Background: Roxy-Pacific is principally engaged in the development and sale of residential properties, and has developed more than 23 small- and mid-sized projects comprising over 1,000 residential and commercial units. It owns the Grand Mercure Roxy Hotel in East Coast and has Roxy Square and Kovan Centre among its investment properties.
2Q11 results: Roxy-Pacific achieved $46.7m revenue in 2Q11, down 16% YoY due to lower revenue from property development. At the net profit level, this was offset by a fair value gain on Roxy Square, resulting in a 15% rise from $12.9m to $14.9m.
Key ratios…
Price-to-earnings: 6.0x
Price-to-NTA: 1.4x
Dividend per share / yield: 1.5 cts / 3.8%
Share price S$0.40
Issued shares (m) 636.6
Market cap (S$m) 254.6
Free float (%) 24.9%
Recent fundraising activities Nil
Financial YE 31 December
Major shareholders Kiam Lam Investment – 36.0%, Sen Lee Development – 11.1%, Teo Hong Lim – 8.5%
YTD change -13.98%
52-wk price range S$0.305-0.52
Our View
Unbilled profits estimated at $0.275/share. There remains $531m of progress billings, mainly from two nearly fully sold projects, Space@Kovan and Spottiswoode 18. Pre-tax profit from these billings is estimated to be $174.6m ($0.275/share and 69% of market cap).
Unsold landbank valued at $0.120/share. We value Roxy-Pacific’s unsold landbank at $384m on the assumption that commercial buildings (70 Shenton Way, Singapura Theatre, Everitt Building and New Changi Hotel) are redeveloped into mixed-use projects and sold. Estimated pre-tax profit is $76.2m ($0.120/share and 30% of market cap).
Book value of $0.70/share. Adjusting for the market value of Grand Mercure Roxy Hotel (kept at cost less depreciation), Roxy-Pacific’s BV will be $0.70/share. In all, its RNAV adds up to $1.10/share. The stock trades at a 64% discount to RNAV.
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