Hiap Hoe

Hiap Hoe: RHB-OSK note that according to the media, Ibis Novena, located at the corner of Balestier and Irrawaddy roads, was recently sold by the Kum family, who last yr was exploring the flotation of a hospitality trust that was subsequently called off. The transaction amount of $150m for the 241-room 3-star hotel translated to per key valuation of $622,000. The biggest hospitality player in the Balestier enclave is currently Hiap Hoe (HH)/Superbowl, who between them own 2 hotels, the 405-room Days Hotel and the 384-room Ramada Singapore, together with some 120,000 sf of commercial space at Zhongshan Park. Days Hotel is currently operational while Ramada Singapore is expected to commence business in 1H13. House have previously valued Ramada SG at $600,000/key and Days Hotel at $500,000 per key. With the latest transaction and taking into account recent valuations by other hospitality operators, house now raise valuation to $650,000/key for Ramada and $550,000/key for Days Hotel. This translates into a valuation uplift of $18m, or 4c/share, for Hiap Hoe. While house expect the recent round of cooling measures to impact on HH’s residential sales, its two major projects, Skyline 360° and Waterscape at Cavanagh, is currently 64% and 75% sold, respectively, with healthy pretax margin of over 40%. House revise development surplus estimate from $220m to $156m, primarily due to further sale recognition on presold projects and a longer sale period assumed for unsold units. RHB-OSK raises TP to $0.79, as house RNAV for the stock now stands at $1.32/share and reduce discount from 50% to 40% given the higher commercial property weighting and limited residential exposure given healthy presales.