Reeling in the cash. Excluding gains from the divestment of its noncore investment in Chongbang Holdings, Ho Bee would have posted a core PATMI of SGD18.0m (+29% YoY, -66% QoQ), in line with expectations. With the expected completion of the sale of Hotel Windsor in May, Ho Bee will have nearly SGD300m in cash for redeployment. Future progress in The Metropolis’ commitment rate will be a positive catalyst. Maintain BUY.

“Met-igating” fading residential earnings visibility. Future earnings contribution from Ho Bee’s Singapore residential sales will depend on how soon demand for Sentosa Cove properties pick up again following the higher ABSD introduced in January. Earnings visibility from prospective sales of completed units at Turquoise, Seascape and Cape Royale remains low, but the recurrent income (~SGD50m per annum) from The Metropolis will be a boon to earnings from FY14 onward.

Will Gold Coast be the next big thing for Ho Bee? Ho Bee is perhaps best remembered for being first-movers into Sentosa Cove ten years ago. But with opportunities looking limited within Singapore due to high land costs and persistent policy risks, Ho Bee is casting its eyes abroad. It has acquired three land parcels in Gold Coast, Australia, at a total cost of AUD31.8m (~SGD41m). Gold Coast’s residential property market had gone through a five-year slump, but the market appears to have bottomed and Ho Bee may well benefit from acquiring these sites at near distressed prices. We estimate a potential 11 cts/share RNAVaccretion from these sites, but we have not included it in our valuation.

TP raised to SGD2.66. We raise our RNAV estimate to SGD3.80 based on higher capital value assumptions for its industrial buildings and The Metropolis (SGD1,330 psf), as well as a reduced number of shares from company share buybacks. Positive deployment of its cash hoard and further leasing updates at The Metropolis will be near-term catalysts. Maintain BUY at a target price of SGD2.66, pegged to a 30% discount to RNAV.

Source: Maybank Kim Eng Research - 02 May 2013