Wheelock Properties - OCBC Investment 2016-05-16: Relatively Resilient 1Q16 Numbers

Wheelock Properties - OCBC Investment 2016-05-16: Relatively Resilient 1Q16 Numbers WHEELOCK PROPERTIES (S) LTD M35.SI 

Wheelock Properties - Relatively Resilient 1Q16 Numbers

  • Results broadly in line
  • Balance sheet in net cash position
  • Well positioned for down-cycle

1Q16 results within expectations

  • Wheelock Properties (S) Ltd (“Wheelock”) reported that its 1Q16 PATMI decreased 9.1% YoY to S$11.1m, which we deem to be within expectations and constitutes 31.0% of our full year forecast. 
  • In terms of the topline, 1Q16 revenues similarly dipped 7.5% YoY to S$91.8m mainly due to weaker recognition at the Panorama, lower rental income from Scotts Square Retail and the absence of dividend income from the group’s investments. 
  • As a result of the lower activity in the property development segment, the cost of sales booked over the quarter also decreased 4.5% YoY to S$76.3m. 
  • Notably, other operating expenses in 1Q16 also dipped 78.9% YoY from S$78.9m to S$0.9m mainly due to exchange losses from the translation of bank loans denominated in foreign currency in the same period last year.

Adeptly navigating sector headwinds

  • Management reports that, as at end Mar 2016, 31 out of 38 units earmarked for leasing at Scotts Square has been leased at an average monthly rent of S$5k per unit, and that seven units has been sold at Ardmore Three at an ASP of S$3.3k psf after its re-launch on 14 April 2016. 
  • In addition, 597 units have been sold at the The Panorama (up versus 561 units as at Dec 2015) while 253 out of the 345 units launched for sale at the Fuyang City project in China has been sold amidst ongoing marketing. 
  • At Wheelock Place, the office component continues to enjoy full tenancy and the retail component is currently 96% leased. 
  • As at end 1Q16, the group’s balance sheet remained in a healthy net cash position with S$665.3m in cash and equivalents. 
  • Despite sector headwinds, we see the group being in a solid financial position to ride out the current down-cycle and we continue to see long term fundamental value in Wheelock’s shares at its price here. 
  • Maintain BUY with an unchanged S$2.27 fair value estimate.

Eli Lee OCBC Securities | http://www.ocbcresearch.com/ 2016-05-16
OCBC Securities SGX Stock Analyst Report BUY Maintain BUY 2.27 SAME 2.27