On 29 October 2018, I wrote that OUE share price plunged to a record 14-year low of $1.37. Since that fateful day, the counter confounded all critics by staging a magnificent run to reach a high of $1.80 on 12 April 2019. It certainly seemed like OUE share price is out to prove me wrong. Well, I have no problem with that as long as shareholders made money out of the rebound!
After that minor bull run, OUE share price tamed off quite a fair bit to reach the current level of $1.50. At current OUE share price, the Price/Book Value amounts to a mere 0.33. Is OUE share price undervalued or is it a value trap?
For sure, OUE is not in the league of CapitaLand, City Development or UOL. But this stock is no pushover either. With a market capitalization of $1.46 billion, OUE share is considered a large cap among SGX property counters. Furthermore, OUE boasts many premium grade assets under its stable, among them are OUE Bayfront, One Raffles Place, Lippo Plaza, Mandarin Orchard Singapore, Crowne Plaza Changi Airport, Marina Mandarin Singapore and Mandarin Gallery.
Given the pedigree of OUE, the Group is in strong position to weather the cyclical nature of the hospitality and real estate industry. Based on my review of the financial results, OUE share price could enter 2020 in bullish form.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in this counter before. Whether OUE share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
OUE share price see light at end of tunnel?
2018 was a real nightmare for OUE. A series of unfortunate events combined to knock the wind out of OUE share price. The government fired the first salvo through the announcement of additional property cooling measures in July 2018. Being a real estate developer, OUE share price fell following the implementation of the property cooling measures.
2018 was also the year in which the US Federal Reserves raised the interest rates four times. Back then, the market was bearish on property and S-REITs because these sectors are heavily leveraged by nature. OUE is no exception. As at end of 2018, the total debts amounted to $3.5 billion. Nonetheless, 2019 saw the US Federal Reserves cutting the interest rates three times, resulting in the revival of many property stocks. OUE share price was one of the beneficiaries.
Another factor that had swung the balance in OUE share price favour was the recovery of Indonesian rupiah. Through First REIT, OUE has exposure to the Indonesia market – 20 healthcare-related properties in Indonesia. In October 2018, OUE and OUELH acquired a 60.0% and 40.0% stake respectively in Bowsprit, the manager of First REIT. Henceforth, any volatility in the Indonesian currency might result in the fluctuation of OUE share price.
But I reckon what really rocked OUE share price in 2018 was the [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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