Ho Bee has just announced its Q1 results for FY18 which was closely expected with no big surprise.
Rental income is the segment which I am monitoring closely and it continued its strong uptrend with a 6.1% year on year. This was due to the purchase of Lombard street which was reported in the Q4 of last year. If we compare quarter on quarter, it is stable at $37.7m, which was unchanged from previous quarter. This comes in at $150m annualized.
The sale of development properties is the swing factor here. In this quarter, sale of development properties come from the sale of the site in Gold Coast, Australia which the company reported a $2.6m gain on profits.
The share of profits from their associates in Shanghai continues to perform well, though it dropped 12.8% year on year. This doesn’t contribute to a cashflow until the associates declare and distribute dividends at the end of the year.
The main drop in the nopat this quarter is due to the absence of one-off divestment sale of investment property, which last year they did to sell Rose Court. Without these absence, nopat would be year on year stable.
The company makes 7.42 cents in earnings per share this quarter and is on course to repeat the same feats as last year. NAV increases higher this quarter to $4.79 from $4.70 in previous quarter.
The big wild card lies in their development sale of their Sentosa properties (Seascape & Turquoise) which they’ve started to market out in March at a psf of $2,170. The last revised down they wrote off in their book was done at $1,450, so the ASP of above $2k psf now should result in a gain once they’ve managed to sell it out.
The other interesting development is the EUR90m that they’ve invested in a European fund overseas where they are looking at a Munich development to be redeveloped into a Grade A office of more than 500,000 square feet. This reminds me of the back then Metropolis before it was completed.
It does also seems like there are many players venturing into the Europe right now, perhaps it’s a gem there in the making.
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