MCL Land has emerged as a top bidder for a 99 yr leasehold residential site at Hougang Ave with its S$207.5m bid. Price will work out to S$456 psf ppr, which was about 10% higher than the 2nd highest bid from Frasers Centrepoint. Assuming a construction cost of $280 psf and an all-in breakeven of about $780 psf, the new project is likely to be priced at about $900 psf. This translates to a pre-tax margin of about 13%.
Our property analyst estimates that this will add about 9 cents/share to MCL Land's current RNAV of $3.59. The closest comparable would be Kovan Residences, which perhaps is in a better location beside the Kovan MRT Station, and is transacting in the secondary mkt at about $950 psf in recent mths. After securing this site, MCL Land would have replenished its landbank to about 1m sq ft in GFA. The stock trades at about 49% discount to its RNAV and supported by a FY10F dividend yield of 6.9%.
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