HO BEE LAND LIMITED
H13.SI
Ho Bee Land - Overseas sales and rental from investment properties support earnings
- Ho Bee Land’s latest results continued to reflect the success of management’s efforts to build a recurring stream of income. Rental revenue from its investment properties rose by 7.4% YoY to SGD34.9m in 3Q16, boosted by a full quarter’s contribution from its six London office properties, some of which were only acquired in the second half of last year (110 Park Street Mayfair, 39 Victoria Street and Apollo House and Lunar House). 9M16 rental income came in at SGD108.6m (+15% YoY) and we expect full year rental income of c.SGD145m.
- Ho Bee’s earnings this year will also benefit from the completion and recognition of its residential developments in Melbourne and Gold Coast, as well as contributions from its joint venture projects in Zhuhai and Shanghai, both with Yanlord Land. For 9M16, these projects and JVs contributed SGD51m in earnings to Ho Bee Land, putting the group in a good position to end the year on a high note as well as to pay higher dividends (FY15: 5 cents of ordinary and 2 cents of special dividend).
- While Brexit has resulted in translation losses due to unfavourable exchange rate, Ho Bee’s London portfolio is backed by solid blue-chip and government tenants and an average lease term to expiry of more than five years. GBPdenominated borrowings have further mitigated the impact of the recent GBP weakness. Longer-term, the Group is also open to options to unlock value from its substantial investment properties portfolio of SGD3bn, such as a REIT transaction.
- Ho Bee has the best track record among its real estate peers, and its NAV/share has seen compounding at a CAGR of 18% over the last decade.
- We reiterate our BUY rating and TP of SGD2.71 based on a 35% discount to its NAV of SGD4.17/share.
Goh Han Peng
RHB Invest
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http://www.rhbinvest.com.sg/
2016-11-22
RHB Invest
SGX Stock
Analyst Report
2.71
Up
2.680
