3Q15 PATMI decreased 2% YoY to S$100.8m, mainly due to the absence of development contributions from The Esplanade at Tianjin China, which attained TOP in 3Q14, and lower hotel income due to refurbishment works and FX weakness affecting the group’s hotels in Malaysia and Australia; but partially offset by increased investment property income from OneKM mall which opened in 4Q14. Overall, we deem this quarter’s earnings to be in line with expectations and 9M15 core PATMI now makes up 75% of our full year forecast.

To date, 134 units have been sold at the recently launched Principal Garden project (663 total units) at average selling prices of about 1.6k psf. The pace of sales is somewhat slower than anticipated but management remains optimistic that sales will pick up ahead given 4Q is historically a quieter part of the year for launches. We understand that the group will continue to be selective in replenishing its landbank in the uncertain domestic residential market. Maintain BUY with an unchanged fair value estimate of S$7.43.

Source: OCBC Research - 12 Nov 2015