Analyst warns investors to ‘stay selective’ on property stocks

Property stocks are trading at –1.5SD to mean discount and we expect property stocks to continue to trade range bound on lack of catalysts. Our strategy would be to stay selective on stock picks, preferring companies that are clear leaders in their market segments such as GLP and CMA, and companies with multi growth engines and strong balance sheets such as UOL and Capitaland where deployment of balance sheet capacity will add to RNAVs and improve earnings visibility.

We also like the retail landlords with good earnings visibility in the Sreits space. We would avoid stocks with purer residential exposure at this juncture and have accordingly, downgraded SC Global and Ho Bee to HOLD as near term buying sentiment is likely to be impacted by the recent policy measures.