HPL’s FY14 PATMI decreased 30.0% to S$124.4m mostly due to reduced contributions from JV and associates (major projects The Interlace and D’Leedon both attained TOP in Sep-13 and Oct-14, respectively) and lower fair value gains on investment properties (S$5.7m in FY14 versus S$21.4m in FY13). That said, we judge FY14 results to be above our expectations given stronger-than-anticipated numbers from the group’s hotel portfolio despite significantly lower fair value gains over the year.

Management reports that soft marketing at its London residential projects at Burlington Gate and Campden Hill has begun and will recognize income from these projects only upon completion. A final dividend of 10.0 S-cents (comprising 4.0 S-cents final, 6.0 S-cents special) has been proposed for FY14, versus 8.0 S-cents in FY13. Maintain BUY with an unchanged fair value estimate of S$5.32.

Source: OCBC Research - 25 Feb 2015