It seems like CapitaLand’s recent spinoff gave life to the property stocks in Singapore. While CapitaLand hogged the news, there were other property stocks that have seen their prices jumping up on high trading volume.
4 Property Developer Stocks with surging trading volume
On 25 Mar 2021, the shares of another property developer, Hong Fok (SGX:H30), rose 25% in a day. Many investors believed it was due to an article from Business Times. The cause cannot be verified though.
OUE (SGX:LJ3) is another beaten down property stock that has seen high volume and rising share prices starting from 25 Mar 2021.
Guocoland (SGX:F17), the company that built the tallest building in Singapore, has seen some interest in its stocks since 26 Mar 2021.
Last but not least, Tuan Sing (SGX:T24) has also seen a huge price jump on 26 Mar 2021 on the back of a huge volume surge.
I sensed that something is brewing and would like to see if this run is extending to other Singapore property developer stocks and would there be opportunities to ride the trend.
Performance of major Singapore property developer stocks
Below is a tabulation of the year-to-date performance (29 Mar 2021) of the major Singapore property developer stocks and their corresponding metrics.
| Stock | Ticker | YTD Return (29 Mar 2021) | Share price | P/B Ratio | Div Yield | Free Float |
| Hong Fok | H30 | +35% | $1.00 | 0.3 | 1.0% | 28% |
| Bukit Sembawang | B61 | +21% | $4.83 | 0.9 | 0.8% | 59% |
| Hongkong Land | H78 | +19% | $4.91 | 0.3 | 4.5% | 50% |
| Tuan Sing | T24 | +17% | $0.37 | 0.4 | 1.6% | 41% |
| Capitaland | C31 | +15% | $3.78 | 0.9 | 3.1% | 43% |
| Guocoland | F17 | +11% | $1.71 | 0.4 | 3.6% | 19% |
| Oxley | 5UX | +11% | $0.25 | 1.0 | 3.3% | 18% |
| OUE | LJ3 | +10% | $1.31 | 0.3 | 0.8% | 30% |
| Ho Bee | H13 | +8% | $2.58 | 0.4 | 3.2% | 22% |
| UOL | U14 | +3% | $7.95 | 0.7 | 1.9% | 56% |
| Wing Tai | W05 | +2% | $1.97 | 0.4 | 1.6% | 47% |
| City Dev | C09 | +2% | $7.94 | 0.8 | 1.0% | 51% |
| Roxy-Pacific | E8Z | +1% | $0.355 | 0.9 | 3.2% | 21% |
| Frasers Property | TQ5 | -1% | $1.22 | 0.4 | 1.3% | 13% |
Most of the property developers have gained in 2021 except for Frasers Property. In fact, 8 out of 14 of these stocks had returned 10% or more. The property sector is heating up again.
Despite the run-up thus far, many are still trading below the price-to-book value of 1. Some are even more undervalued with price-to-book value less than 0.5. If this resurgence is true, property stocks still have much ground to recover.
What are 3 possible causes of property stocks resurgence?
1 – Recovery Play
The most obvious reason that has been thrown around is the recovery play. Landlords and developers were hit during Covid-19 and depressed share prices are just a reflection of the impact. Given that the government has announced work-from-home is no longer the default mode, this gave some hope that life can go back to normal and landlords can get back their powers.
Also, the new home sales have been doing well despite the pandemic and those with units to sell could capitalise on it – I wrote about the property bull run in Aug 2020 and PropNex was trading at $0.60. Now it is at $0.93.
The only argument against this is that the property stock prices have been depressed even before Covid-19 happened. Maybe the recovery play is just an excuse or a long-awaited catalyst for investors to get back into these stocks.
2 – Sector Rotation
The second possible reason is the sector rotation phenomenon that’s occurring right now. Value stocks are back in favour over the growth stocks.
Property developer stocks are definitely value stocks considering that they are trading below book value, have low PE multiples and offering moderate dividend yields. What goes down too much would eventually rebound, as espoused by the effect of mean reversion. Every dog will have its day and it seems like property stocks are having their day now.
3 – Anticipation of delisting moves
The third possible reason is that investors may be expecting some of these property developer stocks to delist. Given the major spinoff decision by Capitaland, investors may feel more optimistic that such corporate action may spill over to other property counters.
Stocks that have lower free float are likelier to be delisted than the others. Examples are Frasers Property, Guocoland, Oxley, Roxy Pacific, Ho Bee and Hong Fok.
Which property developer stocks would you invest in?
If you are a momentum trader, going for the top performers may be your cup of tea. For example, the 4 stocks (with charts) mentioned above can be the starting point – Hong Fok, OUE, Guocoland and Tuan Sing.
If you are a value investor, going for the laggards (share prices haven’t gone up) and cheaper peers would make more sense. Examples are UOL, Wing Tai and Frasers Property.
If you are hoping for a delisting offer, you can choose those with low floats – Guocoland, Oxley, Roxy-Pacific and Ho Bee.
If you are a quality investor, going for the big name players with high quality property portfolios would resonate with you – Capitaland, UOL, City Dev and Hongkong Land.
There are many ways to approach this sector as the opportunities seemed to be back in the property sector.
What about SPH and it’s recent credit Suisse strategic review? Would you consider it a value property developer stock with good dividends?
no doubt that SPH is becoming more and more of a property developer. But media is still a big component though.