Wheelock Properties (S) Limited (“Wheelock”) reported 2Q14 PATMI of S$121.0m – up a whopping 750.5% YoY – mostly due to a one-time accounting gain of S$109.4m as the group’s investment in Hotel Properties Limited (“HPL”), previously recorded as available-for-sale assets, is now recorded as an interest in an associate valued at S$417m based on HPL’s market price as at 30 May 2014. This being so, S$318m of previously accounted gains under fair value reserves were also transferred to retained earnings. Excluding this one-time item, we estimate core PATMI for the quarter at S$14.5m which is judged to be mostly within expectations. We continue to see solid value in Wheelock shares given its current undemanding valuation, quality assets and strong balance sheet. Maintain BUY with an unchanged fair value estimate of S$2.38.
One-time negative goodwill gain of S$109.4m
Wheelock Properties (S) Limited (“Wheelock”) reported 2Q14 PATMI of S$121.0m – up a whopping 750.5% YoY – mostly due to a one-time accounting gain of S$109.4m as the group’s investment in Hotel Properties Limited (“HPL”), previously recorded as available-for-sale assets, is now recorded as an interest in an associate valued at S$417m based on HPL’s market price as at 30 May 2014. This being so, S$318m of previously accounted gains under fair value reserves were also transferred to retained earnings. Excluding this one-time item, we estimate core PATMI for the quarter at S$14.5m which is judged to be mostly within expectations. In terms of the topline, 2Q14 revenues came in at S$24.1m, which decreased 28.1% YoY mostly due to lower progress recognition at Ardmore Three.
Steady performance from Orchard retail assets
The group’s Orchard retail assets – Wheelock Place and Scotts Square Retail – continued to pull in steady figures. As at end June 2014, Wheelock Place was 100% occupied with an overall monthly rental of above S$13 psf per month. Scotts Square Retail was 93% occupied, with an average rental of above S$22 psf per month, and management reports that they are actively looking at rejuvenating the mall with stronger international luxury labels and F&B concepts. For the group’s domestic residential projects, Scotts Square (338 total units), The Panorama (698 total units) and Ardmore Three (84 total units) are 79%, 29% and 4% sold, respectively. We understand that Ardmore Three will likely attain TOP status by the end of FY14. The group is also in the midst of constructing Phase 1 of their residential project in Fuyang City, Hangzhou, China.
Maintain BUY at unchanged S$2.38 fair value
As at end 2Q14, Wheelock’s balance sheet continued to be shored up by a healthy cash balance (S$410.0m) and low gearing of 7.3%. We continue to see solid value in Wheelock shares given its current undemanding valuation, quality assets and strong balance sheet. Maintain BUY with an unchanged fair value estimate of S$2.38.
Wheelock Properties (S) Limited (“Wheelock”) reported 2Q14 PATMI of S$121.0m – up a whopping 750.5% YoY – mostly due to a one-time accounting gain of S$109.4m as the group’s investment in Hotel Properties Limited (“HPL”), previously recorded as available-for-sale assets, is now recorded as an interest in an associate valued at S$417m based on HPL’s market price as at 30 May 2014. This being so, S$318m of previously accounted gains under fair value reserves were also transferred to retained earnings. Excluding this one-time item, we estimate core PATMI for the quarter at S$14.5m which is judged to be mostly within expectations. In terms of the topline, 2Q14 revenues came in at S$24.1m, which decreased 28.1% YoY mostly due to lower progress recognition at Ardmore Three.
Steady performance from Orchard retail assets
The group’s Orchard retail assets – Wheelock Place and Scotts Square Retail – continued to pull in steady figures. As at end June 2014, Wheelock Place was 100% occupied with an overall monthly rental of above S$13 psf per month. Scotts Square Retail was 93% occupied, with an average rental of above S$22 psf per month, and management reports that they are actively looking at rejuvenating the mall with stronger international luxury labels and F&B concepts. For the group’s domestic residential projects, Scotts Square (338 total units), The Panorama (698 total units) and Ardmore Three (84 total units) are 79%, 29% and 4% sold, respectively. We understand that Ardmore Three will likely attain TOP status by the end of FY14. The group is also in the midst of constructing Phase 1 of their residential project in Fuyang City, Hangzhou, China.
Maintain BUY at unchanged S$2.38 fair value
As at end 2Q14, Wheelock’s balance sheet continued to be shored up by a healthy cash balance (S$410.0m) and low gearing of 7.3%. We continue to see solid value in Wheelock shares given its current undemanding valuation, quality assets and strong balance sheet. Maintain BUY with an unchanged fair value estimate of S$2.38.
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