Hiap Hoe Ltd - CIMB Research 2017-11-03: Eyeing Singapore And Overseas Opportunities

Hiap Hoe Ltd - CIMB Research 2017-11-03: Eyeing Singapore And Overseas Opportunities HIAP HOE LIMITED 5JK.SI

Hiap Hoe Ltd - Eyeing Singapore And Overseas Opportunities

  • Well-diversified property operations in Singapore and overseas.
  • Growing hospitality business with 2 new overseas hotels YTD.
  • Recurrent rental income provides a stable base.
  • Low residential inventory; looking for new opportunities.
  • Trading at 0.58x P/BV and 56% discount to revalued net asset base.

Diversified property group 

  • Hiap Hoe is a real estate group with a diversified hospitality, retail, commercial and residential portfolio spread over Singapore, Australia and, more recently, UK. In addition, it has a strategic holding in SuperBowl, which is engaged in the leasing and leisure business, as well as a construction arm via its wholly-owned subsidiary WestBuild Construction pte ltd
  • In 1H17, it derived 49% of revenue from hotel operations, 28% from rental, 17% from development properties and the remaining from its leisure business.

Sizeable hospitality portfolio in Singapore and overseas 

  • Hiap Hoe has a portfolio of 1,282 hotel rooms in Singapore, Australia and UK. 
  • Hotel revenue will likely see additional contributions from the opening of Four Points by Sheraton Melbourne (in Mar 17) and the recent purchase of The Holiday Inn Express Trafford City in Jun 17. The latter is a newly-opened limited service hotel located near the Trafford Shopping Centre and exhibition and conference venue EventCity in Manchester.

About 28% of topline from recurrent rental sources 

  • Hiap Hoe's investment property portfolio in Singapore and Australia comprises of 473,695 sq ft of NLA. The most notable assets are the Hiap Hoe Building Zhongshan Mall (part of the integrated development including Ramada Singapore and Days Hotel Zhongshan) and 130 Stirling Street in Perth, which together account for 51% of portfolio NLA. 
  • Rental revenue made up 28% of topline in 1HFY17.

One residential project in Australia; looking for new opportunities 

  • On the property development front, Hiap Hoe’s remaining residential project is Marina Towers in Australia, which is scheduled for completion in 1Q18F. The group stated it intends to continue growing its recurrent income base and will evaluate property development and investment opportunities both in Singapore and overseas.

Trading at 0.58x P/BV 

  • Hiap Hoe’s net-debt-to-equity ratio stood at 0.66x as at end 2Q17. Marking to market its property and hotel assets to market value could imply a RNAV of S$2.02/share. 
  • At present, Hiap Hoe is trading at a 56% discount to RNAV and 0.58x P/BV.

Target Price: N/A

LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2017-11-03
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