SingHaiyi Group Ltd - CIMB Research 2018-01-18: A Well-rounded Property Specialist

SingHaiyi Group Ltd - CIMB Research 2018-01-18: A Well-rounded Property Specialist SINGHAIYI GROUP LTD. 5H0.SI

SingHaiyi Group Ltd - A Well-rounded Property Specialist

  • SingHaiyi Group Ltd has exposure to property development, property investment, property management and real estate fund management in Singapore, Malaysia and the US.
  • SingHaiyi recently boosted its Singapore residential property with two en bloc acquisitions, while its Penang Road property is being redeveloped to capitalise on office upcycle.
  • US rentals and new investments could provide a recurrent income base.
  • It is now trading at a 39% discount to fully diluted RNAV of S$0.20.



A well-rounded property player 

  • SingHaiyi Group (SHG) is a real estate specialist, with exposure to property development, property investment, property management and real estate fund management, in Singapore, Malaysia and the US.


Singapore landbank boosted by two recent en bloc purchases 

  • In addition to the ongoing City Suites (50% sold) residential project, SingHaiyi recently boosted its Singapore residential property exposure via the successful tender for the Sun Rosier, How Sun Park and Park West en bloc sites, jointly with Huajiang International Corporation (Unlisted). These three land parcels have total potential GFA of 1.64m sq ft.


Redevelopment of 9 Penang Road to ride on current office upcycle 

  • SingHaiyi has a 35% stake in the 9 Penang Road commercial project. Development works for the new Grade A office block commenced in Oct 2016. 
  • According to the company, upon completion at end-2019F, the property will comprise two wings of office space with NLA of 352,000 sq ft and 15,000 sq ft of retail area on the ground floor, thus diversifying SingHaiyi’s earnings base with potential to realise value through asset sales in medium term.


Rentals from Tri County Mall, two ongoing developments in the US 

  • Tri County Mall is a 1.2m sq ft NLA suburban retail mall in the greater Cincinnati area. The mall is tenanted by major retailers such as Macy’s and is currently undergoing asset enhancements to enhance shopper footfall. 
  • In addition to a 585-unit residential project in San Francisco, it has a mixed project in Vietnam Town, San Jose. All the remaining 141 units have been bulk sold for US$95.3m. 
  • SingHaiyi guides for profits to be felt from FY19F.


Investments provide a recurrent income base 

  • SingHaiyi has a 25% share in ARA Harmony Fund III that owns five office/retail assets located across Malaysia, as well as a 35% stake in the manager of the fund. It recently spent S$60.1m to acquire a 3.45% stake in newly-listed Cromwell European REIT (CROMREIT SP, Not Rated). 
  • Income from these investments could form a recurrent base.


Proposed rights issue to fund property investments 

  • Net debt-to-equity ratio stood at 0.3% as at Sep 2017. 
  • In Dec 2017, SingHaiyi proposed a 1- for-2 rights issue at S$0.10/share, to raise gross proceeds of up to S$143.5m. According to management, an estimated 70-90% of the proceeds are planned for property investments, thus enabling the group to tap into new growth opportunities. 
  • SingHaiyi is trading at 0.7x pre-rights P/BV and below fully diluted RNAV of S$0.20. It paid a DPS of 0.3Scts in FY17, translating into a dividend yield of 2.5%.



NOT RATED
Target Price: N/A






LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2018-01-18
CIMB Research SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998 Same 99998


* This Eyes On the Ground report represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.



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