Analysts downgrade ratings and target prices for CityDev and UOL, stock prices decline | Lianhe Zaobao

After JP Morgan downgraded the ratings and target prices of two major local developers, City Developments Limited (CDL) and UOL Group, the stock prices of both companies plummeted on Monday (March 16), with intraday declines of 6.4% and 7.3%, respectively. As of 3:15 PM, the stock prices of both companies had slightly rebounded. City Developments' stock price fell 4.54% to SGD 8.62; UOL Group's stock price was SGD 9.80, down 4.85%. JP Morgan analysts downgraded the ratings of City Developments and UOL Group from "Overweight" to "Neutral." The target price for City Developments was lowered from SGD 10.75 to SGD 8.70, while UOL Group's target price is SGD 9.55, down from the previous SGD 12.05. Analysts wrote in the report that City Developments' earnings are expected to recover, mainly due to last year's record residential sales, the resilience of the local real estate market, and the decline of Singapore's three-month Singapore Overnight Rate Average (SORA) to 1.1%. Additionally, the group still has non-core assets worth SGD 7.5 billion that can be divested or injected into funds or real estate investment trusts (REITs). However, the ongoing conflict in Iran may hinder City Developments from monetizing these assets. Impact of Middle East Conflict on Hotel Business Analysts also believe that the group's hotel business is susceptible to impacts. Although City Developments has no assets in the Middle East, its hotels in the United States, the United Kingdom, Europe, and Asia may be affected by rising oil prices and airfare, as well as limited capacity from Middle Eastern airlines. Due to the uncertainties of the conflict, analysts expect the average revenue per available room (RevPAR) for the group's hotels in 2026 and 2027 to have a year-on-year growth rate of 0%, down from the previous forecast of 2% to 3%. Analysts also stated that given the more challenging macro environment and the weakening drivers supporting a strong rise in City Developments' stock price, they recommend investors to take a wait-and-see approach. "This is a tactical adjustment; if the conflict in Iran is resolved, asset monetization improves, or the company's strategic assessment yields positive results, investors should refocus on City Developments." JP Morgan analysts also downgraded UOL Group's rating from Overweight to Neutral, with the target price lowered to SGD 9.55. (File photo) Analysis: UOL Group's Growth Momentum May Slow Further Reading [UOL Group's net profit rose 21% to SGD 276 million in the second half of last year, plans to distribute a dividend of SGD 0.25] ](https://www.zaobao.com/finance/singapore/story20260226-8644136) Driven by profit growth, two major developers' stock prices rose in early trading At the same time, amid weakening macroeconomic fundamentals, analysts expect UOL's growth momentum may slow down. UOL's stock price has risen 17.9% since the beginning of the year, making it one of the best-performing stocks among locally listed companies. However, with escalating geopolitical tensions, the risk of profit-taking in the market is also increasing. JP Morgan analysts believe that UOL's residential sales this year will slow to between SGD 2 billion and 3 billion, down from SGD 5 billion achieved last year. They expect that although the group's earnings compound annual growth rate (CAGR) over the next three years will reach 10%, the growth rate is significantly slowing compared to the 49% growth in 2025. Similar to the situation with CityDev, analysts believe that UOL's hotel business will also experience a slowdown. Although the group's exposure in the Middle East is limited, rising fuel costs and reduced flight availability may impact demand for the group's local hotels. In terms of average room revenue, analysts have also revised down their growth forecast from the original 2% to 3% to 0%. "Every 5% change in UOL's average room revenue will have a 1% impact on earnings per share (EPS)."