Background: Wheelock Properties (WP) is well-known for its luxury residential property developments in Singapore, such as Ardmore Park, Ardmore II and The Grange Residences. Currently, Ardmore Three is the main project in its landbank that has yet to be launched, with a GFA of 170,351 sq ft.
Recent development: Following the recent market sell-down, WP is now trading at 0.75x P/B despite being in a net cash position. If the market weakness persists, valuations will become increasingly attractive for privatisation.
Key ratios…
Price-to-earnings: 6.6x
Price-to-NTA (as at Jun 2011): 0.75x
Dividend per share / yield: $0.06 / 3.4%
Net cash per share (as at Jun 2011): $0.42
Share price S$1.74
Issued shares (m) 1,196.6
Market cap (S$m) 2,082.0
Free float (%) 24.6%
Recent fundraising activities Nil
Financial YE 31 December
Major shareholders Wheelock & Co – 75.4%
YTD change -10.8%
52-wk price range S$1.705-2.040
Our view
Scotts Square nearing completion. The 338-unit Scotts Square is expected to obtain its TOP in 3Q11, after which each subsequent sale from the 92 units yet to be sold can be recognised in full. At an ASP of $4,000 psf, the remaining units are valued at nearly $190m. In addition, Scotts Square has a retail podium with an NLA of about 75,000 sq ft. Assuming a conservative average rental of $18 psf, the net property income from the retail podium is expected to be about $10m per annum. Luxury brand Hermes has already pre-committed to lease 3,000 sq ft of space.
Ardmore Three launch-ready by end-2011. WP has started building the showflat on site, which is targeted for completion by 4Q11. The 84-unit freehold luxury project is likely to be launched next year. We estimate the breakeven for the project to be around $1,800 psf, potentially generating net profit of $210m (17.5 cents per share) on an ASP of $3,300 psf.
Share price weakness increases privatisation probability. In its latest quarterly reporting, WP is still in a net cash position of $507.8m (or 42.4 cents per share). Following the recent market sell-down, the stock is trading at 0.75x P/B, increasing the likelihood of a privatisation by its major shareholder, Hong Kong-listed Wheelock & Co (20 HK), in our opinion.
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