Tuesday 7 May 2013

Roxy-Pacific Holdings

OCBC on 6 May 2013

ROXY reported 1Q13 PATMI of S$11.8m – up 31% YoY mostly due to a stronger contribution from property development. This forms 15% of our FY13 forecast (S$78.0m) and is judged to be mostly within expectations, given that we expect a “lumpy” contribution later in FY13 from Wis@Changi (COC recognition). The 171-unit Jade Residences was launched in Apr and 44% of the units have been sold to date at ~S1.6k psf. All considered, we believe this is a decent launch performance. We also expect WhiteHaven at Pasir Panjang to launch for sales soon, with Sophia Mansions to follow. At this juncture, maintain HOLD as we await more clarity on execution and sales performance at these first set of launches after latest Jan-13 cooling measures. Our fair value estimate is unchanged at S$0.61.

1Q13 earnings within expectations
ROXY reported 1Q13 PATMI of S$11.8m, which increased 31% YoY mostly due to a stronger contribution from property development. This forms 15% of our FY13 forecast (S$78.0m) and is judged to be mostly within expectations, given that we expect a “lumpy” contribution later in FY13 from Wis@Changi (COC recognition). Revenue for the quarter came in at S$53.7m – up 41% YoY – again mostly due to increased revenues from the property development, partially offset by a 16% dip in Hotel revenues from enhancement works. The group continues to sit on S$918.4m of progress billings from sold projects, which would underpin earnings from 2Q13 to FY17.

In the midst of major launches
The 171-unit Jade Residences was launched in Apr and 44% of the units have been sold to date at ~S1.6k psf. All considered, we believe this is a decent launch performance and would be keeping a close eye on the pace of sales over the new couple of months. We also understand that WhiteHaven at Pasir Panjang would be launching for sales soon, with Sophia Mansions to follow.

1Q13 hotel average room rates down YOY 
RevPar for the the hotel segment (Grand Mercure Roxy) decreased by 17% to S$155.1 in 1Q13 mostly due to a lower occupancy rate of 79.2% from enhancement works. However, we also note that 1Q13 room rates have fallen to S$195.9 versus S$201.5 in 1Q12 which, taken together with other datapoints in the hotel sector from our channel checks, could point to a muted RevPar outlook in FY13. 

Maintain HOLD
We see the next two to three quarters to be particularly key ones for ROXY as it executes on its first set of key launches (Jade Residences, WhiteHaven, Sophia Mansions) after the Jan-13 cooling measures. At this juncture, maintain HOLD as we await more clarity on sales performance at new launches and the group’s land-banking ahead. Our fair value estimate is unchanged at S$0.61.

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