Earnings estimates for FY2009F to FY2011F. SC Global is expected to remain profitable because it has achieved large sales of its residential projects in 2006 and 2007, and revenue will be recognized as construction progresses. Net profit is expected to increase from S$40.7m in FY2009F to S$203.8m in FY2010F based on the percentage of completion of its projects. After that, net profit is likely to fall to S$128.5m in FY2011F as most of its projects have already been completed in FY2010F.
Outlook for FY2009F. SC Global highlights that it is encouraged by the increase in private home sales in Singapore and Australia. It is currently in the planning and design stage for its projects at Ardmore Park and Sentosa Cove. Furthermore, it expects to remain profitable as it recognises revenue from projects that have been sold.
Maintain HOLD recommendation, fair value raised from S$0.67 to S$1.13. We are maintaining our hold recommendation as SC Global has not launched properties for sale recently. Moreover, the luxury property market in Singapore has not registered sales above S$2,500 per square foot for the past three months. However, due to the improvement in buying sentiment for the property market, we are raising the fair value from S$0.67 to S$1.13. This is based on 50 percent discount to the RNAV of S$2.26.
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