Earnings estimates for FY2009F to FY2011F. We are expecting Sing Holdings to report a net profit of S$2.0m in FY2009F. As its projects are completed progressively in 2010F and 2011F, we would expect greater recognition of revenue and profit based on the progress of construction. This would result in net profit of S$5.3m and S$6.6m in FY2010F and FY2011F respectively.
Outlook for FY2009F. Sing Holdings has launched its “BelleRive” project at Keng Chin Road and has achieved sales of more than 50% of the project. Moreover, it is in the planning stage for “The Laurels” project.
Our views on the property market. URA reported that 1,332, 1,220 and 1,207 homes were sold in February, March and April 2009 respectively. We feel that the strong sales momentum in recent months has signaled that there is a turnaround in the property market. Moreover, buyers are rushing into the market as they do not want to lose out during the market recovery.
We believe that the robust sales in the mass market and mid-end homes will continue for the rest of the year as developers cut prices to attract HDB upgraders. However, the luxury segment where homes are sold above S$2,500 per square foot has not recorded any sales and developers have not launched any properties for the past three months.
Upgrade from HOLD to BUY recommendation, fair value reduced from S$0.245 to S$0.21. We are upgrading our recommendation from hold to buy as the stock is trading below its fair value. Sing Holdings has indicated that the price for the units at “BelleRive” project ranges from S$1,325 to S$1,464 per square foot. This is close to our estimate of S$1,380 per square foot for the project. We are adjusting the fair value of the stock from S$0.245 to S$0.21 due to the dilution from the rights issue. This is based on a 50% discount to the RNAV of S$0.42.
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