First Sponsor Group’s strong fundamentals have led Phillip Securities to initiate coverage on the company with a “buy” rating and target price of $1.65.
The brokerage says the property developer has unrecognised property development revenue of $586 million.
The is not including another $1.95 billion worth of gross development value (GDV) yet to be unlocked, which is equivalent to five years of sales, it adds.
Moreover, First Sponsor, which is also involved in property financing, has seen its loan book grow at compounded annual rate of 19% over the past five years.
These securitised loans offer recurring income at low to mid-teens returns, says Phillip Securities.
“We are estimating loan book growth of around 8% for FY20 and FY21,” Phillip Securities analyst Tan Jie Hui writes in a note dated Sept 21.
As at 1.19 pm, First Sponsor was flat at $1.25 with 13,100 shares changed hands.
