Wheelock Properties

Wheelock Properties: Announced 2Q11 results, which was below expectations. Rev at $67.6m, -61.8% yoy and flat qoq, while net profit at $37m, -55.7% yoy and -29% qoq.
Decrease in rev largely attributed to completion of Ardmore II and Orchard View in 2Q10, and lower rev recognition from Scotts Square based on progress of construction works in current period, although Gross margins improved at 66% vs 57% yoy.

Going forward, Grp tip rev and earnings to be enhanced by remaining profits on sold units at Scotts Square with TOP in 3Q11 and 100% of profits will be recognised on additional units sold at Orchard View. Co. on track to acquire 5 sites in Fuyang City early next yr, and tips Wheelock Place to continue generating positive recurring income with high occupancy at good rentals. Upon completion of Scotts Square, rental receipts will further contribute to annual recurring income.

Grp’s balance sheet remains strong, with net cash position of $770.7m, while at current price, valuations are compelling, with grp trading at 0.81x P/B vs peers average of 0.9x.
CIMB downgrades to Neutral from O/p, nothing that while value is underpinned by its large cash hoard, there is a seeming lack of lucrative acquisition opportunities locally while its high-end residential sales are not picking up. Given share-price outperformance against the other developers in the past three months, see better value elsewhere.