tomlinson Heights
CCR
120
May-16
105
31
30%
2.8
5.7
8.5
2,081
2,216
6%
Hiap Hoe
CCR
119
Sep-16
200
50
25%
2.4
4.8
7.1
1,878
n.m.
n.m.
Hotel Properties
CCR
Heeton Holdings, Koh Brothers Group,
CCR
KSH Holdings and Lian Beng Group
52
Mar-16
70
36
51%
2.1
4.3
6.4
3,021
2,884
-5%
243
Apr-16
175
11
6%
1.2
2.4
3.7
1,884
n.m.
n.m.
RCR
133
Oct-16
250
25
10%
1.1
2.1
3.2
1,423
1,512
6%
Lincoln Suites
Cityscape @Farrer
KSH Holdings/ IOI
Park
Palms @ Sixth Avenue MCL Land
First 3
months
2,834
Last 3
months
2,872
%
change
1%
CCR
80
Feb-17
32
16%
1.0
2.0
3.0
1,159
1,067
-8%
CCR
17
Sep-16
52
21
40%
0.5
1.1
1.6
2,735
n.m.
n.m.
CCR
122
Oct-16
130
5%
0.5
1.1
1.6
2,321
2,246
-3%
CCR
161
Mar-15
64
3%
0.4
0.8
1.2
2,755
2,248
-18%
CCR
42
Feb-17
41
7%
0.2
0.5
0.7
2,342
1,921
-18%
18 Woodsville
SP Setia
RCR
65
Jun-17
101
4%
0.2
0.4
0.6
1,775
1,584
-11%
Hallmark Residences
MCL Land
CCR
95
Jan-17
75
3%
0.2
0.4
0.6
1,939
1,831
-6%
The Cristallo
TA Corporation
OCR
21
Feb-17
74
9%
0.2
0.3
0.5
1,309
1,211
-7%
Flamingo Valley
OCR
194
Aug-16
393
1%
0.1
0.2
0.2
1,296
1,307
1%
RCR
Oct-15
56
4%
0.0
0.1
0.1
1,267
1,613
27%
Note 1: CCR = prime segment (core central region), RCR = mid-market (rest of central region), OCR = mass-market (outside central region). #Deadlines to sell are 2 years from the project's
expected completion date. ~QC fees are calculated assuming no additional units are sold. ^Average selling prices (ASP) are based on caveats lodged on URA Realis, and includes primary
and secondary sales. First 3 months refer to when the project was initially launched. Last 3 months refer to the latest 3 months of transaction, typically Nov 2015 to Jan 2016. Source:
Company data, URA, Credit Suisse
03 February 2016
Figure 21: Projects potentially impacted by additional buyers stamp duty (ABSD) (sorted by largest ABSD charge)
Developer
Area
Award
date
03 February 2016
As at Dec 2015
ASP (S$ psf)^
Est ABSD
Cost (S$ First 3
Units Units
%
Last 3
%
mn)~
sold unsold Unsold
months months change
The Crest
Wing Tai, Metro & UE
RCR
Sep-12
516
Sep-17
469
100
369
79%
65.9
1,802
1,722
-4%
Sky Vue
CapitaLand & Mitsubishi Estate
RCR
Dec-12
505
Dec-17
694
591
103
15%
64.5
1,432
1,544
8%
The Glades
Keppel Land & China Vanke
OCR
Oct-12
435
Oct-17
726
371
355
49%
55.5
1,482
1,433
-3%
The Trilinq
IOI
OCR
Jan-12
408
Jan-17
755
220
535
71%
52.1
1,508
1,356
-10%
Echelon
CDL & Hong Leong
RCR
Dec-11
396
Dec-16
508
505
3
1%
50.5
1,795
n.m
n.m
Bartley Ridge
CDL, Hong Long & TID
RCR
Jan-12
388
Jan-17
868
865
3
0%
49.5
1,287
n.m
n.m
La Fiesta
EL Development
OCR
Jun-12
383
Jun-17
810
800
10
1%
48.9
1,175
1,128
-4%
eCO
Far East, FCL & Sekisui
OCR
Feb-12
346
Feb-17
748
725
23
3%
44.2
1,314
1,260
-4%
Alex Residences
SingLand
RCR
Dec-12
333
Dec-17
429
255
174
41%
42.5
1,698
1,787
5%
Jewel @ Buangkok
CDL
OCR
Jun-12
301
Jun-17
616
568
48
8%
38.4
1,197
1,150
-4%
Thomson Three
UOL & SingLand
RCR
Aug-12
292
Aug-17
445
437
8
2%
37.3
1,361
1,329
-2%
Forestville
Hao Yuan
OCR
May-12
247
May-17
653
629
24
4%
31.5
731
752
3%
The Venue Residences
CDL & Hong Leong
RCR
Sep-12
245
Sep-17
266
104
162
61%
31.3
1,436
1,389
-3%
The Skywoods
Hock Lian Seng & Meadows Bright
OCR
Sep-12
244
Sep-17
420
368
52
12%
31.1
1,280
1,178
-8%
Kingsford . Hillview Peak
Kingsford Development
OCR
Mar-12
243
Mar-17
512
242
270
53%
31.0
1,331
1,292
-3%
SkyPark Residences (EC)
JBE Holdings
OCR
Dec-12
212
Dec-17
506
474
32
6%
27.1
797
771
-3%
Vue 8 Residence
Capital Development
OCR
Jun-12
211
Jun-17
463
285
178
38%
26.9
1,024
983
-4%
Sea Horizon (EC)
Hao Yuan
OCR
Nov-12
207
Nov-17
495
485
10
2%
26.4
815
784
-4%
The Creek @ Bukit
Chiu Teng Group
RCR
Sep-12
192
Sep-17
260
116
144
55%
24.5
1,628
1,487
-9%
Ecopolitan
Qingjian Realty
OCR
Sep-12
190
Sep-17
512
495
17
3%
24.2
791
784
-1%
Seventy Saint Patrick's
UOL
RCR
Dec-11
172
Dec-16
186
183
3
2%
22.0
1,631
1,532
-6%
Stratum
Elitist Development
OCR
Apr-12
166
Apr-17
380
364
16
4%
21.2
944
980
4%
Waterwoods
Sing Holdings
OCR
Dec-12
162
Dec-17
373
356
17
5%
20.7
800
798
0%
Twin Fountains
FCL & Lum Chang
OCR
Oct-12
150
Oct-17
418
414
4
1%
19.1
743
728
-2%
The Rise @ Oxley - Residences
Oxley Holdings
CCR
Nov-12
130
Nov-17
120
50
70
58%
16.6
2,409
2,247
-7%
Mon Jervois
SingLand
CCR
Feb-12
119
Feb-17
109
46
63
58%
15.2
2,053
1,838
-11%
Sant Ritz
Santarli Construction
RCR
Jul-12
115
Jul-17
214
190
24
11%
14.7
1,472
n.m
n.m
Pollen & Bleu
SingLand
CCR
Jun-12
113
Jun-17
106
12
94
89%
14.4
1,917
n.m.
n.m.
Floraview
Oxley, Unique and Goldprime
OCR
Mar-12
96
Mar-17
90
42
48
53%
12.3
1,294
1,222
-6%
The Quinn
Top Global
OCR
Mar-12
85
Mar-17
139
91
48
35%
10.8
1,575
1,472
-7%
Whitehaven
Roxy-Pacific
RCR
Jun-12
78
Jun-17
120
114
6
5%
10.0
1,589
n.m
n.m
Michaels' Residences
SCB Terraform
OCR
Dec-11
71
Dec-16
40
11
29
73%
9.1
1,488
n.m.
n.m.
Robin Suites
Goldhill Cap & Robin 25
CCR
Feb-12
54
Feb-17
92
65
27
29%
6.9
2,520
2,340
-7%
Robin Residences
Sing Holdings
CCR
Dec-11
52
Dec-16
134
73
61
46%
6.6
2,306
2,398
4%
Neem Tree
Aylesbury
RCR
Jun-12
46
Jun-17
84
17
67
80%
5.9
1,624
n.m.
n.m.
The Siena
Far East
CCR
Sep-12
46
Sep-17
54
31
23
43%
5.9
2,270
1,737
-23%
One Surin
ACT Holdings
OCR
Sep-12
38
Sep-17
27
6
21
78%
4.8
768
678
-12%
Liv on Wilkie
Roxy-Pacific and Harry Lin
CCR
Aug-12
33
Aug-17
81
65
16
20%
4.2
2,508
2,419
-4%
Liv on Wilkie
Roxy-Pacific and Harry Lin
CCR
Aug-12
33
Aug-17
81
65
16
20%
4.2
2,508
2,419
-4%
The Bently Residences@Kovan
Goodland Group
OCR
Apr-12
27
Apr-17
48
32
16
33%
3.4
1,481
n.m
n.m
# 1 Suites
The One Development
RCR
Jan-12
26
Jan-17
112
85
27
24%
3.3
1,196
1,162
-3%
Ascent @ 456
Quest Homes
RCR
Jan-12
24
Jan-17
28
15
13
46%
3.1
1,471
n.m.
n.m.
28 RC Suites
Sysma Properties
RCR
Aug-12
23
Aug-17
45
42
3
7%
2.9
1,641
n.m
n.m
Rezi 3Two
TEE, KSH and Heeton
RCR
Sep-12
23
Sep-17
65
43
22
34%
2.9
1,469
1,513
3%
Note: CCR = prime segment (core central region), RCR = mid-market (rest of central region), OCR = mass-market (outside central region). #Deadlines to sell are 5 years from the project's
award date. ~ABSD charges are calculated assuming not all units in each project are sold by the deadline. ^Average selling prices (ASP) are based on caveats lodged on URA Realis, and
includes primary and secondary sales. First 3 months refer to when the project was initially launched. Last 3 months refer to the latest 3 months of transaction, typically Nov 2015 to Jan 2016.
Source: Company data, URA, Credit Suisse
Project
03 February 2016
2.2% in 2015E
(%)
7.00
5.0
4.5
6.00
4.0
3.74
3.38
3.5
3.0
5.00
4.00
2.0
1.5
1.0
1.25
3.00
2.00
CS 2015E
estimate: 2.2%
1.00
CS 3M SIBOR Estimate
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
Mar-02
Mar-01
Mar-00
Mar-99
3Q16
1Q16
3Q15
1Q15
3Q14
1Q14
3Q13
1Q13
3MSIBOR
3Q12
1Q12
3Q11
1Q11
3Q10
Islandwide
1Q10
3Q09
1Q09
3Q08
Prime
1Q08
3Q07
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
Luxury
0.00
Mar-98
0.0
Mar-97
0.5
Mar-16
2.27
Mar-15
2.5
Employment growth lowest since 2003, weak growth expected from 2016-2020
While overall and citizen unemployment has remained relatively stable at 1.9% and 3.0%
as at 4Q15, respectively, we note that 2015 total employment growth is estimated to have
increased by only 0.9%, the lowest YoY growth since 2003. This was, however, largely
driven by growth in foreign employment, with local employment only increasing marginally
by an estimated 100 in 2015, from 96,000 in 2014. Going forward, Manpower Minister Mr
Lim Swee Say expects local employment growth to be only about 1% from 2016 to 2020.
Amidst a continued push by the government towards restructuring, redundancies rose
steadily since 2010 to 14,400 in 2015. A further worsening of the labour market and
resident employment situation could thus pose downside risks to property prices, and act
as a dampener to property demand.
10
03 February 2016
2.2% in 2015E
(%)
no. of ppl
7.00
60,000
6.00
50,000
5.00
40,000
4.00
30,000
20,000
3.00
10,000
2.00
Jun 15
Dec 15
Dec 14
Jun 14
Dec 13
Jun 13
Jun 12
Dec 12
Dec 11
Jun 11
Dec 10
Jun 10
Mar-16
Mar-15
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
-30,000
-20,000
Jun 09
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
Mar-02
Mar-01
Mar-00
Mar-99
Mar-98
Mar-97
0.00
0
-10,000
Dec 09
1.00
Dec 08
CS 2015E
estimate: 2.2%
Source: Singstat
40%
30%
25%
250
12%
200
10%
20%
150
8%
15%
Sub-sales
5%
4%
3%
5%
CCR
RCR
OCR
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
0%
1Q12
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Oct-13
Jan-14
Jul-13
Apr-13
Oct-12
Jan-13
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
0%
Apr-10
2%
Jan-10
50
12%
10%
4Q11
4%
1Q10
6%
100
3Q11
14%
2Q11
300
35%
1Q11
16%
4Q10
350
18%
3Q10
20%
2Q10
400
Overall
11
03 February 2016
200
200
180
180
160
160
140
140
120
120
100
100
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2000
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
2001
80
80
2005
2006
2007
2008
2009
2010
2011
2012
2013
DPS
12.5
25
30
7.5
18
18
13
16
16
16
22
38
80
59
65
71
56
60
55
50
56
56%
65%
38%
13%
12%
25%
32%
22%
29%
32%
29%
Core EPS
Payout
2014 2015E
12
03 February 2016
(%)
80
60
40
20
17.7
-7.2
-20
-32.2
-45.5
-40
-60
-80
Dec-90
-52.8
Dec-94
Dec-98
Dec-02
Dec-06
Dec-10
Mean - (7.2)%
Dec-14
1 std
P/B
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jan-88
2.65
1.86
1.07
0.73
Jan-92
Jan-96
Jan-00
Jan-04
Jan-08
Average - 1.86
Jan-12
Jan-16
1 std. dev.
13
03 February 2016
Disclosure Appendix
Important Global Disclosures
Louis Chua and Nicholas Teh each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in
this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation
was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for CapitaLand (CATL.SI)
CATL.SI
Date
21-Feb-13
19-Sep-13
11-Oct-13
20-Feb-14
14-Apr-14
10-Jun-14
29-Jan-15
09-Apr-15
25-Nov-15
Closing Price
(S$)
3.90
3.24
3.16
2.86
2.92
3.21
3.54
3.60
3.11
Target Price
(S$)
4.53
4.53
4.46
4.46
4.70
3.50
Rating
O
R
O
R
O
*
N*
O U T PERFO RM
REST RIC T ED
N EU T RA L
Closing Price
(S$)
11.08
9.27
9.70
10.22
10.68
7.44
Target Price
(S$)
13.49
12.02
12.20
12.25
12.00
Rating
O
*
O*
O U T PERFO RM
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's
total revenues, a portion of which are generated by Credit Suisse's investment banking activities
14
03 February 2016
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.
Analysts sector weightings are distinct from analysts stock ratings and are based on the analysts expectations for the fundamentals and/or
valuation of the sector* relative to the groups historic fundamentals and/or valuation:
Overweight : The analysts expectation for the sectors fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analysts expectation for the sectors fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analysts expectation for the sectors fundamentals and/or valuation is cautious over the next 12 months.
*An analysts coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.
Rating
Outperform/Buy*
56%
(36% banking clients)
Neutral/Hold*
31%
(29% banking clients)
Underperform/Sell*
12%
(42% banking clients)
Restricted
1%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely
correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.
Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
market that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-andanalytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for the purposes of avoiding any penalties.
Target Price and Rating
Valuation Methodology and Risks: (12 months) for CapitaLand (CATL.SI)
Method: Our target price of S$3.50 for CapitaLand is pegged at a 16% discount to our reappraised net asset value (RNAV) per share of S$4.21.
The RNAV is calculated based on CapitaLand's portfolio of assets. For residential properties, we estimate net present value (NPV) of net
profits from its residential properties based on our assumed take-up schedule and selling prices over the next ten years using a 8% and
12% discount rate for Singapore and China respectively. For the subsidiaries we cover, we have used the respective target prices for our
RNAV. Given the limited upside available to our price target and given that valuations while undemanding are not compelling at 0.76x P/B
(-0.5 S.D. from historical averages), we continue to rate the stock Neutral.
15
03 February 2016
Risk:
The main risk to our target price of S$3.50 and Neutral rating for CapitaLand is if the real estate markets in the countries in which the
company is present do not perform as forecast. This would lead to revisions to our NAV assumptions and thereafter target price revisions.
Given that a majority of earnings are dervied from Singapore and China, any government policy changes in these countries would also be
a key risk.
The main risk to our target price of S$12.00 and Outperform rating for City Developments is if the real estate market in the countries which
the company is presently in do not perform as forecasted and hence would lead to downward revisions to our RNAV assumptions and
target price thereafter. Given that a majority of earnings are dervied from Singapore residential sales, any government policy changes
surrounding the property cooling measures in Singapore would also be a key risk.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the
target price method and risk sections.
See the Companies Mentioned section for full company names
The subject company (CTDM.SI, CATL.SI) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of
Credit Suisse.
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (CTDM.SI, CATL.SI) within
the next 3 months.
Credit Suisse has a material conflict of interest with the subject company (CATL.SI) . Credit Suisse (Singapore) Limited is acting as a joint financial
advisor to Sound Investment Holdings Pte Limited, a wholly-owned subsidiary of CapitaLand Limited, regarding its proposed voluntary conditional
cash offer for the shares in CapitaMalls Asia Limited.
16
03 February 2016
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such services and related information solely on an arm's length basis and not as an advisor or fiduciary to the municipality. In connection with the provision of the any such services, there is no agreement,
direct or indirect, between any municipality (including the officials, management, employees or agents thereof) and CS for CS to provide advice to the municipality. Municipalities should consult with their
financial, accounting and legal advisors regarding any such services provided by CS. In addition, CS is not acting for direct or indirect compensation to solicit the municipality on behalf of an unaffiliated broker,
dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of obtaining or retaining an engagement by the municipality for or in connection with Municipal Financial Products,
the issuance of municipal securities, or of an investment adviser to provide investment advisory services to or on behalf of the municipality. If this report is being distributed by a financial institution other than
Credit Suisse AG, or its affiliates, that financial institution is solely responsible for distribution. Clients of that institution should contact that institution to effect a transaction in the securities mentioned in this
report or require further information. This report does not constitute investment advice by Credit Suisse to the clients of the distributing financial institution, and neither Credit Suisse AG, its affiliates, and their
respective officers, directors and employees accept any liability whatsoever for any direct or consequential loss arising from their use of this report or its content. Principal is not guaranteed. Commission is the
commission rate or the amount agreed with a customer when setting up an account or at any time after that.
Copyright 2016 CREDIT SUISSE AG and/or its affiliates. All rights reserved.
Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can
be eroded due to changes in redemption amounts. Care is required when investing in such instruments.
When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS
as a seller, you will be requested to pay the purchase price only.
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