Roxy Pacific

Roxy Pacific: 3Q12 net profit at $8.2m, -39% yoy, mostly due to the absence of fair value gains (~$9.6m) from Kovan Centre in 3Q11. Adjusting for this, net profit would be up 116%. Still OCBC views this as a marginal miss due to slower-than-expected revenue recognition from devt projects. Lowers FY12 net profit forecast by 9% to $50.4m. 3Q12 topline was $43.6m, -2% yoy, again marginally below OCBC’s expectations. For the hotel segment (Grand Mercure Roxy Hotel), 3Q12 ASP was mostly flat qoq at $200.20, while avg occupancy rates increased 3.8ppt qiq to 94.5$. Mgt stated a general policy to pay out at least 50% of operating profits from the hotel segment henceforth. Roxy’s devt projects showed healthy sales conversion in 3Q12, with the MKZ, Natura@Hillview and Nottinghill Suites coming up to 100%, 98% and 94% sold. OCBC expects 4 new launches by 1H13. The house notes mgt continues to show strong ability in seeking out and executing on accretive acq, but says most positives are already priced in at current levels, after the stock’s 42% gain since Mar ’12 (vs STI’s +1.7%). Downgrades to Hold with TP $0.54 (25% RNAV discount).