RHB: "More headroom to relax property cooling measures -- but no easing likely this year"

Excerpts from analysts' report

RHB Research analysts: Ong Kian Lin & the Singapore Research Team

The property price index (PPI) is only -6.7% from its peak in 3Q13 and -3.7% YoY. The Singapore ruling party, People's Action Party (PAP), scored a watershed election on 11 Sep 2015 (Fri), securing 69.86% of valid votes cast (previous: 2011: 60.14%) and 83 out of 89 seats parliament seats (previous 2011: 80 out of 87). We believe that the strong mandate garnered by PAP has given it more headroom to relax property cooling measures and immigration policies ahead.

Despite expectations building-up for more pro-growth policies, we do not think any easing (particularly property) will be done this year, as the property price index (PPI) is still only -6.7% from its peak in 3Q13 and -3.7% YoY.

There may also be push-back from the populace if asset prices spike right after elections. On the tactical front, a measured (data-dependent) and gradual approach towards loosening thus makes more sense for the new cabinet. We think the probability of lifting some of the ABSD cooling measures next year when islandwide property prices have fallen 12-15% certainly looks more palatable at this stage.

As for immigration, we understand that there were many applications for Permanent Residents /Singapore Citizens that were previously falling behind. Expect some expedition in coming months. However, we think the authorities will remain cautious on relaxing the foreign workers quotas too much, given its concerted National Productivity-drive.

Ho Bee Land's Nanhu Eco-City project in Tangshan, China, will feature more than 3,000 residential units set within an eco-friendly environment. Upon completion, the one sq km project will comprise high-end residential units, shopping malls and facilities such as a golf course, school and hospital. Photo: Company For stock picks, we continue to like developers such as Ho Bee Land (BUY; TP:SGD2.60), Wing Tai (BUY; TP: SGD2.44) and UOL (NON-RATED), which has a higher proportion of Singapore exposure. Among other blue chips, we think CDL (NEUTRAL; TP: SGD9.76) will also be a beneficiary as a number of its SG residential projects remained unsold (highest amongst listed developers with ~2,553 unsold units - See tables below) and any easing in property measures will enable the group to expedite the monetisation of those projects.  Despite our BUY rating, we remain wary on CapitaLand (BUY; TP: SGD4.22), given its near-term 'value-trap' sentiment with the uncertainty over China (over 40% RNAV exposure - likewise GLP (NON-RATED). We still prefer the more SG-based developers over REITs. Others counters we like and will likely react favorably on Mon (i.e. Singapore brands, political certainty & stability) include:  - Financials: DBS (BUY, TP: 23.30), OCBC (BUY; TP: SGD11.70),  - Transport with expectations of a new Minister of Transport: CD (CD SP, NEUTRAL; TP: SGD2.86), SIA (NON-RATED)  - Telcos: M1 ( BUY; TP: SGD3.72), SingTel (NEUTRAL; TP: SGD4.07), StarHub (NEUTRAL; TP: SGD4.00),  - Infrastructure: Keppel (BUY; TP: SGD10.00), SCI (BUY; TP: SGD3.90)

Full report here.