Singapore Land

[winston]

Vested. From DBS:-

We remain positive on Singapore Land, which is trading at an attractive 0.63 P/BV.

The stock has upward bias to $6.63.

[winston]

Office rents to rise 10%: RREEF
But no hike next year as new supply from key projects starts coming in
By ARTHUR SIM


OFFICE rents here are expected to rise a further 10 per cent or more this year - before growth all but disappears in 2009.

According to a report by Deutsche Bank's property arm RREEF, rental growth is expected to 'evaporate' by 2009 as extensive new supply starts to come onstream from projects such as the Marina Bay Financial Centre (MBFC), Ocean Building and Marina View.

From 2010 to 2012 - when the market adds 570,000 square metres of new Grade A office space - Grade A stock is expected to increase 25 per cent, the report says.

'The vacancy rate, currently near one per cent, will shoot up to 2005 levels by the time this new wave of supply is all brought on line,' it adds.

RREEF expects rent momentum - the 'general momentum behind the potential changes in rent, not an absolute variation in rates' - to decrease in 2010 and 2011, then stabilise in 2012.

In its report, Asia Pacific Property Cycle Monitor, it says each property sector has a clearly identifiable cycle with four main phases:

# recovery (high but declining vacancy rates - stable to rising rents);

# growth (low and declining vacancy rates - rising rents supportive of construction);

# post-growth (low but increasing vacancy rates - rising/flattening rents); and

# contraction (high or increasing vacancy rates - falling rents).

'The office market has the greatest volatility of the three main commercial sectors,' says RREEF. 'The retail and industrial sectors are less volatile due to the relatively high levels of owner-occupation, with less investment activity and limited modern supply, particularly in the industrial sector.'

While the office sector is currently still in the growth stage, a post-growth stage is expected in 2009, followed by two years of contraction, and finally recovery in 2012.

On the upside, the retail property sector is expected to remain in the growth stage until at least 2012.

RREEF attributes this to a 'broad construction boom' and 'robust economy'. 'Two new malls in the Orchard Road area will join the island's existing stock of dated retail space in 2008, which could spur structural change in the market,' it says. 'Extensive pre-leasing of this space will keep Singapore's retail vacancy rate steady in the one per cent range.'

RREEF expects retail rental growth to average 3 per cent per annum between now and 2012.

It also sees the industrial property market booming - especially business parks. It projects growth until 2010, when a post- growth stage will kick in until at least 2012. Rents, which grew at double-digit levels in 2006 and 2007, should continue to rise this year, before the rate of increase tapers off to single digits.

While the spillover effect from the office sector has led some companies to turn to business-park space for their back-office operations, RREEF reckons that this effect will 'diminish' when the large supply of new office space comes onstream from 2010.

It also adds a note of caution: 'While it poses no immediate competitive threat to Singapore, Malaysia's long-term plan to develop the Iskandar Development Region in Johor will be a project with structural implications for Singapore, and its progress should be monitored over the long-term.'

[winston]

Vested.

July 2, 2008, 3.53 pm (Singapore time)

AmFraser calls buy on SingLand, target price $8.22 a share

AmFraser Securities Pte Ltd on Wednesday initiated a buy call on property group Singapore Land Limited and pegged its target price at $8.22 a share.

At 3.45 pm, SingLand was trading around $6.19 a share, down 6 cents or 1 per cent from Tuesday's close.

'We put fair value at $8.22, based on a 30 per cent discount to our RNAV estimate of $11.75, in view of a moderating property cycle. Trading at a P/B ratio of 0.64 and at a 24% discount to our target price, we think that SingLand is grossly oversold at current price of $6.25,' AmFraser's analyst Henry Tan said in the research report.

The analyst said that at current share price, the implied value of SingLand's quality office assets is cheap at $630 psf compared to recent transacted values of $2,000 psf - $3,000 psf.

Mr Tan added that the company, with an office property portfolio of 2.6 million square foot of net lettable area in Singapore, of which 80 per cent is located in the CBD, is a prime beneficiary of rising office rental rates.

'New supply of office space is expected to be tight till 2010 while net incremental demand is projected at 2m sf p.a., boosting market occupancy rates to a peak 95.3 per centin 2009. On reversion rates at a-third of occupancy, we forecast SingLand's office investment revenues to jump 20 per cent in FY08 and 46 per cent in FY09. Office assets account for 75 per cent of RNAV.'

The company's most significant mall, Marina Square, and all three hotels in downtown Marina Centre, stands to benefit from increased traffic flow and the Formula One (F1) Grand Prix event routed in the area every September, Mr Tan noted.

' We have assumed cap rates of 5 per cent for SingLand's office assets; however, amidst strong investment demand for office properties in a strong rental cycle, there is room for downside to cap rates. A one percentage point fall in cap rates will raise our RNAV estimate by 19 per cent to 13.98, boosting fair value to $9.79,' Mr Tan said.

-- BT Newsroom.

[winston]

Vested. From Kim Eng:-

Singapore Land – Company Update (Wilson LIEW, DID: 64321454)
Previous Day Closing price: $6.14
Recommendation: BUY
Target price: $9.33

Countdown has begun
The Singapore Grand Prix flags off on 28 September, barely two and a half months away. SingLand’s three hotels around the Marina Square area (Pan Pacific Hotel, Mandarin Oriental and Marina Mandarin) will be in the thick of the action and we anticipate that most of the rooms have already been booked for that period.

Spillover from Grand Prix weekend
Tapping on the race weekend, the Singapore Tourism Board has announced its plans for the Singapore GP Season, which spans three weekends from 20 September to 5 October. There will be a series of more than 10 lifestyle events planned, such as the Singapore River Festival, Singapore Biennale 2008 and the Bulgari Watch Exhibition. With these events, visitors could possibly extend their stay after the actual race weekend, which will be a boon for Marina Square and the three hotels.

Office rentals holding firm
The supply of prime Grade A office space in Singapore will remain tight until the completion of Phase 1 of the Marina Bay Financial Centre, which is expected to be in 2010. We expect office rentals to remain firm and SingLand’s office portfolio will continue to enjoy positive rental reversions. We also believe that our FY09 valuation for its flagship Singapore Land Tower of $2,585 psf is fair.

Residential exposure not significant
SingLand’s residential exposure remains small, with only one unlaunched site in Singapore (the former Himiko Court), with a GFA of about 410,000 sq ft. Recent subsale transactions of the nearby Montview averaged $1,300 psf. Given the breakeven for Himiko Court could be as high as $1,400 psf as construction costs increase, we think that SingLand is likely to hold back its launch as long as market sentiments remain weak.

Deep-value play
SingLand remains a deep-value play backed by good quality assets. The current share price suggests that capital values of its commercial properties would fall by about 40%, which we think is highly unrealistic. Reiterate BUY at $9.33, based on a 25% discount to FY09 RNAV.

[winston]

Vested.

SingLand's Q2 net profit doubles

Office landlord Singapore Land's second quarter 2008 net profit doubled to $67.99 million from $33.91 million in the same period last year, on the back of a 25 per cent increase in revenue to S$89.3 million and fair value gains of $54.6 million on investment properties held by subsidiary companies.

SingLand's net profit for the first-half ended June 30, 2008 rose 64 per cent year on year to S$101.6 million.

Parent United Industrial Corporation's Q208 net earnings rose 63 per cent to $46.3 million. Revenue increased 59 per cent to $219.9 million, helped by progressive sales recognition on a percentage of completion basis of the Park Natura condo in Singapore and Tianjin Jun Long Square development.

UIC also booked a net fair value gain of $31.9 million for investment properties held by subsidiary companies.

UIC's first-half net profit rose 55 per cent to $78.4 million. -- KALPANA RASHIWALA, BT NEWSROOM

[cif5000]

Winston, I am just curious about what this company that caught your interest. The discount to their properties?

Historically, these buildings don't seem to possess good earning power. ROA is bad and the ROE is also bad after leveraging on borrowings.

However, the $1/2bn tax bill if deducted (quite possible) will increase the book value further.

[winston]

Hi cif5000,

I invested a while back because it was trading at a big discount.

Also, there is this fight for it's parent, UIC. However, they are buying UIC becuz of Singland.

Now that Singland has dropped so much, potential investors may buy Singland rather than the parent.

Take care,
Winston

[winston]

Vested. From Kim Eng:-

Singapore Land – 1H2008 Results (Wilson LIEW, DID: 64321454)
Previous Day Closing price: $6.28
Recommendation: BUY (maintained)
Target price: $9.45 (increased from $9.35)
No surprises

SingLand posted a 1H08 net income of $101.6m, up 63.8% Y/Y, while revenue improved 47.7% Y/Y to $172.3m. Stripping out a $54.6m fair value gain on investment properties, core earnings of $77.6m was 48.5% of our full-year estimate, in line with expectations. Core earnings improved 25.1% Y/Y. On a Q/Q basis, there was a 30.7% growth.

Steady growth in rental revenue
Gross rental revenue for 1H08 grew by a robust 22.4% Y/Y and 8.8% Q/Q. We expect positive rental reversions to continue as average rents get marked closer to market levels as leases get renewed. The positive rental reversions have also translated to higher capital values, as evidenced by the fair value gains for both Marina Square Retail Mall and Marina Bayfront.

Nary a worry about tourism hiccup
SingLand’s gross revenue from hotel operations grew 4.8% Q/Q on the back of higher room revenue. The Singapore Tourism Board indicated that there was a 4.1% Y/Y decline in visitor arrivals in June, the first decline in 51 months. The likely attributable factors include the global economic slowdown, rising inflation and oil prices.

However, the Average Room Rate still increased 20.1% Y/Y despite a 5%-point fall in the Average Occupancy Rate. We think this hiccup is temporary as the second-half numbers could be bolstered by the F1 race and the associated events.

Higher associate earnings
Due largely to the progressive recognition of profits from the Sixth Avenue Residences, SingLand’s associate earnings increased by $5.6m in 1H08. We maintain that SingLand’s direct exposure to the residential market (i.e. its landbank comprising the former Himiko Court) remains minimal.
Prized assets valued at deep discount

We remain positive about SingLand’s asset-backing, which should continue to benefit from rental reversions and higher room revenues. Reiterate BUY with a target price of $9.45, based on 0.75x P/RNAV

[winston]

Vested. From DBS:-

Boosted by rental and hotel income

Story: Singland reported Q2 net profit of $68m (+101% yoy), bringing 1H08 earnings to $101.6m. Excluding net revaluation surplus of $24m for Marina Square, bottomline would have been $44m, +30% yoy.

The improved performance was due to better rental and hotel contributions as well as greater associate income. During the quarter, Singland revised up the value of Marina Square office and retail but left all other building values unchanged from Dec07 prices.

Point: Gross leasing revenue grew 25% yoy to $56.8m, boosted by higher passing rents from its office properties. For example, Singland Tower is commanding rents of $18psf vs its passing levels of $6.80psf while The Gateway is renewing at $10psf vs its average of $4.80psf. The wide spread between new and expiring rents should continue to underpin rental income growth over the next 2 years.

Hotel contributions continued to be robust, thanks to higher room revenue as demand for short stay accommodation remained strong. Progressive billings from Sixth Avenue also uplifted associate income. Looking ahead, the group would continue to benefit from rising average office rents, which account for up to 65% of total revenue. In addition, its hotel contributions generated
from 2068 rooms should benefit from the upcoming F1given its close proximity to the trackside.

Relevance: In terms of valuations, Singland is trading at 0.64x P/bk NAV, in line with office S-reits, indicating that the prospect of a peaking office rental market could likely factored in the share price. We have lowered our price target to $8.80, after pegging a 15% discount to RNAV.
The stock is trading at 40% discount to target price.

Maintain Buy.

[qxing78]

wow, drop to $5.5 level liao.
One of the few stocks with the 'Singapore' name, but not a GLC.
Would love to own it again at maybe $3.5~4.