SINGAPORE (Nov 6): CIMB have selected Chip Eng Seng, Roxy Pacific and Tuan Sing after a runup in the share prices of property stocks prompted the research house to broaden its search for value to include both the mid- and smaller-cap property companies.
CIMB says these companies have predominant exposure across the various property and hospitality segments in Singapore but have also diversified into the Asia-Pacific region. Some have been actively replenishing their local residential landholdings while building recurrent income overseas.
In terms of valuations, their stocks are also trading at 44-62% discount to their revalued asset backing, with net debt to equity ratio ranging between 0.5x-1.4x.
In a Friday report, CIMB analyst Lock Mun Yee says she likes Chip Eng Seng as it is an established contractor and developer. As at end 2Q17, it has a private and public sector property construction orderbook of $538 million.
Chip Eng Seng has also locked in an attributable residential pre-sales of $900 million, derived largely from High Park Residences and Grandeur Park Residences, totalling 1,560 units, to be recognised till 2021.
The group has ventured into the Australian property sector since 2009 and as at end-2Q17, has four ongoing projects in Victoria. Chip Eng Seng is trading at 45% discount to RNAV.
Meanwhile, Roxy Pacific is a pan-Asian player with recurrent income stream from hotel and investment property portfolio.
As at 9M17, Roxy had remaining $78 million, $328 million and $60 million of unbilled locked-in sales to be recognised in Singapore, Australia and Malaysia, respectively.
In addition, the group had been actively acquiring development land in Singapore and currently has 312,379 sf GFA of residential landbank on the island state.
At present, Roxy has three ongoing projects totalling 283 units in Sydney and Brisbane. It has another 175,545 sf of attributable land area in Sydney and Perth that can be developed into residential projects in the medium term.
Roxy’s share price trading at 44% discount to revalued NAV of $1.00/share.
Lastly, Tuan Sing is a property conglomerate with property development, investment and hospitality activities, spread over Singapore, Australia and China.
For 9MFY17, property development and investment operations accounted for 28% of revenue while hotel operations make up 34% of revenue.
In 2018, the group expects to complete 18 Robinson, its office development in Singapore as well as finalise its plans to optimise the value of the recently purchased Sime Darby Centre. On Sep 17, it had obtained written planning permission from the City of Perth for a planned asset enhancement at Hyatt Centre and development of vacant Plot 11.
Tuan Sing shares are trading at 0.54 times book NAV 78 cents and at a 62% discount to RNAV of $1.10.
Shares in Chip Eng Seng, Roxy Pacific and Tuan Sing are trading at 94 cents, 54 cents and 42 cents respectively.
