DBS Group Research - Property Sector

Source : The Business Times, May 6, 2008

MASTER Plan 2008 preview: The Master Plan, to be exhibited in its draft form in late May this year as part of a review every five years, is the statutory land use plan aimed to assist in guiding the physical development of Singapore in the medium term, over the next 10 to 15 years.

The key interest in the Master Plan is that it shows the permissible land use and density for every parcel of land in Singapore. Any significant increases in plot ratios for developer-owned land would thus bring about an immediate increase in valuations for the developers.

However, as analysed through the newsflow over the past year or so, we can quite safely infer that hopes for an island-wide upgrade in plot ratios to cope with the anticipated increase in population will likely be dashed upon the public exhibition of the draft Master Plan. There will be changes in land use and increases in plot ratios, but these will be selective and focused on growth areas - both from the economic as well as geographical perspectives - rather than a widespread upgrade in densities.

Instead, we see Master Plan 2008 as more of a strategic blueprint in laying down the future growth sectors and strategic areas in the medium-term economic development of Singapore.

Beneficiaries from strong fundamentals: We have identified the Property sector as a key and obvious beneficiary. Stronger planning initiatives and an improved sense of fundamentals will bring foreign investment into Singapore, directly benefiting developers over time. Also standing to benefit from this strategic outline are the Hotel, Aerospace, Healthcare, Transport and Construction sectors.

- Compiled by CHOW PENN NEE

Glossary:

EPS - earnings per share
Ebit - earnings before interest & tax
Ebitda - earnings before interest, tax, depreciation & amortisation
FY - fiscal/financial year
H1, H2 - first or second half
NAV - net asset value
9M - nine months
P/B - price/book value (ratio)
PE - price/earnings (ratio)
Q1, Q2, Q3 - first, second, or third quarter
q-o-q - quarter-on-quarter
ROE - return on equity
RNAV - revised net asset value
TP - target price
y-o-y - year-on-year
YTD - year to date

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