CIMB Research raised its target price for property developer Overseas Union Enterprise to $3.38 from $2.98 and kept its ‘outperform’ rating, citing expected gains from the potential sale of its hotel and shopping mall assets.
By 11:45 am, OUE shares were down 0.7% at $2.93, having surged 39.5% so far this year, compared with the FTSE ST Mid Cap Index’s 25% rise.
OUE said on Wednesday it has offered a potential buyer exclusivity to do due diligence Marina Orchard hotel and Marina Orchard shopping mall in Singapore, which CIMB said could fetch higher-than-expected prices and special dividends from the disposal gains.
“Divestment of Mandarin Orchard at this stage of the cycle when room rates and occupancy are at historical highs will allow OUE to extract near maximum value from this asset,” said CIMB in a report, Sale of OUE’s Mandarin Orchard hotel, which is valued at $1.18 billion, would lead to a divestment gain of about $1.06 billion and an increase in OUE’s book value by 27%.
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