Is there any value left? That depends. Purely on a price-to-book basis coupled with yield, look no further than United Overseas Bank (UOB) and Oversea-Chinese Banking Corporation (OCBC).
For the longest time, developers have been entrenched below their book values (see table). This is because their balance sheets are not liquid. When City Developments and Hongkong Land started to monetise their assets, their price-to-NAV ratios narrowed.
A quick back-of-the-envelope glance using Bloomberg’s data shows quite a few real estate stocks that have lagged the STI and the developers.
Developers have gained an average of 58% in terms of total returns (plus dividends) in the past 12 months. Names such as Hong Fok, Heeton, Straits Trading, Oxley, Tuan Sing and Ho Bee Land have lacked a stimulus.
See also: The FTSE REIT Index is a laggard, but why?
Hong Fok was the subject of a report by Corporate Monitor recently, which could explain why the stock had challenges rallying.
Among the laggards, Ho Bee Land appears to have gained a sliver of momentum from a technical perspective as it appears to have slightly greater relative strength than the other laggards.
See also: This STI-laggard has broken out and looks set for higher levels; who will follow?
But it would need to narrow the P/NAV with asset sales which may be a challenge. Elsewhere, Straits Trading and Tuan Sing could experience rebounds based on their technical charts.
Elsewhere, as yields on the 10-year US treasuries remain above 4%, it is interesting to note that the largest foreign holder of US debt remains Japan, followed by the United Kingdom. The Europeans have taken up the slack left by the Chinese (see chart and table).
