HPL’s 1Q15 PATMI decreased 68.0% to S$14.3m mostly due to the lack of contributions from Tomlinson Heights, which achieved TOP in the same quarter last year, and weaker share of results of JV/associates, which decreased from a 1Q14 profit of S$4.6m to a 1Q15 loss of S$3.9m given lower profits from both The Interlace and d’Leedon (both achieved TOP in Sep 2013 and Oct 2014, respectively). In terms of the topline, 1Q15 revenues similarly fell 26.0% YoY due to reduced contributions from the group’s property development segment.

Overall, we judge this set of results to be broadly within expectations, and 1Q15 PATMI and revenues now constitute 17.8% and 27.2% of our full year forecast respectively. Management indicates that the domestic housing market remains weak while global conditions continue to be mixed. The group will focus on marketing its existing residential projects and expect to reap stable recurring profits from its portfolio of hotels and resorts. Maintain BUY with an unchanged fair value estimate of S$5.32.

Source: OCBC Research - 11 May 2015