Traders could be undermining GuocoLand: Maybank KE

The 201 units sold at Martin Modern surpassed developers' expectations.

GuocoLand's share price fell 12% in the past month, which is conflicting with some stronger data points that have emerged, Maybank Kim Eng said.

Firstly, there has been a stronger pace of sales at Martin Modern. Caveat data showed that 201 units have been sold at Martin Modern, which is higher than the 150 units forecasted by the banks and the 186 units expected by developers surveyed by URA.

The tender for the Jiak Kim site, a "comparable" site to Martin Modern, closed with a top bid of $1,733 psf.

"This implies that Martin Modern would have a cost advantage of c.$500 psf based on its land rate of $1,239 psf. Hence, we see scope for GuocoLand to raise ASPs at the project in the coming year," said analyst Derrick Heng.

Moreover, after GuocoLand previewed Wallich Residence in the week of 13 November, five caveats have been lodged with an average selling price (ASP) reaching a high of $4,000 psf for a $3.8m, 89 sqm home on the 55th floor.

ASPs for the remaining units range from $3,182 to $3,699 psf.

"We are surprised by the prices achieved and our $3,250 psf assumption looks too conservative," Heng commented.

"We fine-tune sales forecasts and raise ASP assumptions for Martin Modern and Wallich Residences by $100-150 psf. This lifts EBIT by about 4%. Below the operating line, we bring forward associate earnings recognition for Changfeng Residences after the strong 1Q18 results," he added.