Sing Holdings

Kim Eng on 11 Apr 2013

A Developer of Premier Living. Sing Holdings is a seasoned property developer that specialises in boutique residential development mostly in prime districts. It focuses on no more than 3 projects at a time, offering strong emphasis in quality and execution. It is currently completing one project, The Laurels @ Cairnhill, and has also replenished its landbank by (1) acquiring four adjoining sites in Robin Drive/Robin Road area and (2) awarded an Executive Condominium (EC) site in Punggol.

Stable earnings flowing through. We estimate the bulk of its profits are secured till 2016. SGD29.1m pre-tax profit has been booked in, and there could be another SGD101.4m worth of pre-tax profits to be recognised until 2016. With its construction cost mostly locked in, its latest winning bid for a Punggol EC site could also potentially rake in SGD34.4m worth of pre-tax profit when it reaches completion in FY16, assuming a sale price of SGD750psf.

Launch of timing crucial. Sing Holdings is now strategically timing the launch of its Robin site to coincide with the opening of Stevens MRT station to achieve a better premium for its proximity to MRT. Current launches in the area are commanding median ASP of SGD2,200 psf, and we expect Sing Holdings could sell at a higher ASP by 2015. While 2014 earnings could be muted, potential earnings upside in 2015 and 201 could more than make up for this.

CEO may increase his stake. Given the visibility of earnings flow through from these projects over the course of next four years, we believe CEO, Lee Sze Hao, who holds a 36.5% stake, may continue to raise his stake, and strengthen his stake in the company. Mr. Lee has been building up from 35.1% in 2011, to 36.2% in 2012 at an average cost of SGD0.32/sh. We do not rule out the possibility of a partial cash offer as a short-cut to increase his stake, as Wing Tai’s CEO did in 2012.

Trading at a sizable discount to book. The stock is currently trading at 0.7x P/B value, with booked-in profit already worth around half its current share price. In our RNAV analysis, we estimate the counter to be worth SGD0.83/share, which is almost double the current share price.