Excerpts from analyst's report
NRA Capital analyst: Liu Jinshu
Estimated GDV of S$1.54 billion. Excluding Harbour View Gardens, 54 & 85 Bracks Street and Jalan Kramat Raya No 110, Jakarta, we estimate that Roxy’s ongoing and future development projects to have an attributable gross development value of S$1.5 billion, of which S$950.2m of properties have already been sold. We estimate unsold and unlaunched properties to have an attributable sales value of S$589.3m.
|"Estimated net development value of S$136m. After deducting for costs, we arrived at an estimated net development value of S$136m, of which about S$91.6m has yet to be recognized as profit.
"The bulk of these projected profits or S$58.4m is expected to arise from overseas projects, thus showing that Roxy’s geographical diversification strategy is about to yield results."
-- Liu Jinshu (photo)
Workings and estimates are shown in Figure 13. The excluded projects are mainly land bank sites with development plans yet to be finalized. Jalan Kramat Raya No 110, Jakarta is 49% owned by Roxy and was acquired for an attributable cost of S$3.3m.
Currently, Roxy plans to develop this site into a 110-unit commercial development. We plan to study this site and incorporate this project into our model in a subsequent report. The challenge is that this project entails a new market that we would prefer to study in detail before committing to forecasts.
|♦ Average profit of $40.4 m between 2016-2018|
|Figure 17 shows that we expect Roxy to make net profit attributable to shareholders of S$39.5m in 2016, followed by S$40.4m in 2017. 2017 profitability will likely be driven by anticipated fair value gains from the revaluation of 59 Goulburn Street to S$150m. In turn, FY18 profitability is expected to rise to S$41.4m on completion from associated projects such as Wisma Infinitum and Bracks Street.
Secondly, we have not revalued those hotel projects that are currently under development, but rely on the revaluation surplus as provided by the company in its results announcement.
Compared to Roxy’s reported adjusted net asset value (which excludes development gains and revaluation gains from the Sydney office properties) of S$0.7855 per share, our estimated RNAV carries a 12 cent premium.
We next discounted Roxy’s RNAV by 40% to S$647m or S$0.540 per share. We have previously discounted Roxy’s RNAV by only 30%. The 40% discount is consistent with our treatment of another Singapore property developer.
Full report here.