What is the news? How do we view this?

It reported satisfactory 2Q13 result – stable hotel earnings, but apartment sales at Auckland remain slow.

Our initiation report’s conclusion that “management  has performed well” and that Stamford Land’s “hotels have been profitable throughout at the operating level” continues to hold. This should sustain a  S$0.02 dividend payout after Mar13 year-end, for a 3.5% yield.

Stamford Land “expects to continue to recognise profits from the completed sales of  The Stamford Residences & Reynell Terraces in the next 12 months.” But,  we have already included some profit of these in our valuation, which would change if there is a difference.

Other fundamentals unchanged

We still hold our opinion that the hotel & property economics are favourable. Therefore we are waiting for, as a probable exit, an offer for its properties that is similar in value to the A$850m it rejected in  Mar08. There was no significant market transaction since our September report.

As this is the objective, we would not be making estimates of earnings or elaborate comments on earnings unless the quarterlies portray instability in performance.

The author holds his opinion that high-yielding currencies (exclude ‘peso’ types) outside of financial crisis periods would outperform. As against the SGD, his opinion is that the history of SGD’s popular ‘safe haven’ status is still a short one, and hence should be relied upon only years later.

Therefore earnings or dividends should not be compromised when translated to SGD. These, having said, the reader should be aware that both currencies are not major in supply; and, influences due to their relative supply being out of sync with demand could impact the rate.

Investment Action

We maintain BUY with the same target price, as before, of S$0.76, as valuation remains little changed.

Source: PhillipCapital Research - 20 Dec 2012