All abuzz over 'landlord king' as shares jump 8%

[reporter2]

http://www.straitstimes.com/business...-shares-jump-8

All abuzz over 'landlord king' as shares jump 8%

Mar 3, 2017

Lee Xin En


Shares of low-profile property developer Bukit Sembawang soared almost 8 per cent yesterday after DBS Bank issued a report, crowning it the "Landlord King".

The counter jumped 7.84 per cent to close at $5.23 yesterday as investors absorbed the report.

More than 808,000 shares changed hands - roughly nine times its average daily trading volume since last February.

The busy trade came despite the firm reporting a 78 per cent slump in third-quarter earnings last month to $5.4 million, as revenue slumped 75.6 per cent to $10.4 million.

The DBS report noted that the rubber company turned property developer has one of the largest tracts of freehold land, which used to be land for its rubber plantation.

About 75 per cent of its more than 2.8 million sq ft landbank is undeveloped and zoned for landed properties, largely in Ang Mo Kio, Seletar and Sembawang, wrote DBS analysts Derek Tan and Rachel Tan in the report. This would make the company an attractive takeover target amid limited land supply, with developers hungry for land.

The report said the company's major shareholder, the Lee family of OCBC Bank, owns 44 per cent and could be in the mood for "divestment", given their history of similar moves, notably Fraser & Neave and Asia Pacific Breweries in 2012.

Mr Tan told The Straits Times that the quick rise in stock price could be a result of talk in the market about the potential mergers in the developer space, for the likes of companies such as United Engineers.

Savills Singapore research head Alan Cheong noted a re-rating of property stocks recently in the stock prices of Wheelock Properties, Far East Orchard and Wing Tai.

He said that the analyst report could have "kick-started" the appetite of the market.

"People are sick of listening to the bearish storylines of property. They are finding resilience in property prices," he said, adding that he believes property prices have bottomed out.

The potential downside of the company was that it could have to pay qualifying certificate penalties for two of its projects - Paterson Collection and St Thomas Walk - if they are still unsold by the third quarter of 2017 and 2019 respectively.

But the analysts wrote that "a bulk sale of the projects could mitigate that risk".

[reporter2]

http://www.businesstimes.com.sg/comp...esearch-report

Bukit Sembawang Estates' shares soar on research report

Friday, March 3, 2017

by Claire Huang
[email protected]
@ClaireHuangBT


SHARES of Bukit Sembawang Estates surged on Thursday after a research house estimated that the property developer is worth S$7.55 a share, on the basis that the price of undeveloped land is marked to market.

On Thursday, DBS Group Research said in its report: "If we factor in its full development potential from its undeveloped landbank, excluding any potential uplift in plot ratio, revaluation net asset value could rise to S$10.35 a share."

The stock added 38 Singapore cents, or 7.8 per cent, to close at S$5.23 after hitting an intraday high of S$5.25. More than 800,000 units were traded for the day. DBS said the developer is the largest owner of land in Singapore with over 2.8 million sq ft of substantially freehold or 999-year-leasehold land. Of that, about 75 per cent is undeveloped raw land.

"In addition, the group's completed or close to completion high-end residential projects (85-unit Paterson Collection and 250-unit project at St Thomas Walk) in the core central region should do well if launched for sale given the positive sentiment in the luxury residential market currently."

It noted that the company's major shareholder, the Lee family of Lee Rubber and OCBC, owns a 44 per cent stake which could be for sale given that the family has been in a "divestment" mode in the past few years, making Bukit Sembawang an attractive prospect for investors looking to gain access to land in Singapore.

As at December 2016, the group has a net cash position S$383 million, an indication that close to one-third of its market capitalisation is backed by cash, DBS said.