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ROXY-PACIFIC HOLDINGS

ROXY-PACIFIC HOLDINGS

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Published by ventria
ROXY-PACIFIC HOLDINGS
ROXY-PACIFIC HOLDINGS

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Categories:Business/Law
Published by: ventria on Jun 29, 2013
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06/29/2013

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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
BUY
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 |
BUY
Asia Pacific Equity ResearchSingapore | Real Estate Management & Development
BUY (upgrade)
Fair value S$0.74add: 12m dividend forecast S$0.02versus: Current price S$0.60
12m total return forecast 28%
Analysts
Eli Lee (Lead) ● +65 6531 9112elilee@ocbc-research.comKevin Tan ● +65 6531 9810kevintan@ocbc-research.com
Key information
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
0.390.450.510.570.640.70Jun-12Sep-12Dec-12Mar-13260030403480392043604800
Fair ValueROXY SPFSSTI
Share Price (S$)Index Level`
 
Sources: Bloomberg, OIR estimates
Industry-relative metrics
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
 
 
 
OCBC Investment ResearchSingapore Equities
2
Exhibit 1: Sales and progress billings at launched projects
Project nameTotal units inprojectStake inprojectPercentagesoldEst.unrecognizedprofitUnrecognizedprogress billing(sold units only)Unit%%S$mS$m1Haig 1629945%100%0.00.62Straits Residences30100%97%1.95.73Jupiter 1853100%100%4.914.54Space@Kovan196100%100%34.5125.55Spottiswoode 18251100%100%54.7153.26Nottinghill Suites12445%100%8.233.87Wis@Changi83100%100%17.578.38Centropod@Changi192100%100%46.1150.49Treescape30100%100%2.921.510Millage15648%100%16.652.211Natura@Hillview19349%100%18.264.512Eon Shenton25320%92%6.091.713The MKZ 42100%100%13.048.114Jade Residences173100%50%44.087.415Whitehaven173100%71%23.796.616LIV on Sophia12190%100%27.592.1
Total2,16990%319.71,118
Source: Company, OIR estimatesNote: Estimated profits and progress bilings are on effective stake basis
 
Exhibit 2: Land-bank held by Roxy-Pacific
NameStake inprojectLand areaGFAEst.unrecognizedprofitLand cost%sq ftsq ftS$mS$m1Wilkie Terrace90%22,53342,58734.351.82Sunnyvale Apt100%23,16032,42410.425.03Yi Mei Garden100%78,030163,86341.2136.0
Total86.0212.8
Source: Company, OIR estimatesNote: Estimated profits are on effective stake basisWe have not included Harbor View Gardens as the en-bloc sales process is currently under review.
 
 
 
OCBC Investment ResearchSingapore Equities
3
As at end 1Q13 (S$m)Dev. prop
Singapore573.9
Inv. prop
Singapore61.2
Surpluses
Development portfolio365.1Grand Mercure Roxy382.1
Adjustments
minus: net debt-448.7Other net assets79.1Total RNAV1,013Shrout955
RNAV per share$1.06Discount30%Fair value$0.74
Source: OIR
Exhibit 3: RNAV breakdown
 

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