SINGAPORE (Mar 9): NRA Capital is maintaining its “overweight” on TEE Land with a fair value of 28 cents given improved outlook for the property developer.
In a Friday report, analyst Liu Jinshu says, “We update on TEE Land following a significant improvement in its fundamentals.”
In 2Q18, TEE Land recorded a total loss of $5.22 million in 2Q18, compared to earnings of $394,000 in 2Q17, bringing 1H18 loss to $6.14 million from earnings of $1.04 million in 1H17.
The group's profitability was dragged down by older completed properties. It also incurred a loss of $1.8 million from unsold units at The Peak @ Cairnhill 1.
The units have since been substantially sold, leaving only two units as inventory.
Liu expects the group to recover close to $30 million of cash on the properties through 2018.
In addition, launches at 24 One Residences at Pasir Panjang were 100% sold, and Liu estimates that the group bagged $212 million pre-sales to be recognised from June 1 onwards, of which $170 million were from either uncompleted or new projects.
The group also acquired two sites with an estimated total GDV of$195.5 million, which will be launched later in 2018.
“We expect these new projects to be relatively well received, and will act as share price catalysts, as they are in exclusive neighbourhoods with few existing launches in the vicinity,” says Liu.
While TEE Land suffered an impairment loss from the sale of Chewathai, the group made a cash profit from the deal due to the low cash cost of its investment and prior dividends received.
Looking ahead, the group will probably aim to sell the Larmont Hotel in Sydney to further raise capital efficiency, which the analyst reckons that the group will make a gain from.
“We see TEE Land offering attractive return if it can execute its new strategy smoothly,” says the analyst.
As at 11.08am, shares in TEE Land are trading at 18 cents or 18.8 times FY18 earnings.
