Excerpts from DBS Vickers' report

Analysts: Rachel Tan & Derek Tan

Roxy Pacific

Stock price: 
57 c

Target price: 
69 c

Ready, set, go! Maintain BUY; TP of S$0.69.

We are maintaining our BUY rating and TP of S$0.69 (based on 30% discount to RNAV) on RoxyPacific Holdings (Roxy).

Benefitting from being early in the current en-bloc cycle, Roxy is one of the few “undiscovered” mid-cap developer proxies to ride the recovery of the Singapore property market. BUY!

TheNavianA freehold six-storey condo in Jalan Eunos. Artist's illustration

Where we differ.
Poised to hit an upbeat Singapore property market with six freehold residential developments. We are one of the first few brokerages to have initiated coverage on Roxy. While the market may have overlooked Roxy for its size, we believe “best things come in small packages”.

We believe Roxy, being one of the earliest to landbank in the current market cycle, has six freehold residential developments in Singapore which will be ready to launch in 2018, two to three of which will be launched within 1Q18. We see this as a window for the group to capture the rise in buyer demand before its peers.

Potential catalysts: Strong sales take-up, more landbanking, acquisitions of good-quality investment properties.

Valuation: Our TP of S$0.69 is based on 30% discount to RNAV of S$0.98. The stock currently trades at 1.2x FY18F P/BV, below historical average. At its peak, Roxy traded at 2.3x P/BV.

-- DBS Vickers

Lower FY17 results but all eyes on FY18. FY17 net profit fell 41% y-o-y largely from lower contributions from development properties and investment properties (post-divestment).

Despite a weak FY17 results, management is upbeat on FY18, anticipating better property sales, contributions from newly-acquired investment properties, and a better outlook on Singapore’s hospitality sector. Declared 0.771 Scents final dividend.

Key Risks to Our View:
i) Slower take-up rates, ii) Government regulates more to manage the Singapore property market, iii) AUD / NZD / JPY forex fluctuations, and iv) acquisitions of less desirable investment properties.

Full report here.

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