HO BEE LAND LIMITED
H13.SI
Ho Bee Land (HOBEE SP) - Skewed Risk-Reward
Maintain BUY with new SGD2.84 TP
- We apply varying discount rates to Ho Bee’s sub-segments in our RNAV, which dips from SGD4.71 to SGD4.28. This lowers our TP to SGD2.84 from SGD2.90.
- We cut ASPs for its Sentosa homes to SGD1,600 psf from SGD2,000 in view of unrelenting market weakness.
- Ho Bee’s RNAV is dominated by office assets in Singapore (40%) and the UK (31%), which should provide strong valuation support.
- Our TP implies 0.7x P/BV, -0.2SD from its 10-year average.
- Expect catalysts from a rebound in home sales in Sentosa and possible monetisation of its investment properties.
Not too concerned with Singapore office exposure
- Ho Bee has the largest exposure to Singapore’s office sector among our property stocks. However, we are unfazed as its The Metropolis is not in the CBD, where a supply glut is anticipated.
- Furthermore, it could benefit from office decentralisation with its more attractive rents of SGD6+psf vs SGD10+ for prime space.
- The Metropolis may also profit from the redevelopment of Jurong as the next commercial hub, as it is located only 3 MRT stations away.
Conservative valuation of Sentosa assets
- We cut ASPs for its unsold inventory in Sentosa to SGD1,600psf from SGD2,000 to reflect unabated market weakness.
- Valuation of these assets is iffy due to a dearth of transactions and wide range of asking prices. But as projects in Sentosa are not subject to QC deadlines, they arguably have lower risks.
Skewed risk-reward trade-off
- We continue to see deep value in the stock.
- Our conservative valuation of its investment properties already implies SGD4.03 per share.
- Not only would these assets provide strong valuation support but the market appears to be not assigning any value to its development projects.
Derrick Heng CFA
Maybank Kim Eng
|
http://www.maybank-ke.com.sg/
2016-01-13
Maybank Kim Eng
SGX Stock
Analyst Report
2.84
Down
2.90
