As such, the brokerage is keeping its “buy” call on UOL with an unchanged target price of $9.05 – a 15% discount to its revalued net asset value (RNAV) of $10.66.
See: UOL a step closer to achieving ‘statutory control’ of UIC in share swap deal with Haw Par
But that is not to say that the proposed transaction is without merit.
More importantly, the proposed deal will bring UOL one step closer to its aim of gaining statutory control of UIC.
“Eventual control of more than 50% of UIC could unlock hidden value within the group and could be a catalyst to watch,” says Heng.
“We see this as a less-risky and cheaper way to create shareholders’ value in times of elevated land prices,” he adds.
UOL remains Maybank’s top pick in the Singapore real estate sector, with catalysts expected from a property price rebound.
As at 1.03pm, shares of UOL are trading 5 cents higher at $7.73.
