Singapore Developers - Hidden value to be unleashed

• Up to 3.5-4.5x uplift in value to be extracted with the redevelopment of Marina Square Mall under SDI scheme 
• Close to 7-12% uplift to RNAVs for developers UOL and SLG, which are trading at 0.3-0.5x P/B or 0.3-0.4x P/RNAV
• SLG  (non-rated) &ndash direct play to unlock value for shareholders 
• UOL Group  (BUY, TP SGD8.40) could see the start of a multi-year value unlocking exercise 

Marina Square &ndash a triple bagger opportunity.  We believe that the time is ripe for consortium UOL Group (UOL) and Singapore Land Group (SLG) to unlock value from the hidden gold in its portfolio through the redevelopment of Marina Square Mall into a future-proof mixed-use integrated development with work-live-play elements involving residential, retail, and office components by tapping into government incentive schemes focused on rejuvenating the core central business districts. Valued at just SGD1,050mn or c.SGD490psf on gross floor area (GFA) basis on the books, the low holding costs for the 2.15mn sqft mall  offers a blank sheet of opportunities  to extract value. We envision two possible development schemes that could drive gross development values (GDVs) by 3.5-4.5x to SGD3.6-4.8bn upon completion. We view this as a key value-unlocking activity expected to drive share prices higher. 
SLG &ndash the best proxy.    With a c.77% stake in the Marina Square Mall, impact from the redevelopment of the mall will be material and visible for SLG (non-rated). With a net debt/equity of close to 0.2x, we see significant capacity for SLG to participate in a redevelopment scheme. With our estimated 10%-30% uplift in GFA from the redevelopment schemes, we estimate an RNAV uplift in the range of SGD0.52-0.77/share (+8-12% rise in RNAV). At current levels, SLG is trading at around 0.35x P/B or 0.30x P/RNAV. 
UOL&rsquo s value-unlocking strategy is unfolding.  In our opinion, UOL is well on its way to extract value at Marina Centre Holdings. Concerns surrounding the huge capital commitment are likely unfounded, given its significant debt capacity of up to SGD1.0-2.0bn (0.4-0.5x debt-equity). The planned sale of a residential component will partly monetise the project when launched. In our assumed scenarios, given UOL&rsquo s 62% effective  stake (23% direct, and c.50% stake in SLG) in the development, we see an uplift of between SGD0.68/share to SGD1.00/share for the group. Further monetisation (i.e., hotels, offices) remains a possibility for UOL to maintain its overall capital structure and drive value for shareholders.