Company background: Bukit Sembawang Estates began as a leading rubber company in 1911. The company started development of landed property in the 1950s, and got listed in 1968. Tapping on its large legacy land bank from its rubber plantations in the old days, it has, for over half a century, been building some of Singapore’s most well-known residential estates such as Seletar Hills and Sembawang Hills.
Key ratios…
Price-to-earnings: 5.8
Price-to-NTA: 1.01
Dividend per share / yield: 12 cts / 3.0%
Share price (S$) 3.98
Issued shares (m) 258.9
Market cap (S$ m) 1,030.5
Free float (%) 52.8
Recent fundraising activities Feb 09: $246m from 1-for-1 rights issue at $2.30
Financial YE March
Major shareholders Singapore Investments – 13.4%, Selat (Pte) Ltd – 11.4%, Aberdeen Assets – 8.7%
YTD change -15.25%
52 week px range S$3.60-S$4.86
Our View
A land bank like no other. Its land bank far surpasses all other developers, in our view. It has 2.6m sq ft of unsold GFA zoned for landed housing, making it Singapore’s largest landed property developer. In a recent land tender for landed housing in Serangoon Gardens, a total of 16 bids were received, a sign that developers remain positive on the landed segment of the property market.
Luxus Hills snapped up, four times. Luxus Hills, its landed project in Seletar, has released 198 units in 4 phases since July 2009. In every phase, units were almost fully sold in the first month, achieving prices from $1,000-$1,200 psf versus its estimated cost of $410 psf. We estimate the company made about $265m pre-tax profits from the first 4 phases.
Latest launch is July’s best selling project. 283-unit Skyline Residence, the redevelopment of Fairways, achieved a 60% take-up in July 2011 and an ASP of $1,900 psf. The project is located near the upcoming Telok Blangah MRT Station, which will begin operation in October. With an ASP assumption of $1,900 psf, pre-tax profits from the project is estimated to be above $200m.
Lowly geared, highly undervalued. The company has been repaying its debts. Net gearing is now at a low of <20%. The estimated $900m in revenue from sold units to be gradually recognised from 2Q FYMar11 gives the company strong earnings visibility. GDV of its unsold land bank is valued at $3.6b.
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