The group reported a 4Q14 loss after tax and minority interests of S$103.1m, versus a loss of S$91.3m in 4Q13, mostly due to significant S$126m write-downs for the Scotts Square retail mall (~S$51m) and the Fuyang residential project (~S$75m) in China. FY14 PATMI of S$43.1m came below our expectations, even after adjusting for one-time items, given slower than anticipated progress recognition at the Panorama residential project and a lower clip of residential sales than expected. A final dividend of 6.0 S-cents has been proposed for FY14 – unchanged from last year and in line with our expectations. Given the transitional challenges at Scotts Square Retail and continued headwinds for its residential projects, we incorporate into our valuation model softer assumptions for the Scotts Square mall and the group’s unsold residential exposure. Our fair value estimate dips from S$2.38 to S$2.27 as a result. Maintain BUY.
Results weaker than expected
The group reported a 4Q14 loss after tax and minority interests of S$103.1m, versus a loss of S$91.3m in 4Q13, mostly due to significant S$126m write-downs for the Scotts Square retail mall (~S$51m) and the Fuyang residential project (~S$75m) in China. FY14 PATMI of S$43.1m came below our expectations, even after adjusting for one-time items, given slower than anticipated progress recognition at the Panorama residential project and a lower clip of residential sales than expected. FY14 revenues dipped 15.4% to S$99.0m mainly as progress recognition contributions from the Ardmore Three development decreased YoY. A final dividend of 6.0 S-cents has been proposed for FY14 – unchanged from last year and in line with our expectations.
Re-tenanting exercise to rejuvenate Scotts Square
Management reports challenging conditions at Scotts Square Retail; its occupancy rate continues to dip – down QoQ from 93% in 3Q14 to 88% in 4Q14 – while average monthly rents have also dipped QoQ from ~S$21 psf to S$16 psf. We understand that a re-tenanting exercise is in process to rejuvenate the mall with leading fashion powerhouses and interesting F&B concepts. Existing leases are being extended on a short-term basis and extensive advertising and promotion programs are in store for FY15. Wheelock Place continues to put up a steady performance with its occupancy rate kept at a firm 99.6% as at end 4Q14, while the blended monthly rent was mostly flat QoQ at ~S$13.50 psf.
Fair value estimate dips from S$2.38 to S$2.27
As at end FY14, the group’s balance sheet remains in a solid position with S$408.5m in cash and a low net gearing of 8.0%. However, given the transitional challenges at Scotts Square Retail and continued headwinds for its residential projects, we incorporate into our valuation model softer assumptions for the Scotts Square mall and the group’s unsold residential exposure. Our fair value estimate dips from S$2.38 to S$2.27 as a result. Maintain BUY.
The group reported a 4Q14 loss after tax and minority interests of S$103.1m, versus a loss of S$91.3m in 4Q13, mostly due to significant S$126m write-downs for the Scotts Square retail mall (~S$51m) and the Fuyang residential project (~S$75m) in China. FY14 PATMI of S$43.1m came below our expectations, even after adjusting for one-time items, given slower than anticipated progress recognition at the Panorama residential project and a lower clip of residential sales than expected. FY14 revenues dipped 15.4% to S$99.0m mainly as progress recognition contributions from the Ardmore Three development decreased YoY. A final dividend of 6.0 S-cents has been proposed for FY14 – unchanged from last year and in line with our expectations.
Re-tenanting exercise to rejuvenate Scotts Square
Management reports challenging conditions at Scotts Square Retail; its occupancy rate continues to dip – down QoQ from 93% in 3Q14 to 88% in 4Q14 – while average monthly rents have also dipped QoQ from ~S$21 psf to S$16 psf. We understand that a re-tenanting exercise is in process to rejuvenate the mall with leading fashion powerhouses and interesting F&B concepts. Existing leases are being extended on a short-term basis and extensive advertising and promotion programs are in store for FY15. Wheelock Place continues to put up a steady performance with its occupancy rate kept at a firm 99.6% as at end 4Q14, while the blended monthly rent was mostly flat QoQ at ~S$13.50 psf.
Fair value estimate dips from S$2.38 to S$2.27
As at end FY14, the group’s balance sheet remains in a solid position with S$408.5m in cash and a low net gearing of 8.0%. However, given the transitional challenges at Scotts Square Retail and continued headwinds for its residential projects, we incorporate into our valuation model softer assumptions for the Scotts Square mall and the group’s unsold residential exposure. Our fair value estimate dips from S$2.38 to S$2.27 as a result. Maintain BUY.
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