Singhaiyi

Singhaiyi: 3QFY15 net profit slipped 26.7% y/y to $2.5m on the back of 69.4% plunge in revenue to $4.0m. Property development income is absent after the completion of Charlton Residences in FY2014.

The recurring portion of revenue from rental and management fees were mostly stable, affected only by FX translation losses from rents on the two US properties Tri-County Mall (TCM) and 5 Thomas Mellon Circle (5TMC)

Other income increased $3.9m (3QFY15 $4.5m vs 3QFY14 $0.6m) due to investment income and FX gains, while finance costs surged $1.8m (3QFY15 $1.9m vs 3QFY14 $0.1m) due to the July 2014 issuance of $100m notes at 5.25% interest from its $500m Multicurrency Debt Issuance Programme.

Looking ahead, the company expects TOP of its 88% sold Pasir Ris One DBSS in March 2015, allowing it to book profits in 4QFY15. CityLife @ Tampines EC is on track to receiving TOP in 2H15. As such, there should be earnings visibility through 2015.

Beyond 2015, however, earnings are hazier. City Suites (rebranded from CosmoLoft, expected TOP July 2016) may be re-launched this year following disappointing sales on its initial launch. Another EC project, The Vales at Anchorvale Crescent, is scheduled for launch in 3Q15.

In the U.S., SHY intends to rebrand TCM into a lifestyle mall through asset enhancement initiatives and redevelop 5TMC into a residential property, which will remove a portion of its recurring rental income in the meantime. Meanwhile, sales of completed units at Vietnam Town, if any (none in 3QFHY15), may add to property development income

Management guides positivity in long-term prospects of Singapore and U.S. property markets and seeks to diversify its earnings through yield-accretive investment opportunities.

Trading at 1.0x P/BV, SHY has relatively demanding valuations compared to its property development and investment peers.