Background: Contractor-turned-developer Sim Lian expands its footprint in both the public and private housing sectors after three decades in the construction industry. It was the first private developer to partner the government in public housing development via the Design, Build and Sell Scheme (DBSS) and to date, it has the most number of DBSS projects to its credit.
Recent development: Sim Lian reported net profit of $200m for FY Jun11 (up 113% YoY), or $0.235 per share. The stock closed at $0.51 last Friday, implying a PER of just 2.2x, and is below its book value of $0.563. On the back of its strong earnings, it has declared a dividend of 4.8 cents per share, an attractive 9.4% yield.
Our View
$120m from Punggol’s Treasure Trove. Total sales broke the 600 mark, achieving 625 units as of last week, or 71% take-up since the 882-unit project was launched in early September. The average selling price was $866 psf, nearly a 15% discount to The Luxurie one MRT station away. We estimate the total pre-tax profits from this project to be $120m upon fully sold.
Centrale 8 over 40% sold. After causing an uproar in June 2011 when five-room units were launched at up to $880,000, which eventually led to the suspension of the DBSS scheme, the public project has since sold over 40% of its units at an estimated ASP of $620 psf, still the most expensive HDB flats in the primary market.
First to be at Tampines Central. Sim Lian’s upcoming executive condominium (EC) project is
located next to its DBSS project Centrale 8. It paid top dollar for the site’s superior location near Tampines MRT station and holds the record of being the priciest EC site ever bought by a private developer, at $392 psf ppr. We expect the project to launch at $740 psf, a $20 psf premium over ARC at Tampines.
Key ratios…
Price-to-earnings: 2.2x
Price-to-NTA: 0.91x
Dividend per share / yield: $0.048 / 9.4%
Share price S$0.51
Issued shares (m) 851.8
Market cap (S$m) 434.4
Free float (%) 36.8
Recent fundraising activities Nil
Financial YE 30 June
Major shareholders Sim Lian Holdings – 53.2%, Lim Ah Kie – 10.0%
YTD change +53.43%
52-wk price range S$0.27-0.55
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