Improvement in markets likely to buoy earnings: We have raised our earnings estimates for FY Dec 09E by removing our previous assumptions of inventory writedowns amounting to S$109million, and boosted our FY10E and FY11E estimates significantly (by over 100%) to take into account higher sales volumes and some stability in hotel contributions from FY10E onwards. With increased sales volumes our cashflow estimates increase and hence our FY10E RNAV estimate has been increased from S$11.23/share to S$11.51/share (+2.5%).
Successful launch of Quayside Isle could be the next thing to watch: The group is readying to launch 400 residential units in 2H09, 100 of which are at the Quayside Isle project in Sentosa Cove, which is pitched at the high-end segment. Over 26% of the group's gross asset value is in high-end segment, a re-rating of which would have the most impact on our RNAV estimates for the stock. A 10% increase in ASP assumptions for Singapore property alone would boost our RNAV estimate by 5%.
We raise our end Jun 10E target price to S$10.80/share (S$7.40 previously), based on a 6% average through-the-cycle discount to RNAV. Key risks to our view: a reversal in the momentum of housing demand, especially at the high and mid-end segment could reduce ASP growth expectations and widen the discount at which the stock trades to our RNAV estimates.
Sponsored Links
No comments:
Post a Comment