HPL reported 3Q14 PATMI of S$15.1m, down 70.0% YOY mostly due to the absence of contributions from the Tomlinson Heights condominium, which achieved TOP over in 1Q14, and lower share of results from associates/JV, which decreased S$25.3m to S$0.3m as the Interlace achieved TOP in Sep-13. That said, the figures from the hotels and resorts division remained healthy, with the Group’s resorts in Maldives and Bali putting in higher contributions over the quarter. 9M14 PATMI now makes up 88% of our full year forecast and we judge 3Q14 figures to be in line with expectations. Our investment thesis for HPL continues to be underpinned by significantly under-valued prime Orchard assets in the group’s real estate portfolio portfolio which are ripe for potential redevelopment. To reflect the uncertainty of redevelopment ahead, however, we opt to assign a punitive 35% discount to HPL’s RNAV of S$8.20 per share, which yields a fair value estimate of S$5.32. Maintain BUY.
3Q14 PATMI down due to absence of Tomlinson Heights contributions
Hotel Properties limited (HPL) reported 3Q14 PATMI of S$15.1m, down 70.0% YOY mostly due to the absence of contributions from the Tomlinson Heights condominium, which achieved TOP over in 1Q14, and lower share of results from associates/JV, which decreased S$25.3m to S$0.3m as the Interlace achieved TOP in Sep-13. The YoY dip in 3Q14 earnings was also aggravated by a S$12.6m non-recurring gain in 3Q13 from the disposal of investment assets in Kensington Square, London. That said, the figures from the hotels and resorts division remained healthy, with the Group’s resorts in Maldives and Bali putting in higher contributions over the quarter. In terms of the top line, 3Q14 revenues dipped 18.9% to S$146.0m, again due to the impact from Tomlinson Height’s TOP earlier this year. 9M14 PATMI now makes up 88% of our full year forecast and we judge 3Q14 figures to be in line with expectations.
Soft marketing started for London units
Management noted that the group’s hotels and resorts typically perform well in the last quarter of the year, though possible headwinds could appear through political uncertainties and the potential escalation of the Ebola outbreak. In London, the group has commenced soft marketing of apartments at Burlington Gate and Campden Hill and income from these will be recognized on a COC basis on completion. In Singapore, however, the group highlights that sentiments in the residential market remain weak, with both transaction volumes and prices declining.
Maintain BUY with unchanged S$5.32 FV estimate
The group’s balance sheet remained firm as at end Sep 2014 with S$129.3m in cash and 49.2% net gearing. Our investment thesis continues to be underpinned by significantly under-valued prime Orchard assets in the group’s real estate portfolio portfolio which are ripe for potential redevelopment. To reflect the uncertainty of redevelopment ahead, however, we opt to assign a punitive 35% discount to HPL’s RNAV of S$8.20 per share, which yields a fair value estimate of S$5.32. Maintain BUY.
Hotel Properties limited (HPL) reported 3Q14 PATMI of S$15.1m, down 70.0% YOY mostly due to the absence of contributions from the Tomlinson Heights condominium, which achieved TOP over in 1Q14, and lower share of results from associates/JV, which decreased S$25.3m to S$0.3m as the Interlace achieved TOP in Sep-13. The YoY dip in 3Q14 earnings was also aggravated by a S$12.6m non-recurring gain in 3Q13 from the disposal of investment assets in Kensington Square, London. That said, the figures from the hotels and resorts division remained healthy, with the Group’s resorts in Maldives and Bali putting in higher contributions over the quarter. In terms of the top line, 3Q14 revenues dipped 18.9% to S$146.0m, again due to the impact from Tomlinson Height’s TOP earlier this year. 9M14 PATMI now makes up 88% of our full year forecast and we judge 3Q14 figures to be in line with expectations.
Soft marketing started for London units
Management noted that the group’s hotels and resorts typically perform well in the last quarter of the year, though possible headwinds could appear through political uncertainties and the potential escalation of the Ebola outbreak. In London, the group has commenced soft marketing of apartments at Burlington Gate and Campden Hill and income from these will be recognized on a COC basis on completion. In Singapore, however, the group highlights that sentiments in the residential market remain weak, with both transaction volumes and prices declining.
Maintain BUY with unchanged S$5.32 FV estimate
The group’s balance sheet remained firm as at end Sep 2014 with S$129.3m in cash and 49.2% net gearing. Our investment thesis continues to be underpinned by significantly under-valued prime Orchard assets in the group’s real estate portfolio portfolio which are ripe for potential redevelopment. To reflect the uncertainty of redevelopment ahead, however, we opt to assign a punitive 35% discount to HPL’s RNAV of S$8.20 per share, which yields a fair value estimate of S$5.32. Maintain BUY.
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