Far East Orchard

Far East Orchard: good set of FY12 results, above Street estimates. Revenue at $140m (-52% yoy), as previous yr’s revenue was boosted by recognition from sales of The Floridian. This was despite maiden contribution from the newly acquired NMC/NSC units and hospitality mgt business of $5m and $5.3m respectively in 2H12. Net profit was $73m (-39% yoy). The co declared final div of 6 cts, double yoy. On outlook, FEOR’s property devt business is expected to ease, with the TOP of The Floridian. Almost 94% of units in euHabitat have been sold, and the bulk of revenue is expected to be progressively recognised in FY13-14. The Bassein Road JV is in the early stage of development and no recognition of revenue is expected until FY14. SBF Centre could be the next share price catalyst. FEOR has started registration of interest for SBF Centre (20% stake), with sales launch targeted in 1Q13. The 31-storey SBF Centre is a 99-year leasehold mixed-use commercial devt with dual frontage on Robinson Road and Cecil Street. SBF Centre will contain 48 medical suites located on the 3rd and 5th levels, with sizes ranging from 665 to 1,290 sf. There are 192 office units on the 10th-28th levels, with unit sizes of 560 to 1,475 sf. The top three levels contain large floor plates office units of 10,890 sf each. Prices of the strata office units will start from $2,400 psf, while those of the medical suites will start from $3,500 psf. Expect strong sales momentum on the back of keen interest in strata commercial space lately (Alexander Central, Paya Lebar Square, PS100 etc.). Armed with fresh dry powder post-restructuring, FEOR is also in a in a good position to capitalize on growth opportunities ahead. Expect to see more involvement from FEOR and its partners in GLS biddings moving forward. Maybank Kim Eng keeps at Buy with TP $2.50, with valuations backed by the co’s net cash of $1.11.