News Analysis: Smashing expectations with impressive sales at Lentor Modern launch
- 84% sell-though rate for Lentor Modern smashes expectations; pricing at c.S$2,100 psf on average
- Smaller units “sold out” with c.92% of the buyers locals with upgraders key buyers
- Lookout for completion of Guoco Midtown (mixed-use) and launch of Lentor Hills Residences in 1H23
- Exposure to “unsold inventory” in a slowing market further “de-risked”; BUY, TP S$2.30 maintained
Lentor Modern impressive sales a positive surprise for GuocoLand (BUY, TP S$2.30).
Lentor Modern launched over the weekend, with 508 out of its 605 units sold, which is around 84% of the project sold. Prices ranged from roughly $1,800 per square foot (“psf”) to $2,500 psf and we’re estimating the average to be around S$2,100 psf, which we estimate to be around 1% accretion to our RNAV. Singaporeans made up 92% of total buyers, mainly owner-occupiers with upgraders constituting the majority. This strong take up is a positive surprise and ahead of our expectations, which shows how buyers believe in GuocoLand’s ability to transform neighbourhoods through its integrated mixed-use developments.
What’s next?
We remain on the lookout for further catalysts for the stock and we see a few. Firstly, the completion of Guoco Midtown mixed-use development launch in Bugis likely in 4Q as it pivots to a deeper focus on its property investment business. The property is roughly 60% pre-committed ahead of completion.
Secondly, the group has another residential site within Lentor which is launching in c.6 months, and we believe that Lentor Modern has set them in good stead to sell strongly in this next project. The recent sale of 2 more residential sites to other developers at marginally higher land prices and targeting similar selling prices of > S$2,000 psf provides somewhat like a pricing benchmark for homes in the outside central region (“OCR”).
We currently have a BUY recommendation and target price of S$2.30 for GuocoLand.
We are hosting management (CEO and CFO) for a group investor call on 3rd October 9.30am, please sign up if keen to speak to management.