Fair value S$0.61
FY12 earnings in line
The group announced 4Q12 PATMI of S$23.3m, up 96% YoY mostly due to S$11.2m of fair-value gains on investment properties. Excluding one-time gains, we estimate core 4Q12 PATMI at S$13.9m which cumulates to full year earnings of S$48.9m - in line with our FY12 estimates. Topline for the quarter came in at S$56.2m, also up 33% YoY as the pace of revenue recognition from property developments increased. A final cash dividend of 0.92 S-cents is proposed.
Major launches to come ahead
The group continues to execute well on launched projects which are now mostly sold out. Progress billings from already sold units now stand at S$861.7m which would underpin earnings from FY13-16. We expect management to launch remaining projects in its land-bank, including major projects Jade Towers, Westvale Condominium and Sophia Mansions, by 3Q13.
Hotel enhancement to complete by May 13
The hotel segment (Grand Mercure Roxy) continues to put up firm numbers, with bouyant Average Room Rates increasing 6% YoY to S$199.9 in FY12 and driving REVPAR up 1% to S$179.7. Average Occupany Rates (AOR), however, fell
4.7 ppt to to 89.9% in FY12 as the group conducted asset enhancements.
Fair value estimate raised to S$0.61
Roxy has delivered an impressive return on equity (ROE) in excess of 20% over the last three years due to management’s dual core competencies: 1) finding and allocating capital to accretive acquisitions, and 2) executing expediently to achieve high sell-through rates. Though we see the shares to be fairly priced currently, a rerating could come through if management shows active and accretive capital redeployment ahead, particularly with an anticipated cash capital in excess of S$200m flowing back into the balance sheet over FY13. Maintain HOLD with an increased fair value estimate of S$0.61 (25% discount to RNAV), versus S$0.54 previously.
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