Following another set of uninspiring results, we maintain our HOLD recommendation on SingLand with a TP of SGD8.20 (previously SGD8.50), pegged to a 35% discount to RNAV.

FY13 core PATMI was in line at SGD198.9m, down 9% YoY on the back of lower profits recognised from residential sales.

Operationally, we see few positive catalysts that can drive earnings growth in the near term. Perhaps, more can be done with its lazy balance sheet to spur future growth.

What’s New

SingLand posted 4Q13 core PATMI of SGD51.6m (-19.0% YoY, +4.3% QoQ). Rental income from its office portfolio inched up marginally by 2% QoQ, but Pan Pacific Singapore continued to grow steadily after its reopening in Sep 2012, with hotel gross profit rising 25% QoQ to SGD8.3m. A dividend of SGD 20.0 cts per share has been proposed, in line with previous years.

What’s Our View

We expect rental income from SingLand’s commercial property portfolio to remain largely stable. Income growth from its hotel business may also be capped as the sector continues to face challenges from new hotel room supply, foreign labour restrictions and higher operating costs.

There will also be not much solace from the residential segment. Only five more units have been sold at Mon Jervois since end-Sep 2013, as the project remained 70% unsold. At Alex Residences, demand appeared to have waned after a fairly successful launch last November. The project has 59% of its 429 units still unsold.

Given the limited growth prospects in Singapore, SingLand should perhaps make better use of its strong balance sheet to grow overseas. We believe a more active approach to growing its business in China, where it already has a footprint, could make the stock more attractive. Reiterate HOLD with a lower TP of SGD8.20.  

Source: Maybank Kim Eng Research - 24 Feb 2014