Ho Bee Land Limited - Phillip Securities 2016-04-29: Development properties to gradually boost revenue

Ho Bee Land Limited - Phillip Securities 2016-04-29: Development properties to gradually boost revenue HO BEE LAND LIMITED H13.SI 

Ho Bee Land Limited - Development properties to gradually boost revenue 

  • Ho Bee Land’s 1Q16 revenue came in at S$37.2mn (up 20% yoy vs S$31mn in 1Q15), primarily driven by the Group’s three office buildings acquisitions in London in 2H15. 
  • Profit after tax rose 60% to S$18.5mn, partly contributed by profits from associates of S$9.3mn. 
  • Sales from the joint development with Yanlord Land in Shanghai, Yanlord Western Gardens contributed bulk of this share of profits from associates. 

Development property profits to boost revenue in the coming quarters 

  • Rental income from The Metropolis and the six commercial properties in London continues to drive top-line growth of Ho Bee, in the absence of completed development projects in the quarter. 
  • Nonetheless, Ho Bee’s two Australian residential projects Rhapsody in Gold Coast and Pearl in Melbourne will complete in 1H16 and sales for these projects would continue to drive revenue growth in the coming quarters. 
  • As of end February this year, Rhapsody is 70% sold and Pearl is 85% sold. 

Associates’ performance boosted by Shanghai property sales 

  • Sales revenue from Yanlord Western Gardens, a 1470-unit project in Shanghai (partnership with Yanlord Land Group) was the primary driver of associates’ profits which ultimately contributed c.43% of profit before tax. 
  • As of end December 2015, 50% of the project has been sold and 353 units handed over to purchasers. 
  • With sentiment still buoyant in Tier 1 cities in China, we remain optimistic of the sales for this project and forecast 100% sales by FY17. The rising average selling prices of the project as extracted from fang.com, a leading property portal in China, appear to reaffirm our belief. 

Investment Action 

  • We maintain our ACCUMULATE call on Ho Bee Land with an unchanged RNAV-derived target price of S$2.27.

Dehong Tan Phillip Securities | http://www.poems.com.sg/ 2016-04-29
Phillip Securities SGX Stock Analyst Report ACCUMULATE Maintain ACCUMULATE 2.27 same 2.27