Sing Holdings - RHB Invest 2016-10-11: Replenish depleted landbank

Sing Holdings - RHB Invest 2016-10-11: Replenish depleted landbank SING HOLDINGS LIMITED 5IC.SI

Sing Holdings - Replenish depleted landbank

  • A partnership between Sing Holdings (SING SP) and Wee Hur Development (WHUR SP) recently clinched a 99-year leasehold private housing site along Fernvale Road in the Sengkang area after putting in a top bid of $517psf. The site was fiercely contested with 14 bids received in total, with Sing Holdings besting the second highest bidder by a mere $0.3psf. 
  • The successful bid allows Sing Holdings to replenish its depleted landbank after the completion of its EC project Waterwoods and prime residential development Robin Residences. Working along the same lines as its Waterwoods project, Sing Holdings is tying up with a contractor, this time with Wee Hur, to lock in its construction cost with Wee Hur also taking a 30% stake in the project.
  • Sing Holdings is positive on the site’s potential given the high sale rate of projects in the vicinity and the proximity of the location to amenities and transport nodes. Chip Eng Seng’s nearby High Park Residences with 1399 units, for instance, is currently 98% sold with recent sales going above $1000 psf. 
  • When launched in about a year’s time, Sing Holdings’ project will be the only one in the vicinity with no other competing new developments. Based on our estimates of a breakeven price of $900 psf, we expect the Fernvale site to generate healthy pretax margins of 12%.
  • Sing Holdings is currently in a net cash position (net cash: c$60m) after collecting proceeds from the completion of its Waterwoods EC and Robin Residences. Waterwoods is fully sold while Robin Residences is 70% sold with a sale value of $173m. 
  • Given its strong balance sheet, management remains on the lookout for yield-accretive investment assets which can bolster its recurring income stream. 
  • We estimate a RNAV of $0.75/share for the stock after factoring in the surplus from the sale of the balance units at Robin Residences and development profits from Fernvale. 
  • At $0.33, the stock is trading at a steep discount of 56% to its RNAV.

Goh Han Peng RHB Invest | 2016-10-11
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