A key quarter for ROXY
We met with ROXY’s management yesterday. Over 2Q13, ROXYlaunched three out of four land-bank sites – LIV on Sophia,WhiteHaven and Jade Residences – which are 100%, 71% and 50%sold to date, respectively. Overall, we judge these pace of sales to befairly strong with selling prices above expectations. In addition, thesold-out launch at LIV on Sophia, located in the same vicinity asROXY’s final land-bank site (Wilkie Terrace), likely points to positivedemand when it is launched ahead.
Successful harvest is a milestone
We see these successful launches to be a key milestone for ROXYgiven their significant combined size – S$423m and S$95m inestimated total sales and net profits – relative to the group’s projectportfolio. ROXY now sits on a whopping S$1,118m of unrecognizedprogress billings from sold units (up 30% from end FY12), which is8.1 times total FY12 development revenues and would underpinearnings growth over FY13-16.
Record of sharp execution
Management continues to acquire and launch niche sites expedientlywith high sell-through rates, while deftly navigating the propertycycle. We understand ROXY is now prudently sourcing for more land-bank; already it has entered into agreements to acquire SunnyvaleApts for S$25m and Yi Mei Gardens for S$136m. By our calculations,these two acquisitions would accrete 3.5 S-cents to RNAV.
Upgrade to BUY with increased S$0.74 FV
We update our model with latest datapoints and our fair valueincreases to S$0.74 (30% RNAV disc.) versus S$0.61 (25% discount)previously. Note that our RNAV discount is raised given increasedresidential uncertainties from rising mortgage rates. We deem this toreflect a sturdy margin for safety, particularly since a large portion of ROXY’s value comprises Grand Roxy Mercure Hotel (worth S$0.47 pershare) and that only 10% of ROXY’s total launched GDV is now leftunsold. Upgrade to
with a FV of S$0.74 (30% RNAV disc.).
STRONG SALES AT KEY LAUNCHES– UPGRADE TO BUY
Good sales at key launches in 2Q13
Progress billings up 30% to S$1,118m
Upgrade to BUY with S$0.74 FV
28 Jun 2013Company Update
ROXY-PACIFIC HOLDINGS |
Asia Pacific Equity ResearchSingapore | Real Estate Management & Development
Fair value S$0.74add: 12m dividend forecast S$0.02versus: Current price S$0.60
12m total return forecast 28%
Eli Lee (Lead) ● +65 6531 email@example.comKevin Tan ● +65 6531 firstname.lastname@example.org
Market cap. (m) S$578 /USD456Avg daily turnover (m) S$0.1 /USD0.1Avg daily vol. (m) 0.352-wk range (S$) 0.41 - 0.67Free float (%) 21.7Shares o/s. (m) 954.8Exchange SGXBBRG ticker ROXY SPReuters ticker RXYP.SIISIN code E8ZGICS Sector FinancialsGICS Industry RE Mngt & DevTop shareholderKian Lam Inv 37%
Relative total return 1m 3m 12m
Company (%) -1 -3 46STI-adjusted (%) 7 1 33
Price performance chart
Fair ValueROXY SPFSSTI
Share Price (S$)Index Level`
Sources: Bloomberg, OIR estimates
0th25th50th75th100thPBPEROEBetaMkt CapCompanyIndustry AveragePercentile
Note: Industry universe defined as companies under identical GICS classification listedin exchanges in Asia Pacific.Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended Dec 31 (S$m) FY11 FY12 FY13F FY14FRevenue 183.7 190.6 381.1 457.3Cost of sales -120.4 -114.7 -242.0 -297.3Gross profit 63.3 75.9 139.1 160.1PAT 51.8 58.3 78.0 95.2Income tax -6.7 -7.6 -10.1 -12.4EPS (S-cents) 8.1 6.1 8.2 10.0Cons. EPS (S-cents) na na 7.8 8.8PER (x) 7.3 9.7 7.3 6.0P/NAV (x) 1.8 2.2 1.8 1.5Net gearing (%) 117.8 140.9 58.6 -24.8
Please refer to important disclosures at the back of this document.MCI (P) 004/06/2013
MARKET CAP: USD 465M AVG DAILY TURNOVER: USD 0.1M