Roxy-Pacific Holdings

Voyage Research, May 7

ROXY-PACIFIC Holdings Limited (Roxy) reported a 27 per cent jump in net profit for Q1 FY2014. We view the results as largely in line with expectations and reiterate that the company will likely benefit from the completion of Centropod@ Changi and its Hong Kong project in FY2014. Quarterly results do not yet reflect contribution from these projects, which are accounted for only on completion or handover.

Moreover, 59 Goulburn Street in Sydney is also likely to raise the company's investment income in H2 2014.

Roxy pre-sold S$19.6 million of its Singapore projects during the current reported period of Feb 7 to April 24 (77 days) or S$255,000/ day, compared to S$23.5 million during the Oct 30, 2013 to Feb 6, 2014 period (100 days) or S$235,000/day. Roxy's pre-sales in Singapore can thus be viewed as consistent or slightly better in Q1 FY2014 than in Q4 FY2013.

We also understand that Roxy sold two more units in Jade Residences during the weekend after it released its results, which were not reflected in the reported numbers.

Other than sales in Singapore, the company also sold four more floors at its 30 per cent-owned Hong Kong project, which raised attributable pre-sales from about S$95 million in February to S$137.7 million as of April 24.

As a result of the company's efforts to diversify geographically and to encourage local pre-sales, progress billings to be recognised as revenue from Q2 FY2014 to FY2017 have risen from S$922.4 million as of end-FY2013 to S$1.001 billion as of end-Q1 FY2014.

Eon Shenton, 20 per cent owned by Roxy, changed its main contractor and this resulted in the reversal of an estimated S$5.5 million of attributable revenue recognised. The project is 97 per cent sold and we expect revenue recognition to resume its pace once the new contractor ramps up work.

The company's Q2 results will shed more light on progress at this project. For now, we maintain our forecasts and valuation in this report and note that the company continues to sell its units in Singapore progressively and is at the same time shifting part of its portfolio into overseas projects.

"Invest"; intrinsic value is S$0.720.

INVEST