KSH

KSH: OCBC conducted an independent visit to Cityscape@Farrer Park yesterday and found that 61% (152 out of 250 total units) have been sold to date, up significantly from 22% sold as of end Jun 2012. After visually inspecting the construction site, we judged it likely that progressive recognition for Cityscape would begin in 2QFY13 and boost earnings (to be announced in mid Nov 2012) by an estimated $3.5m to S$4.5m. This would drive a substantial YoY increase over last year’s quarterly net profit of $5.2m. Since house upgraded KSH to a Buy on 21 Sep 2012, its share price has appreciated 31%. House still see significant upside at current price levels , however, against its fair value estimate of $0.50 (40% discount to RNAV). In particular, see the upcoming results as a postitive near-term catalyst, while the company’s fundamentals continue to strengthen as sales conversions continue at a healthy pace across its property developments.