HO BEE LAND LIMITED
H13.SI
Ho Bee Land (HOBEE SP) - Strong valuation support from office assets
Maintain BUY with SGD2.33 TP
- Maintain BUY on Ho Bee following the 4Q15 results.
- Our RNAV-based TP of SGD2.33 has valuation support from its portfolio of office assets in Singapore (40%) and the UK (31%), which provide strong valuation support. Monetisation of these assets could unlock value and narrow its valuation discount.
- Our RNAV had already built in a conservative value for its Sentosa assets.
FY15 in line; DPS raised
- Ho Bee reported FY15 net income of SGD242m (-23% YoY).
- The positive variance was driven by fair value gains of SGD186.4m on its office properties in Singapore and UK.
- The company also recorded SGD17m in contributions from associates due to profit recognition from its joint venture project in Shanghai and a SGD21.4m write-back on construction cost for The Metropolis.
- These positive variances were offset by a SGD34.7m impairment charge on its 35% stake in Cape Royale.
- Overall, we deem the underlying performance in line.
- The company proposed a higher DPS for the year of 7 SGD cts (Final: 5cts; Special: 2cts) from 5 SGD cts last year. This translates to a yield of 3.7%.
Sentosa properties marked down
- The company took an impairment charge of SGD34.7m for its 35% stake in Cape Royale based on latest valuation by Savills of SGD1,363m (SGD1,950 psf) for the project.
- While negative, our RNAV valuation had already built in a conservative valuation of SGD1,600 psf for its entire Sentosa portfolio.
- No impairment is required for the other two projects in Sentosa, Turquoise and Seascape, as their costs are much lower.
Possible sale of UK office could unlock value
- The company put up Rose Court, one of its UK office properties, for sale recently. This property’s latest valuation of GBP92.5m already reflects a 38% appreciation from the GBP67.2m price it paid.
Derrick Heng CFA
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2016-02-25
Maybank Kim Eng
SGX Stock
Analyst Report
2.33
Down
2.84
