• FY14 PAMTI is above our expectations, boosted by fair value gain
• Amara Bangkok to commence operations in March 2015
• 1.2-cent final and special cash dividend declared for FY14
• Maintain BUY with revised TP$0.65

What is the news?

Amara’s FY14 revenue dipped 6% to S$75.9mn, in-line with our expectations. FY14 PATMI of S$35.3mn, however, beats our expectations due to lower costs of properties sold and the $19mn fair value gain in investment properties.

Hotel Investment and Management segment contributed 70% of the full year revenue, exhibiting resilient performance amid the tough tourism environment.

Amara Bangkok will commence operations in March 2015. Amara Shanghai project in progress, expected for completion by end 2015.

A final and special cash dividend of 1.2 cent per share was proposed for FY14, translating into 2.3% dividend yield based on last done price of $0.52.

How do we view this?

Higher capital expenditures (capex) in FY15 – The management has guided that higher capex is expected in FY15 for the Amara Shanghai project. We estimate the total capex requirement in FY15 to be approximately 120K.

Significant earnings growth in near sight – Amara Bangkok will begin operations in March 2014 and should be fully operational in second half of the year. We reckon this first overseas hotel to contribute ~13-15% to the hotel revenue in FY15. Furthermore, with the sales of the remaining three units from previous residential project Killiney 118 and revenue recognition of the CityLife@Tampines JV project, the earnings will increase substantially in FY15.

Investment Actions

We roll over our valuations and introduce our FY16 estimates. Our TP is lowered to $0.65 after taking into account of the higher capex and slower revenue recognition of M5 residential project. We maintain our BUY rating.

Source: Phillip Securities Research - 2 Mar 2015