1Q09 PATMI of S$83m (-5% YoY, -17% QoQ) came in below forecast on weak hotel earnings and slowing devt profit booking. PBT on hotel ops and property devt fell 60% and 56% YoY to S$21m and S$69m respectively, while rental properties performed better on positive rental reversions (PBT +47% YoY) although occupancy rates have fallen from 94% to 91%. Projects such as City Square, Botannia , Solitaire and One Shenton con tributed.
Management comments that for the 439 units completed in 1Q09, almost all buyers have paid up including those on DPS. Mgmt is fast-tracking the launch of the mass-mid range sites where demand remains firm and plans to launch the former Hong Leong Condo by 4Q09, while the launch of Quayside could be deferred until TOP (by 2011). For the South Beach project (which targeted completion has also been deferred to 2016), the JV partners are in the final stage of negotiations with the consortium banks on re-financing of the land. Mgmt expects construction cost to decline further and are refining development plans for the site.
We have revised down our FY09-11E earnings by ~9% to reflect weaker earnings contribution from M&C, and forecast a 20% decline in FY09 PATMI to S$450m. FY09E earnings should be underpinned by progressive profit recognition from projects approaching TOP (Botannia , Tribeca, Oceanfront). We estimate around 161 units sold in 1Q09 vs just 8 units in 4Q08. Take- up has hit 74% and 55% for The Arte & Livia while profit recognition has yet to commence. RevPAR for Apr continues to be weak (-23% YoY) and there could be downside risk to hotel earnings. Stock is currently trading at a 5% disc to RNAV of S$8.45.
Management comments that for the 439 units completed in 1Q09, almost all buyers have paid up including those on DPS. Mgmt is fast-tracking the launch of the mass-mid range sites where demand remains firm and plans to launch the former Hong Leong Condo by 4Q09, while the launch of Quayside could be deferred until TOP (by 2011). For the South Beach project (which targeted completion has also been deferred to 2016), the JV partners are in the final stage of negotiations with the consortium banks on re-financing of the land. Mgmt expects construction cost to decline further and are refining development plans for the site.
We have revised down our FY09-11E earnings by ~9% to reflect weaker earnings contribution from M&C, and forecast a 20% decline in FY09 PATMI to S$450m. FY09E earnings should be underpinned by progressive profit recognition from projects approaching TOP (Botannia , Tribeca, Oceanfront). We estimate around 161 units sold in 1Q09 vs just 8 units in 4Q08. Take- up has hit 74% and 55% for The Arte & Livia while profit recognition has yet to commence. RevPAR for Apr continues to be weak (-23% YoY) and there could be downside risk to hotel earnings. Stock is currently trading at a 5% disc to RNAV of S$8.45.
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