Ho Bee Land (HOBEE) - Maybank Kim Eng 2018-07-06: Diversification Pays Off

Ho Bee Land (HOBEE) - Maybank Kim Eng Research 2018-07-06: Diversification Pays Off HO BEE LAND LIMITED SGX:H13

Ho Bee Land (HOBEE) - Diversification Pays Off

Maintain BUY with lower Target Price of SGD3.05

  • We trim RNAV by 0.3% after ASP downgrades. With Singapore’s residential market accounting for less than 10% of its valuation, the impact of ASP cuts to its RNAV is relatively muted.
  • Ho Bee is our sole BUY amongst mid-cap developers. We believe its efforts to diversify away from Singapore’s residential market is paying off.
  • With strong recurring income stream from a large pool of investment properties, we cut EPS by less than 5%. io. Nonetheless, we cut Target Price to SGD3.05, based on a revised 35% discount (from 30%) to its RNAV of SGD4.71.
  • Maintain BUY.

Cut ASPs; Limited downside

  • With 5-10% increases in the ABSD for property investors, we expect developers to lower their ASPs to stimulate demand. While higher ABSD for property investors will dampen demand for its Sentosa properties, we see small downside as our ASP assumptions were already fairly conservative.
  • We cut ASPs for its Sentosa properties by 3% to SGD1,750-1,850 psf.

Sector Report:

Other Property Developer Stocks:

Derrick Heng CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2018-07-06
SGX Stock Analyst Report BUY Maintain BUY 3.05 Down 3.300