1QFY16 PATMI increased 77.7% YoY to S$2.6m from 1QFY15’s low base of S$1.4m mostly due to earnings growth from the group’s automotive and real estate rental businesses. In terms of the topline, 1QFY16 revenues similarly increased 30.7% YoY to S$22.6m with increased contributions from the automotive and real estate rental segments, stronger sales at PHGE and performance fees from Star City Zone C, but partially offset by the absence of revenue recognition after the completion of Star City Building A3.

1QFY16 PATMI and revenues now makes up 7.1% and 14.6% of our full year forecasts, respectively; we expect the FY16 results to be mostly back-loaded and judge this quarter’s results to be broadly in line.

Management reported healthy leasing demand for its property leasing portfolio (16-unit apartment block in PHGE and 150-unit Building A5 in Star City) with rental income up YoY to S$2.5m and also strong sales for its Case New Holland agricultural equipment business which also saw 1QFY16 revenue increase YoY from S$0.2m to S$7.0m.

Maintain HOLD with an unchanged fair value estimate of S$0.52.

Source: OCBC Research - 28 Jul 2015