07 March 2014

Roxy Pacific - Transformed from Hotel Operator to Full Set Property Player - Mar 2014

Company Background:

Roxy Pacific is a listed company in Singapore Stock Exchange which focus mainly on property market. The business consists of property development, hotel management and property investment. Below is a snapshot of from annual report 2012:

Roxy-Pacific Holdings Limited is a homegrown specialty property and hospitality group with a track record that extends back to 1967.

Listed on the SGX Mainboard in March 2008, the Group is principally engaged in the development and sale of residential and commercial properties (“Property Development”) and the ownership of Grand Mercure Roxy Hotel and other investment properties (“Hotel Ownership and Property Investment”).

In Property Development, Roxy-Pacific is an established brand name for small and medium size residential developments with unique design features. The Group’s developments offer desirable living environments which epitomise quality and innovation and are targeted at middle to upper middle income buyers.

Between 2004 and 2012, the Group developed and launched 32 small to medium size developments comprising a total of more than 2,000 residential and commercial units. The Group also owns the Grand Mercure Roxy Hotel, managed by the international hotel operator, Accor Group. Strategically located in the East Coast area, the hotel is close to the CBD, the Changi airport and the Marina Bay Resort Casino. The hotel enjoys high Average Occupancy Rate (“AOR”) averaging 89.0% and good Average Room-Rate (“ARR”) averaging S$153.3 between 2004 and 2012.

Source: Company

Income Statement

Balance Sheet

Cash Flow

Management Comments

Property Development

The Singapore Government has forecast Singapore’s GDP growth for 2014 to be between 2% to 4% as
compared to the estimated growth of 3.7% in 20131. Based on advance estimates by Ministry of Trade and Industry Singapore (“MIT”) on 2nd January 2014, the Singapore economy grew by 4.4 per cent on a year-on-year basis in the fourth quarter of 2013, compared to 5.9 per cent in the previous quarter.

Based on the latest statistics released by Urban Redevelopment Authority (URA) on 24th January 2014, for the year 2013 as a whole, price of private residential properties increased by 1.1%, lower than the 2.8% increase in 2012. The various property cooling measures, including the TDSR framework has affected the overall property market’s sentiments.

As at 6 February 2014, the Group has a balance amount of attributable progress billings of approximately $922.4 million from the following projects, the profits of which will be recognised from 1Q2014 to FY2017

Ongoing Projects:

Source: Company

My Own Personal View

As the company is have about S$922.4M order book on hand which could last until year 2017, so I believe the gross profit for next couple of year (inclusive of 3 divisions) could reach about S$100M. The company's JV just acquired prime commercial property in Hong Kong and it is leasing fast to bring in more recurring income. With projected PE of about 7X to 10X, I believe it is at reasonable price range. The catalyst is whether the company could sell the projects faster and replenish the land banks with reasonable price.

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1 comment:

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