Excerpts from analyst's report
NRA Capital analyst: Liu Jinshu
Staying Nimble Amidst Cycle Low  Roxy-Pacific will launch for sale in 2H this year 25 condo units at this 26, Sea Avenue site which it bought for S$21.5 million in Sept 2015 -- its first purchase of landbank in Singapore since June 2013.Revenue and earnings +6.8% and +15.5% above consensus. Roxy Pacific Holdings Limited reported lower net profit attributable to shareholders of S$12.3m for 4Q15, versus S$46.5m a year ago, in the absence of S$38.4m of EBITDA contribution from 8 Russell Street in Hong Kong. On a full year basis, revenue grew by 45% while net profit attributable to shareholders fell by 12% or S$11.6m. Again, the lower profitability was most likely due to 8 Russell Street – a non-recurring associated project (no revenue impact). Overall, full year revenue of S$460.9m and earnings of S$85.1m were above consensus estimates of S$431.5m and S$73.7m. |
| ♦ Some sites may surprise with gains |
 Based on the existing pipeline, we continue to caution that near term performance may be subdued, unless the rezoning of 54 and 85 Bracks Street and redevelopment of 59 Goulburn Street are confirmed. These two projects have the potential of adding about S$40m of profit to Roxy and boost earnings expectations to around S$65m in 2016. -- Liu Jinshu (photo) |
♦ Accumulating land bank to set stage for rebound. In 2015, Roxy has focused more on acquiring additional development and hospitality sites rather than launching new properties. Roxy’s strategy is reminiscent of some property developers in Singapore prior to the last upcycle.
As Roxy progressively develops its land bank over the next two years, we can expect its financial results to bottom in 2016/2017 and rebound in 2017/2018. However, Roxy has maintained full year dividend of 1.913 cents per share, translating to a yield of 3.9% over share price of S$0.490.
♦ Sales momentum remains positive at existing properties. From 21 October 2015 to 15 February 2016 (four months), Roxy has accumulated S$37.5m of attributable pre-sales from existing properties under development and S$15.9m from new launch Wisma Infinitum Block A.
As a result of these pre-sales, Jade Residences (launched in April 2013, 171 units + 2 shops) and Whitehaven (launched in May 2013, 120 units + 1 shop) are now 100% and 95% sold respectively, leaving only two projects in Singapore, launched in May and June 2014, less than 60% sold.
♦ Reiterates second core in Sydney. Other than the two sites in Singapore, the rest of Roxy’s land bank is in Australia, with one resort development in Phuket, Thailand. After falling during the last two months of 2015, property prices in Sydney grew by 0.5% in January according to CoreLogic RP Data.
Reports have also surfaced that property clearance rates in Sydney have recovered to 78.6%, since dipping below 50% during the end of 2015, suggesting that prices are likely to have climbed in February as well. The data supports our earlier bullish view of the Sydney market where tight supply and growing population are expected to keep prices high.
Full report here.
