Investment highlights
- Building its recurring income. With five property developments currently in Thailand, the country is one of Tee Land’s (TEEL) major and growing markets. Encouraged by the pro-business operating environment, TEEL is expanding its Thailand operations. It has recently signed an MOU with a local investor to develop, build and operate boutique industrial estates across Thailand. This will provide the group with a stable recurring income from facilities management and factory rentals to smooth out the lumpy profit recognition from its property development segment.
- Landbank still strong. As at 31 May 13, TEEL had interests in 24 regional property development projects. Of the 10 projects that have been launched, seven enjoyed locked-in sales of more than 80%, providing earnings visibility till FY17.
- Diversifying into new markets. Given the recent property cooling measures, our property analysts forecast Singapore’s residential sales volumes and prices to fall 20-40% yoy and 3-8% yoy respectively in 2013 as investment demand slows. With the cautious outlook on the local property sector, we view TEEL’s diversification into the regional property market positively as it continues to replenish its landbank. Currently, six of its remaining development projects are in overseas. TEEL’s cautious approach of entering new markets with joint ventures also helps reduce the downside risks to the new markets. TEEL has recently ventured into the New Zealand market in a JV with a local partner to construct a 174,375sf workers’ dormitory in Christchurch.
Financial Highlights
- FY13 net profit rose 31.5% yoy to S$2.0m as TEEL recognised revenue from development projects like 448@East Coast and Peak@Cairnhill. Other operating expenses soared mainly due to IPO expenses of S$1.2m. Excluding the one-off expense, profit before tax would have risen 81.2% yoy.
- Balance sheet remained strong as net debt/asset ratio was maintained at 31.0%.
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