• FY13 PATMI up 58%
• Uncertain domestic residential outlook
• Downgrade to HOLD, new FV of S$0.61

Boost from WIS@Changi attaining TOP

Roxy announced 4Q13 PATMI of S$44.8m, up 91% YoY mostly due to profit contributions from WIS@Changi, which achieved TOP over the quarter, and progressive recognition at seven other property development projects. Full year FY13 PATMI cumulates to S$92.2m, which was a 58% improvement. This is 18% above our FY13 forecast, but only due to faster-than-anticipated progress recognition over 4Q13. In terms of the topline, Roxy reported 4Q13 revenues of S$169.7m, up 202% YoY again mainly due to WIS@Changi, and is within expectations. A final cash dividend of 1.297 S-cents per share is proposed.

Harvesting fruits from past sales

We highlight that the group would harvest a substantial S$922.4m of progress billings from already sold units from FY14-17. Key projects, LIV on Sophia, Whitehaven and Jade Residences, have all performed well and are 100%, 82% and 78% sold, respectively, as at end Dec-13. The latest launched project, LIV on Wilkie, is 43% sold, and the group currently sits on two land remaining bank sites in Singapore (Sunnyvale in Telok Kurau, and Yi Mei Garden at Tampines Rd).

Room renovations at Grand Mercure Roxy complete

Over FY13, hotel revenues decreased 7% to S$46.4m mostly due to room renovations from Aug-12 to Jul-13. As a result, revenue per available room (“RevPar”) decreased by 8% to $164.9 in FY13. We expect this to improve with a higher occupancy rate in FY14 as the room closures cease.

Challenges from uncertain domestic residential outlook

Given domestic residential uncertainties, the group is looking to diversify into the region and, over 2H13, have successfully conducted acquisitions in Malaysia and Hong Kong. While management execution remains strong, we deem it appropriate to raise our RNAV discount marginally from 25% to 30% to a level closer in line with listed peers and to reflect weaker fundamentals in its core business space. This brings our fair value estimate down to S$0.61 (from S$0.65 previously) and our rating down to a HOLD.

Source: OCBC Research - 17 Feb 2014