Bukit Sembawang

Bukit Sembawang: CIMB note that FY12 core profit came in below at 89% of house full year and consensus on lower profit recognitions. House introduces FY15 and adjust FY13-14 on recognition timing. RNAV/target price (40% discount to RNAV) dips on higher operating costs factored in. Anchored by Luxus Hills FY12 was down 24% yoy on lower recognitions. FY13 earnings will continue to be propped up by pre-sales on completion of Luxus Hills phase 2 and Verdure later in the year. Sales at non-landed projects have tapered down, though substantially sold with 77%, 66%, 80% take-up at Skyline Residences, The Vermont and Paterson Suites respectively. Slower non-landed sales are offset by steady monetisation of landed landbank, with Luxus Hills Phase 5 largely cleared and Phase 6 due for launch at higher ASPs. We understand that construction has/will soon commence at Paterson 2 and St Thomas Walk sites, but see possibility of delays in launch timing. Co’s balance sheet continued to strengthen, ending FY12 with a $23m net cash position (3Q11:0.01x net gearing). FY12 div of 18c exceeded expectations at 26% of NPAT (vs. 18% in prior years), and 4% yield on current share price. With landbank replenishment less likely in the near term, house anticipate higher dividend payouts to be sustained on back of a stronger net-cash position in 2012/13 following cash collections from projects. At 0.9x P/BV, the stock trades below its 10-year historical average of 2.0x despite landed landbank booked at >$1b below estimated development value. Its steep 54% discount to RNAV (2008 levels) is unwarranted with stronger balance sheet this cycle.