What is the news?

Ho Bee reported 1Q13 PATMI of S$52.1mn. This represents a 230.5% y-y increase, mainly attributed to the S$32.7 million disposal gain in its China investment, Chongbang Holdings. Higher revenue recognition coming from development projects, Trilight (residential) and One Pemimpin (industrial), resulted in S$60.8mn revenue, a 68.4% y-y increment.

How do we view this?

Overall, results were largely in-line with our expectations. Although 3M13 revenue formed 41% of FY13 estimates, we do not foresee strong luxury residential sales amidst a challenging year ahead. While 3M13 PATMI accounts for a mere 9% of FY13 estimates, the strong pre-commitment level of The Metropolis prompts greater optimism. We expect strong reval gain upon its completion in 2H13 to bridge the gap. Additionally, the revaluation would boost its NAV and provide stronger recurring income.

Investment Actions?

We revised the valuation for The Metropolis and factored in gains from the divestments and reduced number of shares. RNAV is increased to $4.11, lifting fair value to $2.52, from $2.29 previously. Maintain Buy.

Source: PhillipCapital Research - 03 May 2013