UOL shares oversold despite impact from fresh property cooling measures: OCBC

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UOL Group shares were likely oversold in the sharp drop in property sector stocks in the wake of the Singapore government imposing a fresh round of cooling measures, OCBC said in a note on Monday.

“UOL would be negatively impacted by these measures, as we estimate that it has a pipeline of around 2,050 units ready to be launched in Singapore over the next 12-18 months,” OCBC said.

But it added, “UOL also has significant exposure to the office and hospitality sectors, which we believe are still undergoing a rental upcycle and RevPAR recovery, respectively, and also not affected by this round of cooling measures.” RevPAR stands for revenue per available room.

OCBC kept a Buy call on the stock

However, it cut its fair value to S$8.48 from S$10.63 on expectations the fresh cooling measures would impact UOL’s residential sales prospects.

“We factor in lower average selling price assumptions and slower sales momentum, while also increasing our discount rate for UOL’s Singapore residential projects and widening our RNAV discount from 20 percent to 35 percent,” it said. RNAV stands for revalued net asset value.

The stock ended Monday up 0.15 percent at S$6.71.

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