As anticipated, TEE’s PATMI showed a strong 73.8% QoQ increase to S$1.6m in 2Q14 from S$0.9m in 1Q14. That cumulates to a S$2.5m profit for 1H14 – down 52.4% YoY - but we continue to forecast earnings to show YoY growth in a back-loaded FY14 as stronger profit contributions from Tee Land (its property development subsidiary) and engineering projects would kick in over 2H14.
The group announced that Tee Land has recently acquired for S$45.2m the Long House at Upper Thomson Road which would be redeveloped into a mixed residential and commercial project. The land cost translates to S$890 psf GFA which we view to be fairly decent in view of estimated overall breakeven average selling prices of around S$1.4 – S$1.5k psf. Management has declared an interim dividend but will announce the exact details at a later date.
On an overall basis, we judge 2Q14 results to be mostly in line. We would speak further with management about this set of results and, in the meantime, maintain BUY with a fair value estimate of S$0.35.
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