Heeton / KSH / Tee

Heeton / KSH / Tee : Sky Green condo will be holding its VVIP preview estimated 18 Oct, Thurs. The premarketing is going on till launch date. Understand ~60 cheques have been collected to date, vs total of 176 units at the devt. Ownership of the project is split as follows, Heeton 40%, KSH 25%, Tee 20% and Zap Piling 15%. Sky Green sits on a 66,932 sf freehold land parcel located on MacPherson Road. It has a 2.1 plot ratio, which allows the new devt to be built up to 24 storeys. Max gfa of the site is 140,557 sf. Avg purchase price of the site works out to ~$750 psf ppr, incl devt charge. Indicative pricing for units is ~$1600 psf, which compares with the $1800 psf pricing for the freehold Katong Regency just 2 Circle MRT line stops away. Based on an est construction & mktg cost of $350 psf ppr, a back of envelop calculation suggests project net profit could be as high as $70m, with project net margins as high as 36%. Heeton’s net profit contribution would be an est $28m, vs FY11 net profit of $25.5m KSH’s net profit contribution would be an est $17.5m, vs FYMar12 net profit of $20.4m. Tee Int’l net profit contribution would be an est $14m, vs FYMay12 net profit of $19.1m. This is not the only partnership btwn the 3 property developers. Recent projects as follows -- The consortium comprising Heeton, KSH, Tee, Futuris and Zap will redevelop the Sam Leong Mansion site acq for $40.3m. The consortium btwn Heeton, KSH and Zap will redevt the Whitley Road site acq for $31m. The consortium comprising Heeton, KSH, Zap and Oxley will redevelop the freehold commercial building at 11 King Albert Park acq for $150m. Share prices of Heeton, KSH, Tee Int’l have recently hit 52 wk highs, an indication positive price momentum. Recall we have been highlighting that the smaller property developers have been forming consortiums to reduce individual project risk, allowing them to participate more aggressively in the property upcycle.