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SLB Development - SAC Capital 2022-03-15: Building Recurring Income From Real Estate

SLB DEVELOPMENT LTD. (SGX:1J0) | SGinvestors.io SLB DEVELOPMENT LTD. (SGX:1J0)

SLB Development - Building Recurring Income From Real Estate


Strong home sales in 2021 lifted 1H22 earnings by 117% to S$12m.

  • All 3 residential projects of SLB Development (SGX:1J0) (20%-owned Riverfront Residences, 20%-owned Affinity @ Serangoon and 42%-owned REZI 24) are fully sold before the cooling measures were imposed on 16 Dec 2021.
  • SLB Development's 51%-owned industrial project INSPACE contributed positive gain of ~S$2.3m. It also booked S$1.8m rental income from freehold industrial property Thye Hong Centre, which was acquired for S$112.5m, or S$550/sf ppr. Annual rental is expected rise to about S$5m (cap rate 4.4%) after asset enhancement initiative (AEI) that drove a 30% rental uplift.
  • SLB Development's other projects on hand include
    • a 10%-stake in the en-bloc acquisition of Peace Centre for S$650m or about S$1,385/sf ppr, to be re-developed into a 60:40 commercial/residential development; and
    • a 9-10% stake in Gaobeidian, a mixed-use development project spanning 5.3m sqm land in Hebei Province.


Building recurring income.

  • SLB Development is building recurring 17 shophouses in Jalan Sultan for S$74.8m to be converted into co-living space. Weave Living will take a significant majority stake.


Strengthening its balance sheet.

  • SLB Development's net debt as at end Nov 21 was S$107m, or net gearing of 57.8%.
  • We expect substantial cash inflow of S$190m in 2022/2023 from the residential projects and INSPACE, as these reached TOP. About S$35m might be deployed as equity at the Peace Centre project.


Valuation.






Peggy Mak SAC Capital Research | https://www.saccapital.com.sg/ 2022-03-15
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000



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