Roxy Pacific: OCBC upgrades to Buy and raises TP to $0.62 from $0.45 previously. House note that inFeb 12, ROXY had a strong month of sales. Treescape is now 78% sold at a median price of S$1.4K psf. Also, sales at Nottinghill Suites picked up with an additional 16% sold in Feb 12 (now 60% sold).
Currently, judge that ROXY warrants a lower RNAV discount at 30%, vs 40% previously, due to its more favorable risk profile. First, see limited risk from long-term residential uncertainties on existing landbank as most remaining sites would likely be launched in 1H12. Second, re from FY12-15 are underpinned by S$599m of progress billings (4.5x FY11 development revenues) from already sold units. Finally, a significant portion of value (46% of RNAV) is anchored on Grand Mercure Roxy Hotel, which house value at a fairly conservative 460k per room.
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