Sing Land

Sing Land: Maybank KE upgrades to Buy from hold, lifts TP to $8.20 from $6.75, on narrower 30% discount to RNAV from 40% With the recent series of privatization deals, there is now a higher probability of privatization at SingLand. UIC holds a 79.8% stake in SingLand, while Silchester (a long term institutional shareholder) holds another 8.2%. This effectively leaves SingLand’s free float close to the 10%-mark, below which it will lose its listing status. With SingLand still trading at a 40% discount to RNAV, UIC may finally pull the trigger and launch a privatisation bid, funded by the low current borrowing costs. Assuming a bid of $8.80/sh corresponding to SingLand’s 10-yr average PBR of 0.75x, it will cost UIC $733m to buy the shares it does not already own. Fundamentally, while SingLand remains predominantly a commercial landlord, mgt is actively navigating the headwinds. As the outlook for the Singapore office sector remains muted, and the hotel sector also appears to have peaked, SingLand has turned to residential development by acquiring 4 sites in 2012. The sites have a combined attributable GFA of 788.4k sf and an estimated gross development value (GDV) of $1.3b. At a blended pre-tax margin of ~18%, margins are decent. After sluggish starts, both The Trizon and Archipelago (50% stake) are now substantially sold at 92% and 99% respectively. Maybank KE expects the progressive recognition of income from Archipelago to mitigate possible mildness in SingLand’s office rental income, with more development profits from FY14 onwards as the four newly acquired sites start to contribute.