Page 1 of 2
Excerpts from analysts' reports
Voyage Research ups Roxy-Pacific's target price to 72 cents on Aussie acquisition
Analyst: Liu Jinshu (left)Roxy-Pacific Holdings Limited (Roxy) announced the acquisition of an A$90.2m 28-storey commercial building in the Sydney CBD precinct. The 89% occupied building will raise Roxy’s investment property revenue from S$1.6m in FY13 to an estimated S$4.6m in FY14; and S$11.9m in FY15 on full year contribution.
The project enhances Roxy’s return on its balance sheet, with scope for redevelopment upside at a later date. As such, we reduced our discount on RNAV from 20% to 18% (200bp), thus raising our valuation of the company to S$0.720.
The project enhances Roxy’s return on its balance sheet, with scope for redevelopment upside at a later date. As such, we reduced our discount on RNAV from 20% to 18% (200bp), thus raising our valuation of the company to S$0.720.
Additional Income Bumps Up Profitability: According to agents’ marketing materials, the building (59 Goulburn Street, Sydney, Australia) has total net lettable area of 19,552.7m2 and a weighted average lease expiry of 3.3 years. Based on the existing occupancy level, annual gross income is about A$8.9m or S$10.3m.
We estimate that the building can provide Roxy with an annual pre-tax yield of 7.3% and up to 8.8% on full occupancy. As a result, forecast FY15 net profit has been bumped up by S$7.3m, from S$98.0m to S$105.3m.
We estimate that the building can provide Roxy with an annual pre-tax yield of 7.3% and up to 8.8% on full occupancy. As a result, forecast FY15 net profit has been bumped up by S$7.3m, from S$98.0m to S$105.3m.
Real Kicker Stems from Upside Potential of Site: The property is about 500m away from the billion dollar Darling Harbour Live project, slated for opening in late 2016 as Sydney’s new convention, exhibition and entertainment hub.
At the same time, the property sits right next to the cross junction with George Street, where part of a major light rail, to be constructed over the next five to six years, will run parallel to it. Based on these developments, we opine that Roxy is likely to enjoy capital appreciation gains over a three to five-year horizon.
Source: Google Maps, Voyage Research
Source: Google Maps, Voyage ResearchRoxy may also redevelop the site or enhance the building to fully realize its value such as the case with its project in Hong Kong. The site is permitted for office, retail, entertainment, residential and/or hospitality uses and a higher plot ratio may be applied from the authorities if floor space is utilized for qualifying purposes such as residential or hotel accommodation. However, we understand that local authority approval may take two to three years to obtain.
As such, any redevelopment will only take place at the later part of Roxy’s current pipeline.
Recent story: @ ROXY-PACIFIC's AGM: Seeking opportunities post-property boom in S'pore
As such, any redevelopment will only take place at the later part of Roxy’s current pipeline.
Recent story: @ ROXY-PACIFIC's AGM: Seeking opportunities post-property boom in S'pore
You may also be interested in:
|
ROXY-PACIFIC: Chairman's group seeks to privatise company at 48.5 cents/share |
|
ROXY-PACIFIC: Steady property sales, 1H21 net profit up 110% |
|
ROXY-PACIFIC: Continues to target quality and unique projects that are well-located |
|
ROXY-PACIFIC: Takes impairment charges, positions for post-Covid recovery |
|
ROXY-PACIFIC: Acquires stake in A$145 million Melbourne commercial property |
|
ROXY-PACIFIC: FY19 net profit up 42%, revenue 234% |