Roxy’s 1Q15 PATMI jumped 210% YoY to S$46.5m, mostly due to the contribution from Centropod@Changi, for which profits were wholly recognized upon attaining TOP in Jan 2015. This was partially offset by weaker earnings from Grand Mercure Roxy Hotel. Its average occupancy rate decreased to 87.2% in 1Q15 from 90.2% in 1Q14, and average room rate similarly fell to S$172.5 from S$190.5. As a result, revenue per available room fell 12% YoY to S$150.4 from S$171.8.

In terms of the topline, 1Q15 revenues increased 149% YoY to S$198.2m again due to Centropod’s contribution. Overall we judge 1Q15 results to be broadly in line; 1Q15 PATMI now makes up 56.1% of our forecast for FY15 which we expect to be frontloaded. While the group’s core development business will likely face continued headwinds from an uncertain domestic residential outlook, we are in favor of management’s strategy of growing recurring income and diversifying its portfolio geographically.

Maintain HOLD with an unchanged fair value estimate of S$0.55 per share.

Source: OCBC Research - 6 May 2015