Singapore | Real Estate Management & Development Asia Pacific Equity Research

ROXY-PACIFIC HOLDINGS | BUY

15 Feb 2018
MARKET CAP: USD 506M AVG DAILY TURNOVER: USD 0.1M Company Update

NIMBLE TO THE NEXT WAVE BUY (maintain)

 4Q17 PATMI dip of 39% YoY Fair value S$0.66
add: 12m dividend forecast S$0.02
 A flurry of launches for 2018
versus: Current price S$0.56
 Higher FV of S$0.66
12m total return forecast 21%

Analysts
Lower revenue recognition from completed projects
Joseph Ng ● +65 6818 4810
Roxy-Pacific’s 4Q17 revenue dropped 53% YoY to S$43.32m, while josephng2@ocbc.com
PATMI dipped 39% YoY to S$7.3m. In 4Q17, the group saw lower Andy Wong Teck Ching, CFA ● +65 6818 4808
recognition from Jade Residences, Whitehaven, LIV on Wilkie and an andywong@ocbc.com
absence of revenue recognition from LIV on Sophia following the
completion of these projects in 4Q16 and early 2017. The group’s Key information

property investment segment saw revenue drop from $3.3m in 4Q16 Market cap. (m) S$668 /
USD506
to $1.6m in 4Q17, following the sale of 59 Goulburn Street in Oct17.
Avg daily turnover (m) S$0.1 /
There was an uptick in revenue for the group’s hotel ownership
USD0.1
segment from $11.2m in 4Q16 to $12.0m in 4Q17, following Avg daily vol. (m) 0.1
contribution from the newly acquired hotel in Osaka, Japan. Overall 52-wk range (S$) 0.46 - 0.6
gross margin for the group for 4Q17 was at 28%, compared with 22% Free float (%) 25.5
in 4Q16. Shares o/s. (m) 1,192.2
Exchange SGX
BBRG ticker ROXY SP
Good pipeline of Singapore residential projects
Reuters ticker RXYP.SI
Currently, Roxy-Pacific has 10 projects in its Singapore landbank,
SGX code E8Z
which should be able to yield a total of 440 units. The group has GICS Sector Financials
launched one of them on 28 Jan (The Navian), and has sold about GICS Industry RE Mngt & Dev
48% of units by 5 Feb. While management plans to launch six Top shareholder Kian Lam Inv: 38.27%
development sites for sale in FY2018, we believe that eight launches
could be possible, leaving 15, 17 & 19 Lorong Kismis and 22 Farrer Relative total return 1m 3m 12m

Road for FY19. In our opinion, with these 10 sites on its books, Roxy- Company (%) 1 4 13
STI-adjusted (%) 4 2 -1
Pacific now has the luxury of being more selective in its landbanking
activities. Separately, we believe that the softer RevPar seen by
Price performance chart
Grand Mercure Singapore Roxy hotel over the course of 2017 should
witness some reprieve this year, given the more favourable supply-
demand dynamics in 2018. The Singapore Tourism Board expects
further growth in the tourism sector in 2018, with visitor arrivals
forecasted to grow 1% to 4%, with tourism receipts to grow between
1% and 3%. Notwithstanding the positives as highlighted above, we
think that revenue will be lumpy – contribution from the 10 Singapore
projects as well as 2 out of 3 Australian development projects is
forecasted to be recognized only from FY19. With a change of
covering analyst, we fine-tune our assumptions and our fair value
rises from S$0.60 to S$0.66.
Sources: Bloomberg, OIR estimates

Industry-relative metrics
Key financial highlights
Year Ended Dec 31 (S$m) FY16 FY17 FY18F FY19F
Revenue 385.4 246.8 172.8 380.1
Cost of sales -304.2 -187.3 -129.6 -285.1
Gross profit 81.2 59.5 43.2 95.0
PAT 52.9 31.3 37.7 62.4
Income tax -12.7 -15.4 -9.0 -14.9
EPS (S-cents) 4.4 2.6 3.2 5.2
Cons. EPS (S-cents) na na na na
PER (x) 12.1 20.4 16.9 10.2
P/NAV (x) 1.3 1.3 1.2 1.1
Net gearing (%) 79.7 109.3 111.4 98.9
Note: Industry universe defined as companies under identical GICS classification listed
in exchanges in Asia Pacific.
Sources: Bloomberg, OIR estimates

Please refer to important disclosures at the back of this document. MCI (P) 003/06/2017
 OCBC Investment Research
Singapore Equities

Exhibit 1: Quarterly financial highlights

4Q17 4Q16 % Chg 3Q17 % Chg
Year ending 31 Dec (S$m) (S$m) (YoY) (S$m) (QoQ)
Revenue 43.3 93.1 -53.5% 60.3 -28.1%
Cost of sales -31.4 -73.0 -57.0% -42.7 -26.5%
Gross profit 11.9 20.1 -40.8% 17.5 -32.0%
Other operating income 3.5 2.0 76.4% 1.0 Nm
Distr. & selling expenses -1.6 -1.0 66.4% -1.5 6.3%
Admin expenses -2.8 -4.9 -42.5% -4.1 -31.1%
Other operating expenses -4.1 -6.8 -38.8% -6.8 -39.4%
Finance cost -3.4 -3.7 -9.0% -3.2 5.2%
Share of assoc/JV profits (post-tax) 5.2 8.1 -35.8% 0.5 nm
PBT 8.7 13.9 -37.2% 3.4 158.1%
Income tax -1.4 -1.3 1.3% -1.1 23.8%
PAT 7.4 12.6 -41.3% 2.3 nm
MI 0.1 0.7 -84.3% 0.8 -86.3%
PATMI 7.3 11.9 -38.9% 1.5 nm
Sources: Company financials

2
 OCBC Investment Research
Singapore Equities

Company financial highlights

Income statement
Year Ended Dec 31 (S$m) FY16 FY17 FY18F FY19F

Revenue 385.4 246.8 172.8 380.1

Cost of sales -304.2 -187.3 -129.6 -285.1
Gross profit 81.2 59.5 43.2 95.0
Other operating income 23.0 32.8 27.9 30.4
Admin expenses -15.0 -11.1 -6.7 -14.8
Other operating expenses -21.8 -28.2 -10.4 -22.8
Share of assoc/JV profits (post-tax) 18.6 13.0 14.3 14.3
PBT 65.6 46.7 46.7 77.3
Income tax -12.7 -15.4 -9.0 -14.9
PAT 52.9 31.3 37.7 62.4

Balance sheet
As at Dec 31 (S$m) FY16 FY17 FY18F FY19F

Cash and equivalents 325.3 322.5 365.2 386.7

Dev. Properties 479.0 540.9 540.9 540.9
Inv. Properties 198.8 124.2 124.2 124.2
Total Assets 1,461.6 1,515.8 1,567.4 1,658.5
Trade and other payables 98.7 88.9 42.0 92.5
Current financial liabilities 446.5 553.8 550.0 550.0
Non-current financial liabilities 270.5 318.1 400.0 400.0
Total Liabilities 966.6 1,008.1 1,039.4 1,089.9
Total Equity 491.3 502.7 525.2 569.6
Total equity and liabilities 1,461.6 1,515.8 1,567.4 1,658.5

Cash flow statement

Year Ended 31 Dec (S$m) FY16 FY17 FY18F FY19F

Profit before income tax 65.6 46.7 46.7 77.3

Reval and disposal of assets -17.2 -24.0 0.0 0.0
Total change in working capital -8.8 -50.4 -30.9 5.7
Cash flow from operations 7.5 -19.7 15.9 77.3
Cash flow from investing -49.7 14.2 -15.0 -15.0
Dividends (paid) -21.5 -17.4 -17.4 -21.7
Cash flow from financing -34.8 2.8 41.7 -40.7
Opening balance 395.0 325.3 322.5 365.2
Change in cash -77.0 -2.7 42.7 21.6
Ending balance 325.3 322.5 365.2 386.7

KEY RATES & RATIOS FY16 FY17 FY18F FY19F

EPS (S-cents) 4.4 2.6 3.2 5.2

NAV per share (S-cents) 41.2 42.2 44.1 47.8
PER (x) 12.1 20.4 16.9 10.2
P/NAV (x) 1.3 1.3 1.2 1.1
Gross profit margin (%) 21.1 24.1 25.0 25.0
Net profit margin (%) 13.7 12.7 21.8 16.4
Net gearing (%) 79.7 109.3 111.4 98.9
Dividend yield (%) 3.1 1.8 2.7 3.4
ROE (%) 10.8 6.2 7.2 11.0
ROA (%) 3.6 2.1 2.4 3.8

Sources: Company, OIR forecasts

Company financial highlights

 OCBC Investment Research
Singapore Equities

SHAREHOLDING DECLARATION:

The analyst/analysts who wrote this report holds/hold NIL securities in the above-mentioned Company.

DISCLAIMER FOR RESEARCH REPORT

This report is solely for information and general circulation only and may not be published, circulated,
reproduced or distributed in whole or in part to any other person without the written consent of OCBC
Investment Research Private Limited (“OIR” or “we”). This report should not be construed as an offer or
solicitation for the subscription, purchase or sale of the securities mentioned herein or to participate in any
particular trading or investment strategy. Whilst we have taken all reasonable care to ensure that the
information contained in this publication is not untrue or misleading at the time of publication, we cannot
guarantee its accuracy or completeness, and you should not act on it without first independently verifying its
contents. Any opinion or estimate contained in this report is subject to change without notice. We have not
given any consideration to and we have not made any investigation of the investment objectives, financial
situation or particular needs of the recipient or any class of persons, and accordingly, no warranty whatsoever
is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of
the recipient or any class of persons acting on such information or opinion or estimate. You may wish to seek
advice from a financial adviser regarding the suitability of the securities mentioned herein, taking into
consideration your investment objectives, financial situation or particular needs, before making a commitment
to invest in the securities. In the event that you choose not to seek advice from a financial adviser, you should
consider whether investment in securities and the securities mentioned herein is suitable for you. Oversea-
Chinese Banking Corporation Limited (“OCBC Bank”), Bank of Singapore Limited (“BOS”), OIR, OCBC
Securities Private Limited (“OSPL”) and their respective connected and associated corporations together with
their respective directors and officers may have or take positions in the securities mentioned in this report and
may also perform or seek to perform broking and other investment or securities related services for the
corporations whose securities are mentioned in this report as well as other parties generally.

The information provided herein may contain projections or other forward looking statements regarding future
events or future performance of countries, assets, markets or companies. Actual events or results may differ
materially. Past performance figures are not necessarily indicative of future or likely performance.

Privileged / confidential information may be contained in this report. If you are not the addressee indicated in
the message enclosing the report (or responsible for delivery of the message to such person), you may not
copy or deliver the message and/or report to anyone. Opinions, conclusions and other information in this
document that do not relate to the official business of OCBC Bank, BOS, OIR, OSPL and their respective
connected and associated corporations shall be understood as neither given nor endorsed.

RATINGS AND RECOMMENDATIONS:

- OIR’s technical comments and recommendations are short-term and trading oriented.
- OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment
horizon.
- As a guide, OIR’s BUY rating indicates a total expected return in excess of 10% based on the current price;
a HOLD rating indicates total expected returns within +10% and -5%; a SELL rating indicates total expected
returns less than -5%.
- For companies with market capitalisation of S$150m and below, OIR’s BUY rating indicates a total expected
return in excess of 30%; a HOLD rating indicates total expected returns within a +/-30% range; a SELL rating
indicates total expected returns less than -30%.

Co.Reg.no.: 198301152E

Carmen Lee
Head of Research
For OCBC Investment Research Private Limited

Published by OCBC Investment Research Private Limited

Published by OCBC Investment Research Pte Ltd

Important disclosures