Slight growth in core PATMI. SingLand reported a 23% YoY increase in its FY12 headline PATMI to SGD407.1m, but excluding revaluation gains, core PATMI showed a mere 2% YoY increase to SGD 218.6m, largely in line with expectations. FY13F earnings are likely to take a dip on the back of expected weaker rental income and development profit recognition, but we are not overly concerned. Maintain BUY (Target Price: SGD 8.32).

Development profits picked up the slack. Due to the five-month closure of the Pan Pacific Singapore hotel for major refurbishment, gross profit from the hotel dropped from SGD41.2m in FY11 to a marginal loss of SGD0.3m in FY12. The decline in hotel earnings was largely buffered by an increase in development profits, mainly from The Excellency in Chengdu, China.

Portfolio revalued upwards by 3.9%. Singland's investment properties enjoyed a 3.9% YoY revaluation gain, despite rental income remaining flat YoY. This is presumably due to lower cap rates used by the valuers. However, we believe that Grade B office rents are likely to come under greater pressure in FY13, given the upcoming new supply.

Landbank sufficient for now. With four unlaunched residential projects in the pipeline, we reckon that SingLand will not be actively landbanking. The first project to be launched is likely to be the 109-unit Mon Jervois at Jervois Road, right at the edge of Chatsworth Park Goodclass Bungalow Area. We estimate the project to have an ASP of SGD1,750 psf.

Cheap valuation; privatization still possible. Singland is trading at an undemanding 0.6x P/B and P/RNAV, suggesting that it remains a fairly attractive privatization candidate. We have raised our RNAV marginally to SGD8.32, and maintain our BUY recommendation.

Source: Maybank Kim Eng Research - 13 Feb 2013