Monday, 5 August 2013

Roxy-Pacific Holdings

OCBC on 2 Aug 2013

2Q13 PATMI is S$19.5m (EPS: 2.05 S-cents) which increased 10% YoY due to higher property development profits. 1H13 PATMI now cumulates to S$31.2m, forming 40% of our full year forecast. We judge this to be within expectations; earnings are likely to be backloaded in FY13, particularly with an anticipated one-time boost from Wis@Changi upon its TOP in 2H13. The group now sits on S$1.1b of yet unrecognized revenues from sold units – this is equivalent to 8 times FY12 property revenues and would underpin a rigorous earnings growth profile ahead in our view. Maintain BUY with an higher fair value estimate of S$0.81 (25% discount to RNAV) versus S$0.76 previously as we update for latest sales datapoints and a reduced RNAV discount. Key catalysts in 2H13 ahead include the launch of LIV on Wilkie and an earnings boost from Wis@Changi’s TOP. We also see a bonus share issue as a possibility in 2H13, which could help the counter’s uneven trading liquidity.

2Q13 earnings in line; Wis@Changi’s TOP to boost 2H13 earnings
2Q13 PATMI is S$19.5m (EPS: 2.05 S-cents) which increased 10% YoY due to higher property development profits. 2Q13 revenues also increased 31% to S$68.9m, driven by a S$17.1m increase in the development topline. 1H13 PATMI now cumulates to S$31.2m, forming 40% of our full year forecast. We judge this to be within expectations; earnings are likely to be backloaded in FY13, particularly with an anticipated one-time boost from Wis@Changi upon its TOP in 2H13. The group now sits on a whopping S$1.1b of yet unrecognized revenues from sold units – this is equivalent to 8 times FY12 property revenues and would underpin a rigorous earnings growth profile ahead in our view. Interim dividend is S$0.77 S-cents.

Expect LIV on Wilkie to be launched in 3Q13
LIV on Sophia, Whitehaven and Jade Residences – all of them launched in 1H13 - are 100%, 76% and 60% sold as at 24 Jul 2013. LIV on Wilkie would likely be launched in 3Q13 and we expect it to perform well due to its proximity to LIV on Sophia (now sold-out). Note that, of the group’s 15 working projects which has been launched, 12 are fully sold with the exception of Eon Shenton (office 97% sold, residential 93%), Whitehaven (76% sold) and Jade Residences (60% sold). Roxy continues to seek land-bank prudently and recently bought a 699k sq ft freehold site in Kuala Lumpur beside the upcoming Quill City. As anticipated, RevPar at Grand Roxy Mercure dipped 9% YoY to S$164.4 mainly due to ongoing enhancements which lowered the average occupany rate by 6.9 ppt YoY to 83.8%.

Maintain BUY with higher S$0.81 fair value
Maintain BUY with an higher fair value estimate of S$0.81 (25% discount to RNAV) versus S$0.76 previously as we update for latest sales datapoints and a reduced RNAV discount. Key catalysts in 2H13 ahead include the launch of LIV on Wilkie and an earnings boost from Wis@Changi’s TOP. We also see a bonus share issue as a possibility in 2H13, which could help the counter’s uneven trading liquidity.

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