Gearing Stays Relatively High. The Group’s balance sheet continues to be weighed down by its net debt, though net gearing did improve marginally from 2.84x in 4Q08 to 2.75x in 1Q09. The majority of its short-term debt, however, relates to AVJ, which is in advanced negotiations for the extension of banking facilities which mature end-Sep 09. While it is anticipated that the facilities sufficient for AVJ’s normal business operations will be extended, these facilities and liabilities are non-recourse to SC Global itself.
Sentosa Next. It looks likely that Sentosa Beachfront will be the company’s next project due for launch, though this is still at the planning stage. At this point, the company has no plans to relaunch any of the unsold units in its launched projects.
Maintain Fully Valued, TP S$0.74. We believe that unlike the mass or mid market segments, the luxury segment, which SC Global is most exposed to, is unlikely to recover by this year. Nonetheless, we now peg a smaller 40% discount (prev 50%) to its RNAV of S$1.23 (prev S$0.93), in view of a broader macro recovery. We maintain a Fully Valued call, with a new TP of S$0.74.
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