20 NOVEMBER 2013 SECTOR REPORT
SINGAPORE DEVELOPERS
DETERIORATING FROM STABLE
2014: Shift towards home oversupply begins n
The shift towards oversupply has begun We are turning more cautious on the Singapore residential market given oversupply risk. We expect the era of supply shortage to end by 2015, with pent-up demand easing and completed supply set to reach record high levels in the coming two to three years. Unsold inventory has been rising since 3Q13 as developers race to launch products ahead of home price weakness. Home demand growth has been declining since its peak in 2012 due to credit tightening and other restrictions from the seven cooling measures. Looking into 2014-15, we expect demand growth to stay under pressure due to potential interest rate increases and slower economic and population growth.
n
Margin squeeze from higher land cost Near term, developers are facing a margin squeeze from lower home prices and higher land costs. Competition for land is intense, driven by restocking needs, strategic bidding practices (eg, to protect existing sites), and new players entering the land market. Based on our land market analysis, land costs for developers in the sector accounted for 57% of development costs in 2013 on average, up from 46% in 2008. We estimate sector net margins could fall from c24% in 2012 to c10% in 2013/14, assuming launch prices stay flat. The overheated land market is forcing out local developers that are finding it difficult to restock land. Their success rate in winning sites has fallen from 23% in 2010 to 11% in 2013. This could slow developers’ earnings momentum.
n
We expect home prices to fall 15% by 2015; REDUCE CIT, BUY CAPL We expect new home volumes to fall 28% in 2013, and another 7% by 2015. With volumes typically leading prices, we expect home prices to fall 15% by 2015 (we previously forecast a fall of 10%), as unsold inventory rises. To reflect our new home price assumptions, we cut our estimates for FY14-15 EPS by 6-10% and RNAV by 2-6%, and cut our TPs by 9% on average. Stock prices also tend to lead home prices. We believe home prices will peak in 2013 and then fall. We downgrade CIT to REDUCE (from Hold) given its proxy status and large exposure to the Singapore residential market. We downgrade KPLD to HOLD (from Buy) given recent outperformance. We maintain CAPL at BUY, given trough valuations, and FNN at HOLD. We still favour Singapore developers with entrenched and diversified overseas exposure, along with asset recycling opportunities.
BNPP recommendations Company
BBG code
Rating
Share price
Target price
(SGD)
(SGD)
Upside/downside (%)
CapitaLand
CAPL SP
BUY
3.10
3.75
+20.9%
Keppel Land
KPLD SP
HOLD
3.70
3.92
+5.8%
FNN SP
HOLD
5.77
6.02
+4.3%
CIT SP
REDUCE
10.24
8.75
-14.5%
Fraser & Neave City Developments Source: BNP Paribas
Chong Kang Ho, CFA
[email protected] +65 6210 1956
Our research is available on Thomson One, Bloomberg, TheMarkets.com, Factset and on http://eqresearch.bnpparibas.com/index. Please contact your salesperson for authorisation. Please see the important notice on the back page.
PREPARED BY NON-US BROKER-DEALER(S): BNP PARIBAS SECURITIES (SINGAPORE) PTE LTD, CO. REG. NO. 199801966C THIS MATERIAL HAS BEEN APPROVED FOR U.S DISTRIBUTION. ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES CAN BE FOUND AT APPENDIX ON PAGE 51
Chong Kang Ho, CFA
Singapore Developers
Investment thesis
Stock implications
We are turning more cautious on the Singapore residential market given oversupply risk. We expect the era of supply shortage to end by 2015, due to a combination of rising completed supply and easing pent-up demand. Unsold inventory has risen since 3Q13 as developers race to launch products ahead of home price weakness. This also reflects declines in demand due to the effects of the seven cooling measures. Looking into 2014/15, demand growth could stay under pressure given potential interest rate increases and slower economic growth, as well as tighter immigration policies.
We expect volumes to fall 28% in 2013 and another 7% by 2015, and home prices to fall 15% (we previously forecast a fall of 10%). Our trend analysis shows volumes typically track ahead of home prices. To reflect our new home price assumptions, we cut our estimates for 2013-15 EPS by 610% and RNAV by 2-6%, and cut out TPs by 9% on average. Stock prices tend to lead home prices. We believe home prices have peaked in 2013 and will fall. We downgrade City Dev to REDUCE (from Hold), given its proxy status and large exposure to the Singapore residential market. We downgrade Keppel Land to HOLD (from Buy) given its recent outperformance. We maintain CapitaLand at BUY, on trough valuation, and FNN at HOLD. We still favour Singapore developers with entrenched and diversified overseas exposure.
Another challenge faced by developers is margin squeeze from higher land costs. The competition for land is intense, driven by restocking needs, strategic bidding practices (eg, to protect existing sites), and new players entering the land market. Land costs for developers in the sector accounted for 57% of development cost in 2013, up from 46% in 2008. We estimate net margins could fall from c24% in 20112 to c10% in 2013/14, assuming launch prices stay flat. One other implication of the overheated land market is local developers being forced out of the market as they find it difficult to restock land. Their success rate at winning sites has fallen from 23% in 2010 to 11% in 2013. This could slow developers’ earnings momentum.
CONTENTS
Risks to our sector view Our cautious view may not materialise in the event that: 1) interest rates stay low for a prolonged period, 2) cooling measures are reversed, 3) pro-immigration policies are renewed, 4) economic recovery turns out stronger than expected, thereby driving up investment sentiment, and 5) completion of supply is delayed due to a shortage of construction workers.
By analysing completed supply with demand, we estimate pent-up demand could be fully met by 2015, with the system tilting to oversupply from 2016
Entering an era of oversupply from 2016E ............................... 3 Demand: cooling measures, rate hikes & slow economic growth ............................................................................................. 5
Cumulative over/ undersupply (RHS) (URA home (excess units) URA Property price index (LHS) Tilting towards px index) oversupply again 80,000 250 Era of cumulative oversupply 60,000 200 40,000
History suggests that volumes lead prices............................... 8
150
We expect home prices to fall 15% by 2015 .......................... 10
100
Record-high land prices are not helping ................................ 12
50
Stock profiles – landbank and unbilled sales ........................ 21
0
Investment summary .................................................................. 27 Company reports ......................................................................... 33
0 (20,000) (40,000) (60,000)
Era of cumulative undersupply
(80,000)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E
How do stock prices react at home price turning points? .. 26
20,000
Sources: URA; HDB; Singapore Department of Statistics; BNP Paribas
Our implied net margin model continues to show aggressive land bids in 2H13, given narrow margins (Expected dev margin buffer) 40% 30%
+1SD=18.0%
20% Mean=12.1%
10% 0%
Aggressive bid Territory
-1SD=6.2%
(10)%
19-Jul-13
31-Mar-13
26-Nov-12
10-Aug-12
21-May-12
13-Feb-12
21-Nov-11
15-Aug-11
31-Dec-10
12-May-11
1-Oct-10
15-Jun-10
9-Sep-09
19-Mar-10
10-Sep-08
8-Jan-08
30-Sep-07
1-Jan-07
(20)%
As of 14 November 2013. Sources: URA; HDB; company data; BNP Paribas NB: Net margins are based on assumptions of winner developers' all-in cost, versus nearby launch prices
2
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Entering an era of oversupply from 2016E Supply rising, pent-up demand easing In our Singapore residential supply and demand analysis, we estimate that pent-up demand began in 2007, peaked in 2012 and will ease from 2013. We expect pent up demand to be fully eradicated by 2015. With completed supply set to reach recordhigh levels in the next two to three years, we could enter an era of oversupply from 2016E, leading to a rise in vacancy rates. It took nine years to fully meet pent-up demand from 2007 to 2015, by our estimates. Similarly, we believe it could take a similar number of years for the oversupply cycle to play out and be absorbed by the end-market. This could put pressure on home prices, unless tightening policies reverse or the economy turns stronger than expected.
EXHIBIT 1: By analysing completed supply with demand, we estimate pent-up demand could be fully met by 2015 with the system tilting to oversupply from 2016 (URA home px index)
Cumulative over/ undersupply (RHS) URA Property price index (LHS) Tilting towards
(excess units)
oversupply again
250
Era of cumulative oversupply
80,000 60,000
200
40,000 20,000
150
0 100
(20,000) (40,000)
50
Era of cumulative undersupply
(60,000) (80,000)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E
0
Sources: URA; HDB; Singapore Department of Statistics; BNP Paribas
EXHIBIT 2: Tracking completed supply by year (units)
Net increase in Private stock (incl. EC)
Net increase in Public HDB stock
45,000 40,000 35,000
Total real home demand p.a. at ~25k (14k for public + 11k for private + EC)
Rising completed supply
30,000 25,000 20,000 15,000 10,000 5,000 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
(5,000)
Sources: URA; HDB; Singapore Department of Statistics; BNP Paribas; Real home demand of ~25K units is based on assumption of new housing formations or marriages per year
3
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 3: Large-scale shortage of housing completions in 2006-2010, when the population boomed in Singapore, led to significant pent-up demand and surging home prices Period
Public (HDB)
Private
Total
1991-1995
17,310
5,212
22,521
1996-2000
29,446
10,287
39,733
2001-2005
10,284
7,813
18,097
2006-2010
2,129
5,958
8,087
2011-2012
13,314
9,689
23,003
2013-2016E
27,790
23,326
51,115
Sources: URA; HDB; Singapore Department of Statistics; BNP Paribas
Signs of unsold inventory build More developer launches are to be expected given record-high land supply since 2010. We see developers racing to launch projects to avoid being caught in a rising supply and weaker home price environment. Moreover, only projects priced at reasonable levels or discounts are likely to enjoy higher take-up. As a result, we expect unsold inventory of units to rise. After declining for four quarters, unsold inventory has been building up since 3Q13.
EXHIBIT 5: Unsold inventory breakdown – mass market inventory rising
Sources: URA; HDB; BNP Paribas
4
3,000
15
2,000
10
1,000
5
0
0
3Q06
28
3Q13
20
1Q13
4,000
3Q12
25
29
1Q12
5,000
3Q13
2Q12
1Q11
4Q09
3Q08
2Q07
1Q06
4Q04
3Q03
2Q02
1Q01
4Q99
0
6,000
30
3Q11
50
35
1Q11
100
7,000
3Q10
150
43
40
1Q10
200
Mass
45
3Q09
8,000
Mid end
1Q09
9,000
Unsold inventory past the peak
3Q08
250
(units)
High end
50
3Q07
(index)
(%)
1Q07
Unsold inventory units (RHS) Home price index (LHS) 2 per. Mov. Avg. (Unsold inventory units (RHS))
1Q08
EXHIBIT 4: Unsold inventory rising again from 3Q13
Sources: URA; HDB; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Demand: cooling measures, rate hikes & slow economic growth On the demand side, we identify three sets of demand pressures – cooling measures, prospects of higher interest rates and slower economic growth.
Cooling measures are taking their toll The impacts are being felt from the seven rounds of cooling measures (2009-2013). In our view, the recent January 2013 measure has been effective: §
Additional buyer’s stamp duty (ABSD) of 7% (on top of the basic 3%) was imposed on Singaporeans buying second homes, 10% on permanent residents, and 15% on foreigners.
§
Credit was also tightened, eg, loan-to value ratios were reduced to 50% for Singaporeans applying for a second home loan.
§
The introduction of a total debt servicing ratio (TDSR) by the MAS in June 2013 dampened demand even further. The TDSR required mortgage loan applications to consider all debt obligations (eg, loans for homes, cars, credit cards and renovations) with a maximum ratio of 60%. This has had the effect of restricting potential buyers’ borrowing capacity and driving many to adopt a cautious approach towards making new purchase commitments. Sales volumes declined as a result.
EXHIBIT 6: New sales trend – the seven cooling measures since 2009 led to a downtrend in monthly new sales, since its peak in 1Q12 (units)
Sale in OCR
Sale in RCR
Sale in CCR
EXHIBIT 7: Resales trend – monthly resales or secondary sales have been trending down since 2009 (units) 2,500
3,500 3,000
2,000
2,500 1,500
2,000 1,500
1,000
1,000 500
Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 2012 Apr-12 Aug-12 Dec-12 Apr-13 Oct-13
0
Sources: URA; HDB; BNP Paribas ; CCR = Core Central Region, or high-end, RCR = Rest of Central Region, or mid-end, OCR = Outside Central Region, or mass market
5
0
Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
500
Sources: URA; HDB; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Prospects of higher interest rates – the next test Sales volumes could moderate further in 2014-15 if interest rates rise. Higher interest rates increase the cost of borrowing and so lower home affordability.
EXHIBIT 8: Affordability ratio – mortgage loans as a percentage of monthly household income creeping up (for private mass market segment) (mortgage/ income) 90
West region
EXHIBIT 9: Sensitivity analysis in a rising interest rate environment – impact on mortgage to income ratio ------------------------- Home price changes ------------------------
East region Mortgage rate
10%
5%
0%
-5%
-10%
0.30%
41.1
39.3
37.4
35.5
33.7
0.80%
44.4
42.3
40.3
38.3
36.3
1.30%
47.7
45.5
43.4
41.2
39.0
60
1.80%
51.2
48.9
46.5
44.2
41.9
50
2.3%
54.8
52.3
49.8
47.4
44.9
2.8%
58.6
55.9
53.3
50.6
47.9
3.3%
62.5
59.7
56.8
54.0
51.1
Northeast region
North region
80 70
40% level 40 30 20
Sources: URA; HDB; Department of Singapore Statistics; BNP Paribas
Sources: URA; HDB; Department of Singapore Statistics; BNP Paribas
EXHIBIT 10: Ratio of private home prices to household income also creeping up
EXHIBIT 11: Sibor trend and 10-year bond yield trend
(x)
(%)
14
7
13
SG 10Y bond yield (LHS)
3M Sibor (RHS)
6
12
5
11 4
10 3
9
2
8
6
0
Sources: URA; HDB; Department of Singapore Statistics; BNP Paribas
2Q98 1Q99 4Q99 3Q00 2Q01 1Q02 4Q02 3Q03 2Q04 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11 4Q11 3Q12 2Q13
1
1Q95 4Q95 3Q96 2Q97 1Q98 4Q98 3Q99 2Q00 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 3Q11 2Q12 1Q13
7
Sources: CEIC; Bloomberg
The authorities are concerned about the high leverage of Singaporean households, and the possible impact from higher interest rates. At the release of MAS’s 2012 annual report in July 2013, MD Ravi Menon highlighted that the central bank estimated 5-10% of households were “over-leveraged”, defined as principal and interest costs on household debt being equivalent to 60% or more of monthly income. He noted that if interest rates were to rise by 300bp, 10-15% of households would be over-leveraged. This partly explains the authorities’ move to introduce the pre-emptive TDSR in June 2013 as an effort to instil further discipline and prudence in household borrowing. Using the MAS definition of TDSR, our Asean economists estimate the average Singapore debt service for resident households was 43% of gross monthly income in 2Q13. They estimate a 100bp rise in mortgage rates would lead to a 45% debt service level, and a 300bp rise would lead to a 50% debt service level. See our Asean economics report “Singapore: uniquely constrained”, 30 Sep 2013. A Bank of Canada study in 2008 found households to be “financially vulnerable” (ie, likely to default on obligations) when debt service exceeds 40% of gross income.
6
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 12: Household debt as percentage of GDP is rising (%) 100
Mortgage loans
EXHIBIT 13: Home prices versus GDP per capita GDP per capita (LHS) House price index (RHS)
(SGD) 70,000
Personal loans
90
(index) 250
60,000
200
80 70
50,000
60
40,000
150
40
30,000
100
30
20,000
50
20
50
10,000
10 0
Sources: URA; HDB; Department of Singapore Statistics; MAS; BNP Paribas
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13
0
Sources: URA; HDB; Department of Singapore Statistics; World Bank; BNP Paribas
Slower economic and population growth The authorities are targeting population growth to slow to 1.1-1.5% pa in order to meet its 6.9m target population by 2030, based on its Population White Paper published in January 2013. This compares with a 2.5% CAGR in 1980-2010. However, the authorities might target even lower population growth if to balance public feedback for a less crowded Singapore against economic growth. Slower population growth could lead to even weaker home demand.
EXHIBIT 14: Population growth could come in lower than the guided CAGR of 1.1-1.5% Historical
(%)
EXHIBIT 15: GDP growth y-y % (y-y %)
Projected
Average = 2.5%
30
3.0
25 2.5
20 15
2.0
10
1.5
2.8 2.3
1.0
1.3 -1.6 2.5
5 1.1 - 1.4
0 (5)
1.5
(10)
0.5
Sources: Department of Singapore Statistics; National Talent and Population Department; Population White Paper (Jan 2013)
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
2000-30
1986
2010-20
1984
2000-10
1982
1990-00
1980
1980-90
1978
1970-80
1976
(15) 0.0
Sources: Department of Singapore Statistics; BNP Paribas
EXHIBIT 16: Correlation studies - Home prices are more sensitive to GDP growth and 3M Sibor (2002-2012) than other property segments in Singapore GDP (y-y %) : 1995-2012
GDP (y-y %): 2002-2012
Home price (y-y %)
0.67
0.69
Office prices (y-y%)
0.60
0.49
Retail prices (y-y%)
0.60
0.53
Industrial prices (y-y%)
0.47
0.19
3M Sibor (%): 1995-2012
3M Sibor (%): 2002-2012
Home price index
(0.31)
(0.50)
Office price index
0.30
(0.42)
Retail price index Industrial price index
0.21
(0.37)
(0.00)
(0.49)
Sources: URA; HDB; Bloomberg; CEIC; BNP Paribas
7
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
History suggests that volumes lead prices Our trend analysis suggests residential volumes and values tend to lead home prices by about two quarters.
EXHIBIT 17: Based on past patterns, volume unit sales trend is a leading indicator for home prices (y-y %)
Home px (LHS)
(y-y %)
Vol (RHS)
400 350 300 250 200 150 100 50 0 (50) (100) (150)
40 30 20 10 0 (10) (20) (30)
Home px (LHS)
Transaction Vol (RHS)
(y-y %)
50
500
40
400
30 300
20 10
200
0
100
(10)
0
(20) (100)
(30) (40)
1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
(40)
(y-y %)
(200)
1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
50
EXHIBIT 18: Transaction value trend is also a leading indicator for home prices
Sources: URA; HDB; BNP Paribas
Sources: URA; HDB; BNP Paribas
On the other hand, rentals tend move in tandem with home prices with little time lag. Thus rentals may not serve as an effective indicator of home prices, in our view. We note further that rentals and home prices decline whenever vacancy rates go above 8%. Vacancy rates are currently at 6%.
EXHIBIT 19: Home price and rental trends move in tandem, with little time lag (q-q %)
Home px (LHS)
Rent (RHS)
(SGD/sqft)
20 15
EXHIBIT 20: Home prices and rentals decline by 20-25% y-y whenever vacancy rates go above 8% (currently at 6%) (%)
Vacancy rate (LHS)
15
12
Home px (RHS)
10
10
Rent (RHS)
(y-y %) 50 40 30
10 5 0 (5)
5
8
0
6
(5)
4
(10)
2
(15)
0
20 10 0 (10)
(10)
1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
(20)
Sources: URA; HDB; BNP Paribas
(30) (40)
1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
(15)
(20)
Sources: URA; HDB; BNP Paribas
When home prices have fallen by 20% or more Singapore home prices have fallen by 20% or more four times in the past 30 years. The approaching oversupply cycle, in our view, could be similar to the 2Q00-1Q04 oversupply cycle. At that time, notwithstanding the dot.com bubble bursting and SARS, home prices suffered a long drawn effect from oversupply, falling 20% over 15 quarters.
8
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 21: Upcoming cycle could mirror that in 2Q00-1Q04 when home prices suffered a long drawn decline spanning 15 quarters Period
Home price declines
Duration
(%)
(Qtr)
(36)
10
Economic slowdown
4Q83 to 2Q86
Comments
2Q96 to 4Q98
(45)
10
Asian financial crisis
2Q00 to 1Q04
(20)
15
Dot.com bust, SARS, long drawn oversupply
2Q08 to 2Q09
(25)
4
Global credit/ Lehman crisis
Sources: URA; HDB; BNP Paribas
EXHIBIT 22: Singapore home price index and rental index, likely to have peaked in 2013, and could fall from 2014 (index)
Resi. price index
Resi. rental index
EXHIBIT 23: Singapore home price index breakdown by mass market, mid-end and high-end (index)
CCR
RCR
OCR
240
240 220
Asian financial crisis
200
Tech bubble, 911, SARS
Lehman crisis
220 200
180 180
160 140
160
120
140
100
120 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
80 100 2Q04 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13
Sources: URA; HDB; BNP Paribas
Sources: URA; HDB; BNP Paribas
EXHIBIT 24: Private and HDB resale prices are highly correlated; HDB resales prices fell for the first time in nine quarters in 3Q13 by 0.9% q-q
EXHIBIT 25: Existing stock and vacancy rates
(index)
Private residential
(units)
HDB Resale
250
(%)
Total avaiable units (LHS) Total vacancy (RHS)
350,000
12
300,000
200
10
250,000 150
8
200,000 150,000
100
6.1%
6.5% 4.9%
100,000 50
2
0
0
1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
1Q90 1Q91 1Q92 1Q93 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
9
4
50,000
0
Sources: URA; HDB; BNP Paribas
6
5.7%
Sources: URA; HDB; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
We expect home prices to fall 15% by 2015 We expect new home volumes to fall 28% in 2013, and another 7% by 2015. Buying sentiment could be impacted by a combination of cooling measures, sales fatigue, easing of pent-up demand and the effects of rising inventory. With volumes typically leading prices, we expect home prices to fall 5-7% in 2014 and another 10% in 2015 (a total of 15% by 2015; we previously forecast a fall of 10%), as unsold inventory rises.
EXHIBIT 26: We expect volumes to decline 28% in 2013, followed by 7% by 2015 Subsale
(units)
Resale
New sale
25,000 20,000 15,000 10,000 5,000
2015E
2014E
2013E
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
Sources: URA; HDB; BNP Paribas estimates
EXHIBIT 27: We forecast home prices and rents will fall 15% by 2015, with vacancy rates rising from 5.4% in 2012 to 7.5% in 2015 (SGD/sq ft)
2008
2009
2010
2011
2012
2013E
2014E
2015E
- Luxury
2,000
2,250
2,800
2,780
2,800
2,800
2,604
2,344
- Prime
1,300
1,300
1,600
1,670
1,700
1,700
1,581
1,423
670
720
870
940
1,000
1,035
983
885
- Luxury
13
24
(1)
1
0
(7)
(10)
- Prime
0
23
4
2
0
(7)
(10)
- Mass market
7
21
8
6
4
(5)
(10)
Home prices
- Mass market
Change (y-y %)
Home rents (SGD/sq ft pm)* - Luxury
5.7
5.1
5.3
5.1
5.1
5.1
4.7
4.3
- Prime
4.4
4.0
4.5
4.7
4.8
4.8
4.5
4.0
- Mass market
2.9
2.6
3.0
3.2
3.4
3.4
3.2
2.9
(10)
Change (y-y %) - Luxury
(11)
4
(4)
0
0
(7)
- Prime
(9)
13
4
2
0
(7)
(10)
(10)
15
7
6
0
(5)
(10)
- Mass market
Yield (%) - Luxury
3.4
2.7
2.3
2.2
2.2
2.2
2.2
2.2
- Prime
4.1
3.7
3.4
3.4
3.4
3.4
3.4
3.4
- Mass market
5.2
4.3
4.1
4.1
4.1
3.9
3.9
3.9
Vacancy rate (%)
6.1
5.0
5.0
5.9
5.4
6.5
7.0
7.5
Sources: URA; HDB; CBRE; BNP Paribas estimates
10
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 28: Net supply and demand dynamics, with occupancy rates Net supply (LHS) Occ rate (RHS)
(units)
EXHIBIT 29: Vacancy rates trending at various market segments
Net demand (LHS)
30,000
(%)
(%)
96
12
95
25,000
Resi ave East region North region
Central region West region NE region
10
94 20,000
8
93
15,000
6
92 91
10,000
4
90 5,000
2
89 88
0
3Q 93 3Q 94 3Q 95 3Q 96 3Q 97 3Q 98 3Q 99 3Q 00 3Q 01 3Q 02 3Q 03 3Q 04 3Q 05 3Q 06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
0
Sources: URA; HDB; CBRE; BNP Paribas estimates
Sources: URA; HDB; CBRE; BNP Paribas estimates
Home prices feeling the heat since 2H13 We continue to see slower growth in home prices ytd, reflecting our expectations that home prices could peak in 2013. The URA price index showed a 0.4% q-q rise in 3Q13, slower than 1.1% q-q in 2Q13. We have also seen the HDB resale price index fall 0.9% q-q in 3Q13, its first decline since 2009, stemming from policy measures such as lowering the mortgage service ratio cap to 30%, allowing singles to buy new HDB flats, and requesting permanent residents wait for three years before purchasing HDB resale flats. We note that HDB resale prices have a high correlation with private home prices (corr = 0.9x). Developers’ balance sheets are currently strong, given low borrowing rates and strong reserves arising from robust sales in the past two years. However, their net gearing could come under greater pressure, especially if borrowing costs rise, launch take-up slows and margins soften. Anecdotally, we are seeing developers starting to cut prices in existing and new projects, and being willing to accept lower profit margins. We saw price cuts by Capitaland at D’Leedon and at Sky Vue, its new launch at Bishan, at 10% below neighbouring launch Sky Habitat. We also saw Singland launch its Alex Residences at 10-15% prices lower than at neighbour Echelon.
EXHIBIT 30: Developers’ balance sheets still strong, but likely to be under pressure from 2014 as borrowing cost rises and margins soften (%)
Market cap. weighted net gearing
70 60 50 40 30 20 10 Mar-13
Sep-13
Sep-12
Mar-12
Mar-11
Sep-11
Mar-10
Sep-10
Mar-09
Sep-09
Mar-08
Sep-08
Mar-07
Sep-07
Mar-06
Sep-06
Mar-05
Sep-05
Sep-04
Mar-04
Mar-03
Sep-03
Sep-02
Mar-02
Sep-01
Mar-01
0
Sources: Company data; Bloomberg; BNP Paribas
11
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 31: Our analysis shows that the supply pipeline is rising at a 6% CAGR in 2013-17E, much faster than its historical 1999-2012 rate Supply CAGR
Cumm. Dd CAGR
Supply
Take-up
Occ. rate
(%)
(%)
(units)
(units)
(%)
Average 1999 - 2012
3.2
3.5
7,432
7,485
93.2
Average 2001-2007
2.9
3.3
5,969
5,999
92.5
Average 2008-2012
3.6
3.8
8,562
8,215
94.5
Average 2013-2017E
6.0
5.7
18,189
15,634
92.7
Sources: URA; HDB; CBRE; BNP Paribas estimates
Record-high land prices are not helping What’s driving up land prices? Land prices in the Government Land Sales (GLS) market continue to rise due to increased competition for land. Since 2010, the competition for land has intensified, driven by new players entering the land market (as they find the GLS tender process transparent and relatively easy to participate), the need to replenish land by local developers (which have enjoyed robust home sales in 2010-1012), and low interest rates helping to fund land buying. The Qualifying Certificates (QC) ruling has also driven more developers towards the GLS market. The QC conditions make it difficult for affected developers – many of which are listed companies (with foreign shareholders) – to buy land from the private market via enbloc (ie collective) sales. Non-traditional property developers, especially foreign construction companies, are also entering the market, bidding aggressively to secure land for development while sacrificing profit margins in construction. Many developers are also forming joint ventures or consortiums to bid for land – we believe one side-effect of them bidding as a group is increased risk appetite. Land prices have risen by a CAGR of 18.2% since 2008, according to DTZ. This is higher than URA home price and Singapore household income CAGRs of 6.8% and 5.5% respectively.
Land bids have been aggressive The aggressive bidding patterns in the land market have been captured in our implied margin model in Exhibit 32. For more details on how the implied margin model, or margin buffer model, works, please see our report “The battle for land continues”, 19 June 2013.
12
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 32: Our implied net margin model (or expected margin buffer model) tracks developers’ bidding patterns – Narrow implied net margins imply aggressive bids by developers, as they are willing to sacrifice margins for land restocking; NB: Our implied net margins are calculated by using selling prices of the nearby residential launches (Expected dev margin buffer)
DM
40%
Mean Jan 11: Policy #4
+1 SD
-1 SD Mt Vernon site, won by CDL, when land market was most cautious Jun 13: Policy 7.5 (60% TDSR)
Dec 11: Policy #5
30% +1 SD = 18.0% 20% Mean = 12.1% 10% 0%
Aggressive bid Territory
-1 SD = 6.2%
-10%
Sep 09- Policy #1
Feb 10: Policy #2 Aug 10: Policy #3
May elections 2011
Oct 12: Policy #6
Jan 13: Policy #7 Tampines Ave 10
site, won by MCC Land
1-Jan-07 12-Jun-07 19-Jul-07 3-Oct-07 19-Dec-07 8-Jan-08 1-Apr-08 30-Jun-08 1-Oct-08 1-Apr-09 9-Sep-09 9-Nov-09 5-Mar-10 1-Apr-10 14-May-10 15-Jun-10 1-Jul-10 27-Sep-10 11-Oct-10 25-Nov-10 31-Dec-10 18-Mar-11 11-Apr-11 10-Jun-11 30-Jun-11 15-Aug-11 1-Oct-11 31-Oct-11 8-Dec-11 16-Jan-12 13-Feb-12 1-Apr-12 7-May-12 6-Jun-12 31-Jun-12 10-Aug-12 26-Sep-12 22-Oct-12 10-Dec-12 1-Jan-13 31-Mar-13 13-May-13 14-Jun-13 2-Aug-13
-20%
As of 14 November 2013 Sources: URA; HDB; company data; BNP Paribas
EXHIBIT 33: Rising land competition (I) - The number of bidders that bid for each GLS site has increased from an average of 8 (2010) to 10 (2013 ytd) (nos)
EXHIBIT 34: Rising competition for land (II) – The number of foreign players that bid for each GLS site has also increased from an average of 0.3 (2008) to 2.0 (2013 ytd) (nos)
No. of bidders per GLS land site
13
No. of foreign player bidders per GLS land site
2.5
12
12
2.0 2.0
11
1.6
10
10 9
8 8
8
1.0
0.5
0.4
0.3
2007
2008
6
6
0.0
2007
2008
2009
2010
Sources: URA; HDB; company data; BNP Paribas
13
1.4
1.3
8
7 7
1.5
1.7
2011
2012
2013E
2009
2010
2011
2012
2013E
Sources: URA; HDB; company data; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 35: Rising competition for land (III) – Consortiums that are formed to bid for each GLS site have also increased from an average of 0.4 (2008) to 3.0 (2013 ytd), and have unwittingly raised risk appetite when bidding, in our view (nos)
EXHIBIT 36: Turnaround time has reduced from 2008 (from securing land to launching) – developers are trying to launch fast to avoid home price uncertainty (month)
No. of consortium bidders per GLS land site 3.0
3.0
20.4 20
2.5 2.5 2.0
Time to launch (month)
25
3.5
2.2 1.8
15
1.8
13.0 10.8
1.5 1.5
10
8.8
9.2
9.4
2010
2011
2012
1.0 5
0.4
0.5
0
0.0 2007
2008
2009
2010
Sources: URA; HDB; company data; BNP Paribas
14
2011
2012
2007
2013E
2008
2009
Sources: URA; HDB; company data; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Implication 1: Margin squeeze One implication from a heated land market is high land costs, which could lead to margin squeeze. In light of property cooling measures, the introduction of TDSR framework and potential rate hike in future, higher land prices may not be easily supported by higher home selling prices. Margins could be further squeezed as other cost components rise too, eg, a possible increase in borrowing cost due to rate hikes and labour costs as a result of manpower restrictions in the construction sector. Looking at the land cost impact, land costs for developers in the sector accounted for 57% of development cost in 2013, up from 46% in 2008. We also estimate net margins could fall from c24% in 20112 to c10% in 2013/14, assuming launch prices stay flat.
EXHIBIT 38: Land costs rising faster at prime sites (eg near MRT stations, amenities)
EXHIBIT 37: Land costs have been rising Tender price (SGD psf) 1,400
Mass
Mid
Top Bid - Near MRT Top Bid - Far MRT URA Property Index
(PSF)
High
1,400
(Index) 220 210 200 190 180 170 160 150 140 130 120
1,200
1,200
1,000
1,000
800
800 600
600
400
400
200
200
8-Jan-13
6-Aug-12
22-Oct-12
13-Feb-12
21-May-12
21-Nov-11
15-Aug-11
12-May-11
1-Oct-10
31-Dec-10
15-Jun-10
9-Sep-09
19-Mar-10
8-Jan-08
10-Sep-08
1-Jan-07
Dec-12
Feb-12
Apr-11
Jun-10
Jul-09
Sep-08
Nov-07
Jan-07
0
30-Sep-07
0
Sources: URA; HDB; Company data; BNP Paribas
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 39: Sector land costs (from GLS market) have risen as % of breakeven or development costs and may increase the risk of margin pressure
EXHIBIT 40: We estimate net margins, based on actual project launch prices (chronologically by dates of securing the land), could fall from an average of 24-25% in 2010-12, to 10.1% in 2013 (2013 net margin is conservatively based on ASPs of nearby launches)
(%)
(%)
58
56.1
56
57.1
54.8 52.7
30
50.7
25
50 48
24.8
23.0
24.7
24.1
20
46.3
15
46
10.1 10
44
5
42
0
40 2008
2009
2010
Sources: URA; HDB; Company data; BNP Paribas
15
35.7
35
54 52
40
2011
2012
2008
2013E
2009
2010
2011
2012
2013E
Sources: URA; HDB; Company data; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 41: Select foreign players that have participated in Singapore GLS land biddings Country
Developer
Recent projects
Region focus
History in Singapore
Parent Group
China
Qingjian Realty
Nin Resi, Riversound Resi, River Isles, Waterbay Punggol (EC)
Mass market (Punggol, Sengkang)
The Group started construction in Singapore in 1999; Ventured into development in 2008, with Natura Loft DBSS in Bishan
Qingjian Group from Qingdao, China (established 1952), with interests in property, construction, hotels and logistics
China
MCC Land
The Canopy (EC), Canberra Resi, One Canberra (EC)
Mass market (Yishun, Sembawang)
The Group started construction in Singapore since 1990s; Started property development in 2010
China govt-linked MCC Group (Metallurgical Corp of China, listed in HK and Shanghai), with interests in mining, trading, steel, engineering, development, construction
China
Hao Yuan
The Nautical, New Woodlands (EC)
Mass market (Woodlands, Sembawang)
Started property development in Singapore in 2011
Private developer from China
China
Kingsford Dev
Peak @ Hillview
Mass market (Upp. Bukit Timah)
Started bidding in 2012
Private developer from China
China
China Vanke
Upper Changi Rd
Mass market (Upp. Changi Rd)
JV with Keppel Land since Apr 2013
Leading China developer
Malaysia
Sunway
Sea Esta, Arc@ Tampines (EC), Miltonia Resi
Mass market (Tampines)
JV with Hoi Hop
Sunway Group, integrated property-construction business with international exposure
Malaysia
IOI Corp
TrinLinq
Mid-end (Clementi)
Less active in GLS bidding
IOI Group, leading property developer and integrated palm oil player
Malaysia
SP Setia
Eco Sanctuary
Mass market (Upp. Bukit Timah)
Less active in GLS bidding
SP Setia Group, leading property developer with global exposure
Japan
Mitsubishi Estate
Sky Habitat, new Bishan site
Mid-end (Bishan)
JV with Capitaland
Mitsubishi Estate Group, real estate developer with strong presence in Japan and overseas
Japan
Sekisui House
Hillsta, Watertown, eCO, Q Bay Resi
Mass market
JV with Fraser, and Far East
Sekisui House is one of Japan's largest home builders, with strong international presence
Japan
Mitsui Fudosan
Optima@ Tanah Merah, The Rainforest
Mass market
JV with Hong Leong Hldgs (via TID)
Mitsui Fudosan Group, leading developer with international exposure across property segments
Sources: HDB; URA; Company websites; BNP Paribas
16
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Implication 2: Restock slowdown Rising land competition also impedes developers under our coverage from restocking land bank effectively in Singapore. This has a slowdown effect on land replenishment and earnings momentum.
EXHIBIT 42: “Non-traditional” developers such as foreign players, construction firms and niche developers, have increased in terms of land bid market share in GLS market, from 18.3% in 2009 to 67.9 in 2013 ytd
EXHIBIT 43: Using City Dev and FNN as proxies, we observe the trend of lower success rates of securing land by traditional developers, from 23% (2010), down to 11% (2013) City Dev Frsaer&Neaves Average winning bid rate per year
(%) 35
(%) 80 67.9
70
30
57.8
60
23.0
25
50
44.8
20
16.8
40 30
23.6
27.6
15
27.5 18.3
20
12.6
11.0
10 5
10 0
0 2007
2008
2009
2010
2011
2012
2013E
Sources: URA; HDB; Company data; BNP Paribas
2010
2011
2012
2013
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 44: Bidding preference of developers under our coverage, since 2007 Bids made since 2007 (may not be wins) - Mid to high end
Capitaland
Keppel Land
City Dev
F&N
Farrer, Bishan, Serangoon, Alexandra
Region
7
10
19
28
- Mass (East)
P. Ris, Changi, Flora Dr, Bedok, T. Merah
3
3
12
22
- Mass (West)
Choa Chu Kang, Bukit Panjang, Petir Rd
0
0
7
9
- Mass (Southwest)
West Coast Link, Jurong, Boon Lay
2
1
6
8
- Mass (North)
Yishun, Seletar, Woodlands
0
0
6
12
- Mass (Northeast)
Punggol, Seng Kang, Hougang
2
3
19
30
Mixed development (resi, retail)
Bedok, Petir Rd, Yishun
3
3
5
7
White sites (comm, hotel, resi)
Jurong Gateway, Peck Seah St
4
3
1
3
21
23
75
119
Total bids made Total bids awarded
4
4
13
15
Number of bids on EC sites
0
0
21
24
Sources: URA; HDB; Company data; BNP Paribas
17
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 45: Recent winning bids, from the GLS market Win Award date
Location
Segment
# of
Winning
bids
bidder
bid
Market
Prem.over
Nearby launch Implied net
expectation median bid Breakeven (%) (SGD/sq ft)
ASP
margins*
(SGD/sq ft)
(%)
Comments
(SGD/sq ft)
(SGD/sq ft)
1,157
Above exp
22
1,726
1900
9.1
Aggressive
2H13 12-Sep-13
Mount Sophia
High
9
HoiHup,SW
02-Aug-13
Yuan Ching Rd
Mass, EC
16
Evia
419
Above exp
14
765
800
4.4
V. aggressive
02-Aug-13
Punggol Drive
Mass, EC
6
Kheng Leong
355
Above exp
5
694
750
7.5
V. aggressive
02-Aug-13
Punggol Central
Mass, EC
8
Master Cont
356
Above exp
4
695
750
7.4
V. aggressive
19-Jul-13
Tampines Ave 10 (B)
Mass
10
MCC Land
562
400 - 470
35
987
1050
6.0
20-Jun-13
Faber Walk
Mass
18
Aspial
687
430 - 500
16
1,191
1350
11.8
Aggressive
1H13 V. aggressive
14-Jun-13
Fernvale Close
Mass
9
Fraser
533
500 - 520
12
955
1,050
9.0
Aggressive
31-May-13
Anchorvale Crescent
Mass, EC
6
Qingjian
331
300 - 350
6
666
740
10.0
Aggressive
13-May-13
Woodlands Ave 5/6
Mass, EC
7
Qingjian
341
300 - 340
18
679
760
10.7
Aggressive
12-Apr-13
Sengkang West (A)
Mass
8
UOL
23-Apr-13
Kim Tian Road
High
11 3
Keppel Land
489
400 - 450
26
907
1050
13.6
Aggressive
1,163
850 - 950
22
1,765
2020
12.6
Aggressive
07-Feb-13
Commonwealth Ave
Mid
City Dev
883
700 - 1100
2
1,406
1650
14.8
Cautious
31-Jan-13
Jurong W. St 41 (A)
Mass
12
MCL Land
651
540 - 600
14
1,093
1250
12.6
Aggressive
09-Jan-13
Ang Mo Kio Ave 2
Mass
12
Wheelock
790
560 - 650
12
1,274
1,450
12.1
Aggressive
17-Dec-12
Alexandra View (B)
High
6
Singland
970
820 - 960
20
1,457
1,650
11.7
Aggressive
17-Dec-12
Sembawang Cres
Mass, EC
8
JBE
324
Above exp
3
658
730
9.8
Aggressive
10-Dec-12
Punggol Field Walk
Mass, EC
7
Sing Hldgs
351
270 - 329
13
688
730
5.7
V. aggressive
03-Dec-12
Bishan Street 14
Mid
9
Capitaland
853 Above/in line
11
1,334
1,500
11.1
26-Nov-12
Pasir Ris Drive 3
Mass, EC
10
Hao Yuan
331
Above exp
8
666
720
7.5
23
Aspial
482
Above exp
95
864
1,000
13.6
30-60 yr option
City Dev
296
270 - 330
3
628
720
12.8
Moderate
Keppel Land
791
630 - 680
24
1,226
1,300
5.7
Fraser
302
300 - 350
9
634
720
11.9
2H12
22-Nov-12
Jln Jur. Kechil
Mass
12-Nov-12
Sengkang West (B)
Mass, EC
22-Oct-12
New Upp.Changi (A)
Mass
16-Oct-12
Woodlands Ave 6
Mass, EC
22-Oct-12
New Upp. Changi Rd
Mass
11
Keppel Land
791
630 - 680
24
1,226
1,300
5.7
16-Oct-12
Woodlands Ave 6
Mass, EC
5
F&N, LumC
302
300 - 350
8.8
634
720
11.9
25-Sep-12
Prince Charles Cres
High
8
Wing Tai, UE
960
950
7.9
1,500
1600
6.3
25-Sep-12
Dairy Farm
Mass
9
HLS & TA
616
Beat est.
21.5
1,054
1250
15.7
03-Sep-12
Farrer Road
High
15
1108
NA
20
1,693
1,850
8.5
6 11 5
Far East
Aggressive V. aggressive
V. aggressive Moderate Aggressive Moderate Aggressive Moderate V. aggressive
Sources: URA; HDB; Company data; BNP Paribas; * Implied net margins are based on our assumptions of developers’ all-in cost, and neighbouring launch prices of projects at time of bidding
18
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 46: Winning bids and their subsequent project launches, from the GLS market Award date
Launch dates
Developer
Project names
Location
Actual ASP
Breakeven
Actual net margins*
Land cost
(SGD/sqft)
(SGD/sqft)
(%)
(%)
Dec-12
Nov-13
Singland
Alex Residences
High
1,650
1,516
9
64
Dec-12
Sep-13
Capitaland
Sky Vue
Mid
1,401
1,334
5
64
Nov-12
Sep-13
Hao Yuan
Sea Horizon
Mass
818
666
23
50
Nov-12
Aug-13
City Dev
Lush Acres
Mass
790
628
26
47
Oct-12
Sep-13
Keppel Land / Vanke
Glades
Mass
1,518
1,228
24
64
Oct-12
May-13
Fraser/ Lum Chang
Twin Fountains
Mass
741
634
17
48
Sep-12
Sep-13
HLS/ TA
The Skywoods
Mass
1,290
1,054
22
58
Sep-12
Jun-13
Qingjian
Ecopolitan
Mass
793
669
18
47 65
Sep-12
May-13
Far East
Siena
High
2,297
1,693
36
Aug-12
Sep-13
Singland/ UOL
Thomson Three
Mid
1,362
1,197
14
60
Aug-12
Feb-13
Fragrance/ Aspial
Urban Vista
Mass
1,400
1,122
25
60
Jul-12
Apr-13
Santarli
Sant Ritz
Mid
1,500
1,122
34
56
Jun-12
Jun-13
City Dev
Jewel @ Buangkok
Mass
1,150
872
32
58
Jun-12
Jul-13
Private consortium
Vue 8
Mass
1,000
769
30
54
Jun-12
Jan-13
EL Dev
La Fiesta
Mass
1,150
905
27
58
May-12
Jun-13
MCL Land
J Gateway
Mass
1,486
1,109
34
64
May-12
Jan-13
Fraser/ Far East
Q Bay Resi
Mass
1,020
768
33
54 52
May-12
Dec-12
SingXpress
CityLife
Mass
810
716
13
May-12
Jun-13
Hao Yuan
Forestville
Mass
730
651
12
49
Apr-12
May-13
SSL Dev
The Stratum
Mass
900
827
9
57 47
Apr-12
Nov-12
Kheng Long
Topiary
Mass
735
627
17
Apr-12
Oct-12
Qingjian
Waterbay Punggol
Mass
730
654
12
49
Mar-12
Mar-13
Kingsford
Hillview Peak
Mass
1,400
1,045
34
61 48
Mar-12
Sep-12
Ho Lee
Heron Bay
Mass
720
635
13
Feb-12
Sep-12
Fraser/ Far East
eCo
Mass
1,400
927
51
58
Feb-12
Apr-13
Singapore Land
Mon Jervois
High
2,000
1,417
41
62
Jan-12
Oct-12
Hoi Hup
Kovan Regency
Mass
1,300
928
40
55
Jan-12
Feb-13
IOI Corp
TriLinQ
Mass
1,400
952
47
58
Jan-12
Mar-13
City Dev
Bartley Ridge
Mid
1,250
922
36
54
Dec-11
Jul-12
Wee Hur
Parc Centros
Mass
950
706
35
50
Dec-11
Dec-12
City Dev
Echelon
Mid
1,750
1,254
40
60
Nov-11
Nov-12
SP Setia
Eco Sanctuary
Mass
1,100
848
30
50
Nov-11
Oct-12
Tong Garden
Skies Miltonia
Mass
890
731
22
50
Nov-11
Jun-12
Qingjian
River Isles
Mass
830
690
20
48
Oct-11
May-12
MCC
One Canberra
Mass
700
623
12
47
Oct-11
Jul-12
Koh Bro
Parc Olympia
Mass
840
716
17
50
Oct-11
Jun-12
United Engin
Watercolour
Mass
730
621
17
47
Oct-11
Jun-12
Hoi Hup/ Sunway
Sea Esta
Mass
920
716
28
50
Sep-11
Sep-12
Allgreen
Riversails
Mass
830
652
27
45
850
685
24
47
1,300
950
37
60
Sep-11
May-12
Capital Dev
FLO Residences
Mass
Aug-11
Jul-12
Tuan Sing
Sennett Residences
Mid
Jul-11
Feb-12
Fraser/Far East
Twin Waterfalls
Mass
730
598
22
45
Jul-11
Mar-12
Far East
Hillsta
Mass
1,100
772
43
53
Jun-11
Apr-12
Far East
Seahill
Mass
1,250
828
51
56
Jun-11
Mar-12
Fraser
Palm Isles
Mass
870
677
28
48
Jun-11
Jan-12
Qingjian
Riversound Residences
Mass
860
759
13
52
Jun-11
Feb-12
Fragrance
Parc Rosewood
Mass
990
723
37
51
May-11
Dec-11
Hao Yuan
The Nautical
Mass
880
798
10
58
May-11
Mar-12
MCL Land
Ripplebay
Mass
880
759
16
53
Apr-11
Feb-12
Sim Lian
Tampines Trilliant
Mass
800
723
11
54
Apr-11
May-12
United Engin
8 Riversuites
Mid
1,375
1,198
15
65
Apr-11
Feb-12
City Dev
Bartley Residences
Mid
1,260
1,057
19
59
Mar-11
Jan-12
City Dev
The Rainforest
Mass
750
654
15
49
Mar-11
Aug-11
Keppel Land
The Luxurie
Mass
1,053
886
19
57
Mar-11
Dec-11
UOL
Archipelago
Mass
1,100
833
32
56
(Continued to the next page)
19
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 46: Winning bids and their subsequent project launches, from the GLS market (Cont’d) Award date
Launch dates
Developer
Project names
Location
Actual ASP
Breakeven
Actual net margins*
Land cost
(SGD/sqft)
(SGD/sqft)
(%)
(%)
Feb-11
May-12
Capitaland
Sky Habitat
Mid
1,700
1,341
27
65
Dec-10
Mar-12
Tuan Sing
Seletar Park Resi
Mass
1,160
853
36
55
Dec-10
Sep-11
Sim Lian
A Treasure Trove
Mass
900
740
22
55
Dec-10
Jul-11
City Dev
Blossom Residences
Mass
702
599
17
45
Nov-10
Sep-11
Hoi Hup/Sunway
Arc at Tampines
Mass
734
634
16
48
Nov-10
Aug-11
Fraser/Far East
Boathouse Residences
Mass
900
681
32
47
Nov-10
Jul-11
Far East
Woodhaven
Mass
981
693
42
48
Oct-10
May-11
NTUC, Chip Eng Seng
Belysa
Mass
700
588
19
45 50
Oct-10
May-11
Wing Tai
Foresque Residences
Mass
1,100
695
58
Oct-10
Jul-11
Fraser/Far East
Seastrand
Mass
900
695
29
48
Sep-10
Jul-11
Qingjian
RiverParc Residence
Mass
685
560
22
42 50
Sep-10
Oct-11
Sim Lian
Parc Vera
Mass
840
677
24
Sep-10
Aug-11
Far East
EuHabitat
Mass
1,100
772
42
54
Sep-10
Jun-11
Hoi Hup/Sunway
The Miltonia Residences
Mass
877
743
18
55
Jun-10
Apr-11
Fraser/Far East
Eight Courtyards
Mass
789
665
19
48
Jun-10
Dec-10
NTUC, Chip Eng Seng
Prive
Mass
704
638
10
48
Jun-10
Dec-10
Qingjian
Nin Residence
Mass
1,220
993
23
61
Jun-10
Jan-11
MCC
Canberra Residences
Mass
831
753
10
51
May-10
Jan-11
United Engin
Austville Residences
Mass
719
654
10
49
May-10
Jun-11
MCL Land
Terrasse
Mass
1,000
821
22
56
May-10
Feb-11
Chip Eng Seng
My Manhattan
Mass
1,200
896
34
58
May-10
Oct-10
Fragrance
Kovan Grandeur
Mass
1,086
780
39
52
May-10
Nov-10
Keppel Land
Lakefront Residences
Mass
1,070
868
23
57
Dec-11
Jul-12
Wee Hur
Parc Centros
Mass
950
706
35
50
Mar-10
Dec-10
Sim Lian
Waterview ($900)
Mass
900
768
17
55
Mar-10
Oct-10
MCC
The Canopy
Mass
657
609
8
46
Mar-10
Oct-10
Fraser/ Lum Chang
Esparina Residences
Mass
750
646
16
49
Feb-10
Mar-11
City Dev
H2O Residences
Mass
950
729
30
50
Nov-09
Jul-11
Cheung Kong
Thomson Grand
Mid
1,350
907
49
59
Oct-09
Jul-10
Hong Leong
The Scala
Mid
1,180
906
30
58
Sep-09
Apr-10
UOL
Waterbank at Dakota
Mass
1,150
882
30
58
Aug-09
Apr-10
City Dev
Tree House
Mass
840
630
33
44
Sep-08
Jul-09
Hong Leong
Optimah @ Tenah Merah
Mass
822
627
31
45
Jun-08
Jun-09
Fraser
8 @ Woodleigh
Mass
800
615
30
44
May-08
Mar-09
Far East
Mi Casa
Mass
617
535
15
38
Apr-08
Aug-09
NTUC
Trevista
Mass
943
838
13
55
Mar-08
Feb-10
MCL Land
The Estuary
Mass
757
710
7
49
Mar-08
Mar-10
Cheung Kong
The Vision
Mass
1,050
650
62
47
Jan-08
Mar-09
UOL
Double Bay Resi
Mass
660
639
3
46 59
Dec-07
Jul-09
Wing Tai/ United Eng
Ascentia Sky
Mass
1,230
1,083
14
Dec-07
Jun-09
Chip Eng Seng
Oasis @Elias
Mass
660
572
15
40
Dec-07
Feb-09
Fraser
Caspian
Mass
603
598
1
41
Nov-07
Mar-11
Allgreen
Sky Suites @ Anson
High
2,100
1,248
68
57
Nov-07
Feb-10
Far East
Altez
High
1,800
1,393
29
61
Oct-07
Jan-00
Duke Dev
Kovan Residences
Mass
887
796
11
55
Sep-07
Jul-09
Far East
Centro Residences
Mid
1,174
999
18
60
Jul-07
Jul-08
Fraser
Woodsville 28
Mass
900
793
14
55
Jun-07
Jun-08
Ho Bee
Dakota Residences
Mid
978
914
7
57
Jun-07
Jun-08
Sim Lian
Clover by the Park
Mid
765
716
7
52
Source: Company data, URA, HDB, BNP Paribas; * Actual net margins are based on our assumptions of developers’ all-in cost, and the respective projects’ actual launch prices when they sell
20
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Stock profiles – landbank and unbilled sales The composition of land bank of developers has shifted towards high-end from mass market. The key reason is that many developers have depleted their mass market land bank which has sold well in the past two years. On the other hand, high-end launches have been tepid, thus resulting in their current land bank skew towards the high-end segment. Unbilled sales have been relatively stable, but may decline if developers do not restock land bank sufficiently. Unbilled sales are sales that have been made as a result of launches but are recognised on the P&L only later, eg, at various progressive levels of construction.
EXHIBIT 47: Capitaland – outstanding residential land bank in Singapore Project
Region
Location
Latitude
High end
Jalan Mutiara
Wharf Residences
High end
Tong Watt Road
The Interlace
Mid end
Depot Road
Urban Resort Condo
High end
Cairnhill Rd
D'Leedon
High end
Leedon Heights
Tenure
Stake
GFA attri,
Attri. unsold GFA
Attri. unsold
Selling price
Breakeven
Dev margins
(%)
(‘000 sqft)
(sqft)
(units)
(SGD/sqft)
(SGD/sqft)
(%)
FH
100
262.779
10,346
5
2,150
1,059
50.8
999-yr
100
292.433
0
0
1,550
863
44.3
99-yr
60
1095
215,841
123
1,100
682
38.0
FH
100
160
62,500
25
2,700
1,647
39.0
99-yr
35
822
150,943
110
1,600
1,073
33.0
The Nassim
High end
Nassim Hill
FH
100
172
172,000
55
3,300
1,343
59.3
Marine Point Site
Mid end
Marine Parade Rd
FH
100
107
107,000
124
1,800
1,408
21.8
Bedok Residences
Mass
Bedok N. Drive
99-yr
82.7
466
18,368
19
1,350
1,007
25.4
Sky Habitat
Mid end
Bishan St 14
99-yr
65
411
269,562
217
1,500
1,319
12.1
Yio Chu Kang Site
Mass
Yio Chu Kang Rd
FH
100
208
208,066
80
1,000
435
56.5
Cairnhill Residences
High end
Cairnhill Rd
99-yr
100
268
267,827
225
2,500
1,726
31.0
Sky Vue
Mid end
Bishan St 14
99-yr
75
592
222,645
196
1,400
1,297
7.3
Coronation Road
High end
Coronation Road
99-yr
100
403
403,000
140
2,000
1,513
24.3
2,108,099
1,319
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 48: Capitaland – Residential land bank in Singapore, breakdown by segment value
EXHIBIT 49: Capitaland – Residential land bank in Singapore, breakdown by segment sq ft
Mass (% by val) 6%
Mass (% by sqft) 11%
Mid (% by val) 30%
High (% by sq ft) 50%
High (% by val) 64%
Sources: URA; HDB; Company data; BNP Paribas
21
Mid (% by sqft) 39%
Sources: URA; HDB; Company data; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 50: Capitaland – unbilled residential sales in Singapore (SGD m)
Est. Attri. Unbilled Sales (LHS)
(%)
Uncompleted (RHS)
600
120
500
100
400
80
300
60
200
40
100
20
0
0 D Leedon
Urban Resort Condo
Bedok Residences
Sky Habitat
Sky Vue
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 51: Keppel Land – outstanding residential land bank in Singapore Site
Region
Location
Tenure
99-yr
Stake
Attri. unsold GFA
Attri. unsold
Selling price
Breakeven
Dev margin
(%)
(sqft)
(units)
(SGD/sqft)
(SGD/sqft)
(%)
30
121,711
66
2,000
848
58
Reflections at Keppel Bay
Mid end
Keppel Bay
Marina Bay Suites
High end
Marina Bay
99-yr
33
16,254
8
2,800
1,033
63
The Luxurie
Mass
Sengkang Square
99-yr
100
0
0
1,020
837
18
FH
100
477,706
590
2,800
1,563
44
99-yr
30
86,950
62
2,100
797
62
Keppel & GE Tower
High end
Tanjong Pagar Rd
Corals at Keppel Bay
Mid end
Keppel Bay
Keppel Bay Plot 4
Mid end
Keppel Bay
99-yr
12
40,300
27
2,000
793
60
Keppel Bay Plot 6
Mid end
Keppel Bay
99-yr
30
67,813
26
2,000
793
60
The Glades
Mass
Tanah Merah
99-yr
70
337,236
446
1,450
1,231
15
Kim Tian Rd Site
High end
Tiong Bahru
99-yr
100
473,200
500
2,000
1,765
12
1,621,170
1,725
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 52: Keppel Land – Residential land bank in Singapore, breakdown by segment value
EXHIBIT 53: Keppel Land – Residential land bank in Singapore, breakdown by segment sq ft
Mass (% by val) 14%
Mid (% by val) 19% High (% by val) 67%
Sources: URA; HDB; Company data; BNP Paribas
22
Mass (% by sqft) 21%
High (% by sqft) 60%
Mid (% by sqft) 19%
Sources: URA; HDB; Company data; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 54: Keppel Land – Unbilled residential sales in Singapore (SGD m)
Estimated Attributable Unbilled Sales (LHS)
(%)
500
Uncompleted (RHS)
100
450
90
400
80
350
70
300
60
250
50
200
40
150
30
100
20
50
10
0
0 Lakefront Residences
Marina Bay Suites
The Luxurie
Corals @ Keppel Bay
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 55: City Development – Outstanding residential land bank in Singapore Site
Region
Location
Tenure
Stake
H2O Residences
Mass
Hedges park
GFA attri. Attri. unsold GFA
Attri. unsold Selling price
Breakeven
Dev margin
(%)
(‘000 sqft)
(sqft)
(units)
Sengkang West
99-yr
100
604
23,179
20
(SGD/sqft)
(SGD/sqft)
(%)
950
745
22
Mass
Flora Drive
99-yr
33
153
0
0
850
660
22
The Residences at W
High end
Sentosa Cove
99-yr
100
400
Buckley Classique
High end
Buckley Road
FH
100
100
356,140
203
2,400
901
62
1,563
1
2,050
1,116
46
Nouvel 18
High end
Anderson Road
FH
50
157
156,938
78
3,500
2,190
37
Blossom Residences EC
Mass
Segar Road
99-yr
100
713
0
0
720
599
17
Pasir Ris Parcel 3 + Stateland
Mass
Pasir Ris Grove
99-yr
51
479
478,568
459
900
390
57
D'Nest
Mass
Pasir Ris Grove
99-yr
51
476
38,087
37
900
390
57
The Palette
Mass
Pasir Ris Grove
Tampines Rd/ Upp. Changi site
Mass
Upper Changi Rd
99-yr
51
494
0
0
900
390
57
99-yr/ FH
33
290
177,409
207
900
429
52
Bartley Residences
Mid end
Bartley Road
99-yr
30
220
0
0
1,250
1,004
20
Former Futura site Former Lucky Tower site
High end
Leonie Road
FH
100
122
121,852
82
2,800
1,668
40
High end
Grange Road
FH
100
355
355,295
174
2,800
1,676
40
South Beach Residences
Mid end
Beach Road
Boulevard Hotel site
High end
Cusaden Road
99-yr
50
200
200,000
95
3,000
1,673
44
FH
40
241
241,327
80
2,800
1,186
58
Haus at Serangoon Gdns
Mid end
Echelon
Mid end
Serg Gdn Way
99-yr
70
306
0
0
1,500
798
47
Alexandra Road
99-yr
50
262
1,550
2
1,600
1,274
20
Bartley Ridges UP at Robertson Quay
Mid end
Mt Vernon Road
99-yr
30
235
43,627
48
1,200
975
19
High end
Robertson Quay
99-yr
100
136
31,125
16
2,800
1,524
46
Jewel at Buangkok
Mass
Sengkang Central
99-yr
100
592
266,326
277
1,020
872
15
The Venue
Mid end
Thong Tai Crescent
99-yr
60
309
232,331
120
1,400
1,199
14
Lush Acres EC
Mass
SengKang W. Way
99-yr
100
455
56,319
47
800
653
18
Commonwealth Ave
Mid end
Commonwealth Ave
99-yr
33
213
212,500
231
1,650
1,362
17
2,994,134
2,177
Sources: URA; HDB; Company data; BNP Paribas
23
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 56: City Development – Residential land bank in Singapore, breakdown by segment value
EXHIBIT 57: City Development – Residential land bank in Singapore, breakdown by segment sq ft
Mass (% by val) 17%
High (% by val) 60%
Mass (% by sqft) 34%
High (% by sqft) 43%
Mid (% by val) 23%
Mid (% by sqft) 23%
Sources: URA; HDB; Company data; BNP Paribas
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 58: City Development – unbilled residential sales in Singapore (%) 120
Estimated Attributable Unbilled Sales (LHS) % uncompleted (RHS)
100 80 60 40 20 Lush Acres
The Venue
Inflora
South Beach Residences
D'Nest
Jewel @ Buangkok
Bartley Ridges
Echelon
Haus@ Serangoon Gdns UP@ Robertson Quay
Bartley Residences
The Rainforest
The Palette
Blossom Residences
Buckley Classique
0 Hedges Park
H2O Residences
(SGD m) 400 350 300 250 200 150 100 50 0
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 59: Fraser & Neave – outstanding residential land bank in Singapore Stake
Attri. unsold GFA
Attri. unsold
Selling price
Breakeven
Dev margin
Tenor
(%)
(sqft)
(units)
(SGD/sqft)
(SGD/sqft)
(%)
FH
100
22,704
19
1,300
834
36
Bedok Reservoir Rd
99-yr LH
50
2,007
2
1,100
605
45
Mass Market
Yishun Ave 2
99-yr LH
50
0
0
820
660
20
Mass Market
Pasir Ris Link
99-yr LH
50
2,746
3
1,050
705
33
Boathouse Residences
Mass Market
Upper Serangoon
99-yr LH
50
0
0
900
683
24
Twin Waterfalls
Mass Market
Punggol Way
99-yr LH
80
0
0
720
599
17
Palm Isles
Mass Market
Flora Drive
99-yr LH
100
19,645
21
860
687
20
Watertown
Mass Market
Punggol Central
99-yr LH
33
2,185
3
1,350
1,153
15
Starhub Centre
High end
Cuppage Road
FH
100
333,000
249
2,800
1,745
38
eCo
Mass Market
Bedok South
99-yr LH
33
26,161
30
1,350
935
31
Q Bay Residences
Mass Market
Tampnes Ave 10
99-yr LH
33
24,543
26
1,100
776
29 14
Project
Region
Location
Flamingo Valley
Mass Market
Siglap Rd
Waterfront Isle
Mass Market
Eight Courtyard Seastrand
Twin Fountains
Mass Market
Woodlands Ave 6
99-yr LH
70
60,813
51
740
635
Fernvale Close
Mass Market
Fernvale Close
99-yr LH
40
192,852
198
1,000
920
8
Yishun Central
Mass Market
Yishun Ave 2 / Central 1
99-yr LH
100
530,680
890
1,100
976
11
1,217,338
1,492
Sources: URA; HDB; company data; BNP Paribas
24
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 60: Fraser & Neave – Residential land bank in Singapore, breakdown by segment value
EXHIBIT 61: Fraser & Neave – Residential land bank in Singapore, breakdown by segment sq ft
High (% by sqft) 27%
Mass (% by val) 50%
High (% by val) 50%
Mid (% by sqft) 0%
Mid (% by val) 0% Sources: URA; HDB; Company data; BNP Paribas
Mass (% by sqft) 73%
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 62: Fraser & Neave – unbilled residential sales in Singapore (SGD m)
Estimated Attributable Unbilled Sales (LHS)
(%)
300
% uncompleted (1-% completion) (RHS)
100 90 80 70 60 50 40 30 20 10 0
250 200 150 100 50
Twin Fountains
Q Bay Residences
eCo
Watertown
Palm Isles
Twin Waterfalls
Boathouse Resi.
Seastrand
Eight Courtyard
Waterfront Isle
Esparina Resi.
Waterfront Gold
Flamingo Valley
0
Sources: URA; HDB; Company data; BNP Paribas
25
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
How do stock prices react at home price turning points? Developer stock prices typically react ahead of home price corrections. Our basket of developer stock price index fell by an average of 33% before home prices peaked in our analysis of three cases: 2Q96, 2Q00 and 3Q08. Based on our findings, after home prices start to fall, developer stock prices tend to remain under pressure through the trough cycle, with discounts to RNAV staying relatively wide, but would be first to react ahead of home price recovery.
EXHIBIT 63: Based on past patterns, our basket of developer stock prices reacted ahead of home price corrections (y-y %)
Sector stock price (RHS) (SGD) 30
Home px (LHS)
50
EXHIBIT 64: Based on past patterns, developers’ discounts to RNAV widened ahead of home price corrections, and typically remained wide until home price recovery (y-y %)
Home px (RHS)
Disc. To RNAV CAPL
50
60
40
40
25
30 20
20
40
30 20
20
10
15 10
Sources: URA; HDB; Bloomberg; BNP Paribas
1Q13
3Q11
1Q10
3Q08
1Q07
(60)
1Q95
(40)
1Q13
3Q11
1Q10
3Q08
1Q07
3Q05
1Q04
3Q02
1Q01
3Q99
1Q98
3Q96
1Q95
0
3Q05
(40)
(40)
(30)
1Q04
(30)
(20)
3Q02
5
(20)
1Q01
(20)
(10)
3Q99
(10)
0
0
1Q98
0
3Q96
10
(%)
Sources: URA; HDB; Bloomberg; BNP Paribas
EXHIBIT 65: Tracking developer stock price performances through the cycle (index) 400
BNP Property Index (LHS)
Home index (LHS)
Rising bond yields
350 300 250
(%) 14
3M SIBOR (RHS)
1996 cooling measures, followed by Asian crisis
200 150
2008 GFC 2000 Tech bubble
Concerns over EU crisis
12 10 8 6
2003 SARS
4
100 50
2
0
0
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Sources: URA; HDB; Bloomberg; BNP Paribas
26
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Investment summary To reflect our new home price assumptions, we cut our estimates for 2013-15 EPS by 6-10% and RNAV by 2-6%, and TPs by 9% on average. Stock prices tend to lead home prices, which we expect to peak in 2013 then fall. As such, we downgrade City Dev to REDUCE (from Hold) given its proxy status and large exposure to the Singapore residential market. Our target price of SGD8.75 is pegged at a 34% discount to its RNAV, which is -1x standard deviation to its mean reflecting its proxy status and Singapore residential exposure. We downgrade Keppel Land to HOLD (from Buy) given its recent outperformance. Our target price of SGD3.92 is pegged to a 32% discount to its RNAV, which is -0.5x standard deviation to its mean. This is narrower than peers to factor in possible monetising of office assets in Singapore generating special dividends. See our accompanying company reports on City Dev “Growth downdraft” and Keppel Land “Positives mostly priced in”. We still favour Singapore developers with entrenched and diversified overseas exposure, along with asset recycling opportunities. We maintain Capitaland at BUY, given its trough valuation. To reflect our new home price assumptions, we have lowered our 2013-15E EPS by 6-9% and RNAV by 2.5%. Accordingly, we have lowered our TP by 9.6%. Our new TP of SGD3.75 is pegged at a 32% discount to RNAV, or the mid-point between -0.5x to -1x standard deviation to its mean. Upside catalysts could come from better than expected economic recovery in Singapore and China, as well as asset recycling opportunities. Capitaland announced on 20 November 2013 that it has entered into a secondary placement agreement to sell an aggregate of 115.66m shares of its listed subsidiary Australand (ALZ AU), representing about 20% of Australand, with allocation and pricing due to take place on 21 November 2013. As reference, Capitaland has an interest of about 341.9m shares in Australand (about 59.1% of Australand). We maintain FNN at HOLD. We have raised our 2013E EPS by 16.2% to reflect better than expected 3Q13 results, but lowered our 2014-15E EPS by 7-16% and RNAV by 2.5% to factor in our new home price assumptions. Accordingly, we have lowered our TP by 2.4%. Our new TP of SGD6.02 is pegged at a 15% discount to RNAV, which is narrower than its developer peers given its exposure to resilient F&B business, as well as the proposed spin-off or demerger of its property arm (Fraser Centrepoint Limited).
EXHIBIT 66: RNAV exposures (%) 120
SG Resi
SG Comm
Overseas
100 80 60 40 44
20 0
10
13
CAPL
KPLD
CIT
Sources: Company data; HDB; URA; BNP Paribas; NB: Resi = Residential, Comm = Commercial assets e.g. retail, offices
27
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 67: Changes to our EPS forecasts -------------------------- 2013E ------------------------------
-------------------------- 2014E --------------------------
-------------------------- 2015E ----------------------------
New
Old
Change
New
Old
Change
New
Old
Change
(SGD)
(SGD)
(%)
(SGD)
(SGD)
(%)
(SGD)
(SGD)
(%)
Capitaland
0.164
0.181
(9.4)
0.195
0.214
(8.9)
0.209
0.223
(6.3)
Keppel Land
0.263
0.252
4.4
0.289
0.305
(5.2)
0.321
0.358
(10.3)
City Dev
0.641
0.671
(4.5)
0.724
0.767
(5.6)
0.746
0.827
(9.8)
FNN
0.459
0.395
16.2
0.425
0.457
(7.0)
0.431
0.511
(15.7)
Sources: Company data; BNP Paribas
EXHIBIT 68: Changes to our stock recommendations and target prices ---------- Rec ---------New
Capitaland
Old
Upside to
New
Old
Change
New
Old
Change
new TP
TP peg*
(SGD)
(SGD)
(%)
(SGD)
(SGD)
(%)
(%)
(%)
Comments
Buy
Buy
3.75
4.15
(9.6)
5.51
5.65
(2.5)
21
(32)
Midpoint of -0.5x and -1x SD
Hold
Buy
3.92
4.47
(12.3)
5.76
6.14
(6.2)
6
(32)
-0.5x SD, on recycling prospects
Reduce
Hold
8.75
9.95
(12.0)
13.32
14.21
(6.3)
(14)
(34)
-1x SD, on proxy to matured SG resi
(15)
Narrower, on potential property spinoff
Keppel Land City Dev
-------------------- TP -------------------- ------------------ RNAV ------------------
FNN
Hold
Hold
6.02
6.17
7.08
(2.4)
7.26
4
(2.5)
* TP pegged to percentage discount to RNAV Sources: Bloomberg; Company data; BNP Paribas
EXHIBIT 69: Capitaland discount to RNAV
EXHIBIT 70: Capitaland P/BV vs ROE
% Premium/(discount) to RNAV (LHS) Home price (RHS)
(%) 40
(index)
(x)
250
2.5
200
2.0
150
1.5
100
1.0
20 +1 SD = 6.1%
P/BV (LHS)
30 % 25 % 20 %
0 Mean = -16.1%
(20) -0.5 SD = -27.3%
(40)
15 % 10 %
-1 SD = -38.4%
Sources: URA; HDB; Bloomberg; BNP Paribas
Sources: URA; HDB; Bloomberg; BNP Paribas
EXHIBIT 71: Keppel Land discount to RNAV
EXHIBIT 72: Keppel Land P/BV vs ROE
% Premium/(discount) to RNAV (LHS) Home price index (RHS)
(%) 60 40
Jan 13
Jan 12
Jan 11
Jan 10
Jan 09
Jan 04
0 %
Jan 08
0.0
Jan 07
0
5 %
Jan 06
0.5
Apr-13
Feb-12
Oct-09
Dec-10
Jul-07
Aug-08
Mar-05
May-06
Jan-04
Oct-01
Nov-02
Jun-99
Aug-00
Apr-98
Feb-97
Jan-96
(80)
50
Jan 05
(60)
(index)
(x)
250
3.5
50
3.0
40
P/BV (x)
ROE (RHS)
(%)
200
30
2.5
20 +1 SD = 2%
0
150 100
-0.5 SD = -32% -1 SD = -43.4%
Jan-13
Jan-11
Jan-09
Jan-07
Jan-05
Jan-03
(30) Jan-01
0.0 Jan-99
(20) Jan-97
0.5 Jan-95
Apr-13
Jun-12
Jul-11
Sep-10
0
Nov-09
(80)
(10)
Jan-93
(60)
Jan-09
0
1.0 50
Sources: URA; HDB; Bloomberg; BNP Paribas
1.5
Jan-91
(40)
20
2.0
10
Mean = -20.7%
(20)
28
(%)
ROE (RHS)
Sources: URA; HDB; Bloomberg; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 73: City Dev discount to RNAV (%)
EXHIBIT 74: City Dev P/BV vs ROE
% Premium/(discount) to RNAV (LHS) Home price index (RHS)
60
(index)
(x)
250
4.0
P/BV (LHS)
(%)
ROE (RHS)
25
3.5
40
200
20
+1 SD = 5.4%
0
150
Mean = -14.3%
(20)
-0.5 SD = -24.1% -1 SD = -33.9%
2.5
15
2.0 100
(40) 50
(60)
20
3.0
10
1.5 1.0
5
0.5 0
Sources: URA; HDB; Bloomberg; BNP Paribas
Sources: URA; HDB; Bloomberg; BNP Paribas
EXHIBIT 75: FNN discount to RNAV
EXHIBIT 76: FNN P/BV vs ROE
% Premium/(discount) to RNAV (LHS) Home price (RHS)
(%)
(index) 250
20 10
200
(x) 3.0
P/BV (LHS)
Jan-13
Jan-11
Jan-09
Jan-07
Jan-05
Jan-03
Jan-01
Jan-99
Jan-97
Jan-95
Jan-91
0
Jan-93
0.0
Jan-96 Oct-96 Jul-97 Apr-98 Jan-99 Nov-99 Aug-00 May-01 Feb-02 Nov-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 May-11 Feb-12 Nov-12 Aug-13
(80)
(%) 25
ROE (RHS)
2.5
20
0 (10)
+1 SD = -11.2%
(20)
Mean = -22.5% -0.5 SD = -28.1% -1 SD = -33.8%
1.0
50
(60)
Sources: URA; HDB; Bloomberg; BNP Paribas
Oct 13
Oct 11
Oct 09
Oct 07
Oct 05
Oct 03
Oct 91
0
Oct 01
0.0
Nov-13
Jun-13
Feb-13
Sep-12
Dec-11
May-12
Jul-11
Mar-11
Oct-10
Jun-10
Jan-10
Aug-09
Apr-09
Nov-08
0
Oct 99
(70)
5
0.5
Oct 97
(50)
Jul-08
10
100
Oct 95
(40)
15 1.5
Oct 93
(30)
2.0
150
Sources: URA; HDB; Bloomberg; BNP Paribas
EXHIBIT 77: City Dev - RNAV derivation Attrib. value
Surplus
RNAV
(SGD m)
(SGD m)
(SGD m)
Investment properties Estimated market value
5,567
Less: Book value
(3,004)
Surplus/ (deficit to book value)
2,562
Development properties NPV of future resi development profits Listed entities
1,773 Stake (%)
Millennium & Copthorne (MLC LN)
57.0
City e-Solutions Ltd (557 HK )
49.8
Surplus/ (deficit to book value)
935
Book value of shareholder equity as of FY2012
7,445
RNAV
12,715
Fully-diluted share base (m)
954
RNAV per share
13.3
Applied discount to RNAV (%)
(34)
Target price
8.75
Sources: Company data; Bloomberg; BNP Paribas estimates
29
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 78: Keppel Land - RNAV derivation Attrib. value
Surplus
RNAV
(SGD m)
(SGD m)
(SGD m)
Investment properties Estimated market value
1,708
Less: Book value
(1,302)
Surplus/ (deficit to book value)
406
Development properties NPV of future resi development profits Listed entities
1,828 Stake (%)
K-REIT Asia (KREIT SP)
44.7
Surplus/ (deficit to book value) Other business segments
153 Stake (%)
P/E
FY13E PATMI
100
8
44
Fund management business
370
Total shareholders' Equity as at FY12E
6,169
Total equity value for 2013E
8,927
RNAV per share
5.76
Fully-diluted share base (m)
1,550
Applied discount to RNAV (%)
(32)
Target price
3.92
Sources: Company data; Bloomberg; BNP Paribas estimates
30
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 79: Capitaland - RNAV derivation Attrib. value
Surplus
RNAV
(SGD m)
(SGD m)
(SGD m)
Investment properties Singapore commercial
1,210
Overseas commercial
364
Raffles City China
2,338
The Ascott Limited
1,814
Less: Book value
(2,092)
Surplus/ (deficit) to book value
3,833
Development properties NPV of future resi development profits Listed entities Ascott Residence Trust
2,089 Stake (%) 37.7
123
Australand Holdings
59.1
505
CapitaCommercial Trust
31.5
(80)
CapitaMalls Asia
65.4
1,146
Central China Real Estate
27.1
119
Lai Fung
20.0
(149)
Surplus/ (deficit) to book value
1,665
Other business segments Fund management business
784
Book value of shareholder equity as of 3Q12E
15,080
RNAV
23,451
Fully-diluted share base (m)
4,255
RNAV per share
5.51
Applied discount to RNAV (%)
(32)
Target price
3.75
Sources: Company data; Bloomberg; BNP Paribas
31
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
EXHIBIT 80: Fraser & Neave - RNAV derivation FNN : RNAV
Valuation
Surplus or valn
Investment Properties
(SGD m)
(SGD m)
Retail
1046.9
Serviced apartments
1015.5
Office
500.4
Business parks
92.6 11.671
Others Less: Book value
(2617.7)
Surplus/(deficit) to book value (A)
51.5
Development Properties Singapore
712.4
China
527.4
Australia
683.1
Others
51.0
NPV of future development profits/(losses) (B) Real estate investment trusts
1,973.9 Stake
Fair value
Valuation
(%)
(SGD/shs)
(SGD m)
Fraser Centrepoint Trust
40.8
1.82
611
260.5
Frasers Commercial REIT (Formerly Allco REIT)
27.1
1.27
220
(46.0)
Surplus/(Deficit) from REITs (C) Other business segments
214.5 Valuation (SGD m)
Soft drinks
1055.9
Dairies
1233.8
Printing & publishing
222.6
REIT & serviced apartments management
314.7
Valuation based on multiples of FY13 P/E (D)
2827.0
Shareholders' equity in property business as of FY12 (E)
4175.3
Others (F)
872.0
Total RNAV (A+B+C+D+E+F)
10114.2
Issued shares(m)
1429.0
RNAV per share (SGD)
7.08
Discount ascribed to RNAV
(15)
Target Price @ discount to RNAV (SGD)
6.02
Sources: Company data; Bloomberg; BNP Paribas
32
BNP PARIBAS
20 NOVEMBER 2013
20 NOVEMBER 2013 CHANGE IN /NUMBERS SINGAPORE REAL ESTATE
8
CITY DEVELOPMENTS
REDUCE FROM HOLD
CIT SP
TARGET PRICE
SGD8.75
CLOSE
SGD10.24
UP/DOWNSIDE
HOW WE DIFFER FROM CONSENSUS
MARKET RECS
TARGET PRICE (%)
-16.2
POSITIVE
2
EPS 2013 (%)
-2.9
NEUTRAL
13
EPS 2014 (%)
-2.7
NEGATIVE
10
-14.5%
PRIOR TP
SGD9.95
CHANGE IN TP
-12.03%
KEY STOCK DATA
Growth downdraft n
n
n
n
YE Dec (SGD m)
Downgrade to REDUCE, from Hold We are turning more cautious on the Singapore residential property market as we head into 2014 as we expect pent-up demand to ease further amid rising supply, dragging down home prices. We downgrade City Dev to REDUCE, from Hold.
3,473
3,704
3,664
611
691
713
Recurring EPS (SGD)
0.75
0.67
0.76
0.78
Prior rec. EPS (SGD)
0.75
0.70
0.80
0.87
Chg. In EPS est. (%)
0.0
(4.5)
(5.6)
(9.8)
(15.1)
(9.9)
13.0
3.2
13.7
15.2
13.5
13.1
Searching overseas for growth City Dev is proactively looking overseas for growth given a matured property cycle in Singapore. China projects are in excavation stage and could be launched in 2014/15. City Dev recently entered the London market by securing a high-end Knightsbridge site. We are concerned it will take time for overseas projects to contribute to P&L.
60
(index) 250
+1 SD = 5.4%
(20)
-0.5 SD = -24.1% -1 SD = -33.9%
(40) (80)
0.6
0.6
0.6
13.5
11.2
10.4
1.3
1.2
1.1
1.0
24.2
4.1
(3.0)
(6.4)
9.5
7.9
8.3
8.0
ROE (%) Nov-12
Feb-13
May-13
Aug-13
Nov-13
14
17 7
12
(3) 10 (13) 8 (SGD)
City Developments
Share price performance
Rel to Straits Times Index
1 Month
3 Month
12 Month
(2.2)
(3.8)
(5.8)
Relative to country (%)
(2.2)
(4.4)
(14.0)
February 2014
Jan-96 Oct-96 Jul-97 Apr-98 Jan-99 Nov-99 Aug-00 May-01 Feb-02 Nov-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 May-11 Feb-12 Nov-12 Aug-13
7,487
3m avg daily turnover (USD m)
5.1
Free float (%)
51
150 100
(23) (%)
Absolute (%)
12m high/low (SGD)
Hong Leong Group (34%)
3m historic vol. (%) ADR ticker
0
[email protected] +65 6210 1956
0.6 13.2
Price/book (x)
Major shareholder
50
Chong Kang Ho, CFA
EV/EBITDA (x)
200 Mean = -14.3%
(60)
Sources: Bloomberg; BNP Paribas estimates
Dividend yield (%)
Mkt cap (USD m)
40 0
Recurring P/E (x)
Next results
% Premium/(discount) to RNAV (LHS) Home price index (RHS)
20
2015E
678
Net debt/Equity (%)
(%)
2014E
3,354
EPS growth (%)
TP pegged to a 34% discount to RNAV We cut our TP to SGD8.75 as we lower our 2013-15 EPS estimates 4.5-9.8% and RNAV by about 6.3% to partly reflect our new home price assumptions for 2014-15.Our new TP is pegged to a 34% discount to 2013E RNAV, or -1x SD, partly to reflect its proxy status and greater exposure to a potential Singapore residential slowdown.
2013E
Rec. net profit
Depleting land bank, momentum to slow City Dev has been crowded out of the land market given rising land competition. This could slow its restocking efforts. Along with the company’s depleting legacy land bank in the North (Pasir Ris, Changi), we are concerned about its future earnings momentum.
City Dev’s discount to RNAV trend
33
Revenue
2012A
13.20/9.76 15.0 CDEVY US
ADR closing price (USD; 19 Nov 2013)
8.14
Issued shares (m)
909
Sources: Bloomberg consensus; BNP Paribas estimates
City Developments
CIT SP
Chong Kang Ho, CFA
Investment thesis
Catalyst
We are turning more cautious on the Singapore residential market given the oversupply risk (see our accompanying sector report, 2014 – Shift towards home oversupply begins). We expect the era of supply shortage to end by 2015, due to the combination of rising completed supply and easing of pent-up demand. Unsold inventory has also risen, with demand hit by effects of the seven cooling measures, tighter immigration policies, and prospects of higher interest rates. We expect new sales volumes to fall 28% in 2013 and another 7% by 2015 and home prices to fall 15% by 2015.
Downside catalysts are worse-than-expected economic slowdown, a sharper-than-expected rise in interest rates, and failure to restock sufficient land bank at reasonable prices in Singapore, and slower-than-expected profit contribution from overseas projects.
Singapore developers also face potential margin squeeze arising from higher land costs and from the “crowding out” process as they find it difficult to restock land. This could slow earnings momentum.
Risks to our call Key upside risks to our REDUCE call are: 1) interest rates staying low for a prolonged period, 2) a reversal of cooling measures, 3) renewal of pro-immigration policies, 4) stronger-than-expected economic recovery, and 5) completion of supply is delayed, due to the shortage of construction workers.
As such, we cut our 2013-15 EPS estimates by 4.5-9.8% and RNAV by 6.3% to reflect our new home price assumptions. Accordingly, we cut our TP for City Dev by 11.6% to SGD8.75, from SGD9.95. Our new TP is pegged to a 34% discount to RNAV, or -1x SD, partly to reflect the company’s proxy status and greater exposure to the Singapore residential market.
Company background
Key assumptions
City Developments Limited (CDL) is engaged in property development, ownership and investment holding. The company’s subsidiaries are engaged in property development and ownership, hotel ownership and operations, a club operation and ownership, investment in properties and in shares, property management, project management and provision of consultancy services, and hospitality-related information technology and procurement services. CDL operates in four business segments: property development, hotel operations, rental properties and others.
Singapore home price growth Singapore office cap value
2013E
2014E
(%)
(%)
0
(5)
4.50
4.50
Source: BNP Paribas estimates
Principal activities, revenue (2012) Rental income 9.1%
Earnings sensitivity
Others 3.0% Base case
Property development 42.2% Hotel operations 45.8%
Key executives
RNAV
Change
(SGD)
(%)
13.3
10% drop in SG home prices
12.8
(4.2)
China home prices
13.3
(0.2)
SG office cap value
13.0
(2.5)
Listed entities
13.3
(0.5)
Source: BNP Paribas estimates Since
Title
Mr. Kwek Leng Beng
01/01/69
CEO
Ms.Ann Nee Goh
01/01/05
CFO
Mr. Seng Chee Tan
01/01/00
CIO
City Dev’s key operations include property development, and rental income from investment properties. As such , key drivers to RNAV include home prices, cap rates and rental incomes.
http://www.cdl.com.sg
34
BNP PARIBAS
20 NOVEMBER 2013
City Developments
CIT SP
Chong Kang Ho, CFA
EXHIBIT 1: City Development – outstanding residential land bank in Singapore as of September 2013 Site
Region
Location
Tenure
Stake
Breakeven
Dev margin
(%)
(‘000 sqft)
GFA attri, Attri. unsold GFA
(sqft)
Attri. unsold Selling price
(units)
(SGD/sqft)
(SGD/sqft)
(%)
H2O Residences
Mass
Sengkang West
99-yr
100
604
23,179
20
950
745
22
Hedges park
Mass
Flora Drive
99-yr
33
153
0
0
850
660
22
The Residences at W
High end
Sentosa Cove
99-yr
100
400
356,140
203
2,400
901
62
Buckley Classique
High end
Buckley Road
FH
100
100
1,563
1
2,050
1,116
46
Nouvel 18
High end
Anderson Road
FH
50
157
156,938
78
3,500
2,190
37
Blossom Residences EC
Mass
Segar Road
99-yr
100
713
0
0
720
599
17
Pasir Ris Parcel 3 + Stateland
Mass
Pasir Ris Grove
99-yr
51
479
478,568
459
900
390
57
D'Nest
Mass
Pasir Ris Grove
99-yr
51
476
38,087
37
900
390
57
The Palette
Mass
Pasir Ris Grove
Tampines Rd/ Upp. Changi site
Mass
Upper Changi Rd
99-yr
51
494
0
0
900
390
57
99-yr/ FH
33
290
177,409
207
900
429
52
Bartley Residences
Mid end
Bartley Road
99-yr
30
220
0
0
1,250
1,004
20
Former Futura site
High end
Leonie Road
FH
100
122
121,852
82
2,800
1,668
40
Former Lucky Tower site
High end
Grange Road
FH
100
355
355,295
174
2,800
1,676
40
South Beach Residences
Mid end
Beach Road
99-yr
50
200
200,000
95
3,000
1,673
44
Boulevard Hotel site
High end
Cusaden Road
FH
40
241
241,327
80
2,800
1,186
58
Haus at Serangoon Gdns
Mid end
Serg Gdn Way
99-yr
70
306
0
0
1,500
798
47
Echelon
Mid end
Alexandra Road
99-yr
50
262
1,550
2
1,600
1,274
20
Bartley Ridges
Mid end
Mt Vernon Road
99-yr
30
235
43,627
48
1,200
975
19
UP at Robertson Quay
High end
Robertson Quay
99-yr
100
136
31,125
16
2,800
1,524
46
Jewel at Buangkok
Mass
Sengkang Central
99-yr
100
592
266,326
277
1,020
872
15
The Venue
Mid end
Thong Tai Crescent
99-yr
60
309
232,331
120
1,400
1,199
14
Lush Acres EC
Mass
SengKang W. Way
99-yr
100
455
56,319
47
800
653
18
Commonwealth Ave
Mid end
Commonwealth Ave
99-yr
33
213
212,500
231
1,650
1,362
17
2,994,134
2,177
Total Sources: URA; HDB; company data; BNP Paribas
EXHIBIT 2: City Development – Residential land bank in Singapore, breakdown by segment value as of September 2013
EXHIBIT 3: City Development – Residential land bank in Singapore, breakdown by segment sq ft as of September 2013
Mass (% by val) 16.6%
Mass (% by sqft) 34% High (% by sqft) 43%
High (% by val) 60.4%
Mid (% by val) 22.9%
Mid (% by sqft) 23% Sources: URA; HDB; company data; BNP Paribas
35
Sources: URA; HDB; company data; BNP Paribas
BNP PARIBAS
20 NOVEMBER 2013
City Developments
CIT SP
Chong Kang Ho, CFA
EXHIBIT 4: City Development – Unbilled residential sales in Singapore as September 2013 (SGD3.18b) (%) 120
Estimated Attributable Unbilled Sales (LHS) % uncompleted (RHS)
100 80 60 40 20 Lush Acres
The Venue
Inflora
South Beach Residences
D'Nest
Jewel @ Buangkok
Bartley Ridges
Echelon
Haus@ Serangoon Gdns UP@ Robertson Quay
Bartley Residences
The Rainforest
The Palette
Blossom Residences
Buckley Classique
0 Hedges Park
H2O Residences
(SGD m) 400 350 300 250 200 150 100 50 0
Sources: URA; HDB; company data; BNP Paribas
EXHIBIT 5: Discount to RNAV – our TP is pegged to 34% discount to RNAV, or -1x SD to mean (index)
(x)
250
4.0
P/BV (LHS)
(%)
ROE (RHS)
25
3.5
40
200
20
+1 SD = 5.4%
150
0 Mean = -14.3% (20)
-0.5 SD = -24.1% -1 SD = -33.9%
2.5
15
2.0 100
(40) 50
(60)
20
3.0
10
1.5 1.0
5
0.5
Sources: Bloomberg; BNP Paribas
0.0 Jan-13
Jan-11
Jan-09
Jan-07
Jan-05
Jan-03
Jan-01
Jan-99
0 Jan-97
Jan-96 Oct-96 Jul-97 Apr-98 Jan-99 Nov-99 Aug-00 May-01 Feb-02 Nov-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 May-11 Feb-12 Nov-12 Aug-13
0
Jan-95
(80)
Jan-93
60
% Premium/(discount) to RNAV (LHS) Home price index (RHS)
Jan-91
(%)
EXHIBIT 6: Forward P/BV and ROE
Sources: Bloomberg; BNP Paribas estimates
We lower our 2013-15 EPS estimates for City Dev by 4.5-9.8% to partly factor in our new Singapore home price assumptions (we now assume prices will fall 15% by 2015, vs our previous estimate of a 10% decline). We also lower our RNAV per share estimate by 6.3% to SGD13.3, partly to factor in our new Singapore home price assumptions and changes in stock prices in listed entities. Accordingly, we lower our TP by 12% to SGD8.75, offering 14% downside potential. Our new TP is pegged to a 34% discount to 2013E RNAV, or -1x standard deviation to the mean of its discount to RNAV. This is the widest discount in our developer coverage universe given City Dev’s higher exposure to the Singapore residential market, which we are cautious on. Overall, we downgrade City Dev to REDUCE, from Hold.
36
BNP PARIBAS
20 NOVEMBER 2013
City Developments
CIT SP
Chong Kang Ho, CFA
EXHIBIT 7: City Dev – RNAV derivation (SGD m)
Attrib. value
Surplus
RNAV
Investment properties Estimated market value
5,567
Less: Book value
(3,004)
Surplus/ (deficit to book value)
2,562
Development properties NPV of future resi development profits
Listed entities
1,773
Stake (%)
Millenium & Copthorne (MLC LN)
57.0
City e-Solutions Ltd (557 HK )
49.8
Surplus/ (deficit to book value)
935
Book value of shareholder equity as of FY2012
7,445 12,715
RNAV Fully-diluted share base (m)
954
RNAV per share
13.3
Applied discount to RNAV (%)
(34)
Target price
8.8
Sources: Company data; Bloomberg; BNP Paribas
37
BNP PARIBAS
20 NOVEMBER 2013
City Developments
CIT SP
Chong Kang Ho, CFA
Financial statements City Developments Profit and Loss (SGD m) Year Ending Dec
2011A
2012A
2013E
2014E
3,280
3,354
3,473
3,704
3,664
(1,507)
(1,693)
(1,722)
(1,947)
(1,902)
1,773
1,661
1,751
1,757
1,762
254
149
78
170
183
Operating costs
(900)
(889)
(919)
(962)
(959)
Operating EBITDA
1,127
920
910
965
986
0
0
(20)
(30)
(26)
Revenue Cost of sales ex depreciation Gross profit ex depreciation Other operating income
Depreciation Goodwill amortisation
2015E
0
0
0
0
0
1,127
920
890
935
961
(53)
(40)
(40)
(27)
(22)
62
80
28
57
71
Recurring non operating income
0
0
0
0
0
Non recurring items
0
0
0
0
0
Profit before tax
1,136
960
877
966
1,009
Tax
(175)
(100)
(113)
(112)
(124)
962
860
764
853
886
(163)
(182)
(153)
(162)
(172)
Preferred dividends
0
0
0
0
0
Other items
0
0
0
0
0
799
678
611
691
713
Operating EBIT Net financing costs Associates
Profit after tax Minority interests
Reported net profit Non recurring items & goodwill (net)
0
0
0
0
0
799
678
611
691
713
Recurring EPS *
0.88
0.75
0.67
0.76
0.78
Reported EPS
0.88
0.75
0.67
0.76
0.78
DPS
0.24
0.07
0.07
0.07
0.07
Recurring net profit Per share (SGD)
Growth Revenue (%)
5.7
2.2
3.5
6.6
(1.1)
Operating EBITDA (%)
13.9
(18.4)
(1.2)
6.1
2.2
Operating EBIT (%)
13.9
(18.4)
(3.3)
5.1
2.7
Recurring EPS (%)
1.8
(15.1)
(9.9)
13.0
3.2
Reported EPS (%)
1.8
(15.1)
(9.9)
13.0
3.2
Gross margin inc depreciation (%)
54.0
49.5
49.8
46.6
47.4
Operating EBITDA margin (%)
34.4
27.4
26.2
26.1
26.9
Operating EBIT margin (%)
34.4
27.4
25.6
25.3
26.2
Net margin (%)
24.3
20.2
17.6
18.7
19.5
Effective tax rate (%)
15.4
10.4
12.9
11.6
12.3
Dividend payout on recurring profit (%)
27.4
8.8
9.8
8.6
8.4
Interest cover (x)
22.5
24.8
22.9
37.1
46.5
Operating performance
Inventory days
0.0
0.0
0.0
0.0
0.0
Debtor days
115.6
129.7
125.2
120.2
123.8
Creditor days
256.8
247.1
256.8
243.4
260.3
14.6
10.9
10.6
12.3
12.3
ROIC (%)
9.0
7.2
6.6
7.5
7.5
ROE (%)
12.2
9.5
7.9
8.3
8.0
ROA (%)
6.9
5.8
5.2
5.7
5.8
Operating ROIC (%)
*Pre exceptional, pre-goodwill and fully diluted
Revenue By Division (SGD m)
2011A
2012A
2013E
2014E
2015E
Property development
1,344
1,415
1,482
1,707
1,661
Hotel operations
1,563
1,536
1,581
1,581
1,581
10
0
0
0
0
281
304
310
316
322
82
99
99
99
99
Gross dividends from investments Rental and car park income Others
Sources: City Developments; BNP Paribas estimates
38
BNP PARIBAS
20 NOVEMBER 2013
City Developments
CIT SP
Chong Kang Ho, CFA
Financial statements City Developments Cash Flow (SGD m) Year Ending Dec
2011A
2012A
2013E
2014E
2015E
799
678
611
691
713
0
0
20
30
26
101
102
125
105
102
Other non-cash items
154
162
(3)
2
(2)
Recurring cash flow
1,054
942
753
828
839
Recurring net profit Depreciation Associates & minorities
Change in working capital
(71)
(877)
(84)
(18)
(171)
Capex - maintenance
(199)
(209)
(172)
(158)
(165)
Capex - new investment
(195)
(48)
(48)
(48)
(48)
Free cash flow to equity
589
(192)
449
605
454
Net acquisitions & disposals
(70)
(420)
(73)
(242)
(158)
Dividends paid
(247)
(182)
(60)
(60)
(60)
Non recurring cash flows
517
324
152
443
382
Net cash flow
788
(469)
468
746
619
Equity finance
0
0
0
0
0
(172)
122
(734)
(613)
(666)
616
(347)
(266)
133
(47)
0.92
Debt finance Movement in cash Per share (SGD) Recurring cash flow per share
1.16
1.04
0.83
0.91
FCF to equity per share
0.65
(0.21)
0.49
0.67
0.50
2011A
2012A
2013E
2014E
2015E
Balance Sheet (SGD m) Year Ending Dec Working capital assets
4,456
5,608
4,421
4,409
4,556
(1,457)
(1,497)
(1,588)
(1,730)
(1,703)
Net working capital
2,999
4,112
2,832
2,679
2,854
Tangible fixed assets
3,313
3,405
3,404
3,515
3,620
Operating invested capital
6,312
7,517
6,236
6,194
6,474
Goodwill
0
0
0
0
0
Other intangible assets
0
0
0
0
0
1,095
1,225
1,101
1,101
1,101
Working capital liabilities
Investments Other assets
3,469
3,180
3,566
3,614
3,676
Invested capital
10,876
11,922
10,903
10,910
11,251
Cash & equivalents
(2,693)
(2,629)
(2,189)
(2,634)
(2,688)
Short term debt
1,477
998
765
623
546
Long term debt *
2,929
3,469
2,280
1,741
1,402
Net debt
1,777
2,278
411
(324)
(745)
0
0
0
0
0
403
387
417
423
420
Total equity
6,827
7,445
7,997
8,629
9,282
Minority interests
1,869
1,953
2,078
2,182
2,295
Invested capital
10,876
12,064
10,903
10,910
11,252
Deferred tax Other liabilities
* includes convertibles and preferred stock which is being treated as debt
Per share (SGD) Book value per share
7.51
8.19
8.79
9.49
10.21
Tangible book value per share
7.51
8.19
8.79
9.49
10.21
Net debt/equity (%)
20.4
24.2
4.1
(3.0)
(6.4)
Net debt/total assets (%)
11.9
14.6
2.7
(2.1)
(4.8)
2.4
3.1
3.0
3.0
3.2
15.8
(2.6)
13.4
25.4
23.7
Financial strength
Current ratio (x) CF interest cover (x) Valuation
2011A
2012A
2013E
2014E
2015E
Recurring P/E (x) *
11.7
13.7
15.2
13.5
13.1
Recurring P/E @ target price (x) *
10.0
11.7
13.0
11.5
11.2
Reported P/E (x)
11.7
13.7
15.2
13.5
13.1
Dividend yield (%)
2.3
0.6
0.6
0.6
0.6
P/CF (x)
8.8
9.9
12.4
11.2
11.1
P/FCF (x)
15.8
(48.5)
20.7
15.4
20.5
Price/book (x)
1.4
1.3
1.2
1.1
1.0
Price/tangible book (x)
1.4
1.3
1.2
1.1
1.0
11.0
13.2
13.5
11.2
10.4
EV/EBITDA @ target price (x) **
9.9
11.9
12.1
9.9
9.1
EV/invested capital (x)
1.2
1.1
1.1
1.0
1.0
EV/EBITDA (x) **
* Pre exceptional, pre-goodwill and fully diluted
** EBITDA includes associate income and recurring non-operating income
Sources: City Developments; BNP Paribas estimates
39
BNP PARIBAS
20 NOVEMBER 2013
20 NOVEMBER 2013 CHANGE IN NUMBERS SINGAPORE / REAL ESTATE
8
KEPPEL LAND
HOLD
KPLD SP
TARGET PRICE
SGD3.92
CLOSE
SGD3.70
UP/DOWNSIDE
FROM BUY
HOW WE DIFFER FROM CONSENSUS
MARKET RECS
TARGET PRICE (%)
-7.1
POSITIVE
16
EPS 2013 (%)
-3.2
NEUTRAL
6
EPS 2014 (%)
-2.9
NEGATIVE
2
+5.8%
PRIOR TP
SGD4.47
CHANGE IN TP
-12.5%
KEY STOCK DATA
Positives mostly priced in n
n
n
n
YE Dec (SGD m)
2012A
2013E
2014E
2015E
Revenue
939
1,180
1,729
2,170
Rec. net profit
465
408
448
498
Recurring EPS (SGD)
0.32
0.28
0.31
0.34
Prior rec. EPS (SGD)
0.32
0.27
0.33
0.38
Chg. In EPS est. (%)
0.0
2.5
(6.8)
(11.1)
EPS growth (%)
74.6
(12.2)
9.9
11.0
Facing slower sell-through in Singapore launches KPLD is seeing slower sales momentum. Sales from May’s mid-end launch Corals at Keppel Bay are so far moderate (158 units sold, out of 366), with Glades facing a harder sell (89 units sold, out of 726) as of September. Prime Kim Tian Rd is slated to launch in 1H14.
Recurring P/E (x)
11.7
13.3
12.1
10.9
Adjusting our EPS estimates We raise our 2013E EPS by 2.5% to factor in better-than-expected 3Q13 results, but cut 2014E/15E EPS by 6.8-11.1% to reflect our new home price assumptions. We are turning more cautious on the Singapore property sector as pent-up demand is easing amid rising supply, potentially dragging down home prices.
ROE (%)
Recent outperformance prices in positives: downgrade to HOLD KPLD has outperformed peers under our coverage recently, partly due to strong 3Q13 results, especially fund management growth and robust China unit sales ytd (up 216% y-y). The market has priced in most positives, in our view, and upside potential could be capped by oversupply risks in Singapore. Downgrade to HOLD, from Buy.
New TP pegged to a 32% discount to RNAV We lower our TP to SGD3.92 to reflect cuts to our EPS and RNAV estimates. Our new TP is pegged at a 32% discount to 2013E RNAV, or -0.5x SD. Our discount for KLPD is narrower than that for covered peers, to reflect potential monetising of its office assets (eg MBFC T3), which could result in special dividends, likely in 2014E.
Dividend yield (%) EV/EBITDA (x)
2.2
2.2
2.2
2.2
10.4
12.7
9.9
6.6
Price/book (x) Net debt/Equity (%)
Nov-12
Feb-13
0.9
0.9
0.9
0.8
22.2
1.0
(4.6)
(17.2)
8.0
6.6
7.2
7.6
May-13
Aug-13
Nov-13
4.51
21
4.01
11
3.51
1
3.01 (SGD)
Keppel Land
Share price performance
Rel to Straits Times Index
1 Month
3 Month
12 Month
Absolute (%)
0.3
2.5
13.2
Relative to country (%)
0.3
1.9
5.0
Next results
January 2014
Mkt cap (USD m)
KPLD’s discount to RNAV
Chong Kang Ho, CFA
[email protected] +65 6210 1956
Aug-13
May-13
Feb-13
Nov-12
Jul-12
Jan-12
Sep-11
Jun-11
Mar-11
Dec-10
Aug-10
May-10
Oct-09
Feb-10
Jul-09
Apr-09
Jan-09
-0.5 SD = -32% -1 SD = -43.4%
Sources: URA; HDB; Bloomberg; BNP Paribas estimates
40
(index) 250 200 150 100 50 0
+1 SD = 2% Mean = -20.7%
Apr-12
(%) 60 40 20 0 (20) (40) (60) (80)
(9) (%)
4,433
3m avg daily turnover (USD m)
6.5
Free float (%)
48
Major shareholder
Keppel Corporation (54%)
12m high/low (SGD) 3m historic vol. (%) ADR ticker ADR closing price (USD) Issued shares (m)
Sources: Bloomberg consensus; BNP Paribas estimates
4.31/3.27 20.1 1,490
Keppel Land
KPLD SP
Chong Kang Ho, CFA
Investment thesis
Catalyst
We are turning more cautious on Singapore residential given oversupply risk. See our accompanying sector report, 2014 – Shift towards home oversupply begins. We expect the period of supply shortages to end by 2015, on rising completed supply and easing pent-up demand. Unsold inventory has risen, with demand hit by the effects of the seven cooling measures, tighter immigration policies and prospects of higher interest rates. We expect new sales volumes to fall 28% in 2013 and another 7% by 2015 and home prices to fall 15% by 2015.
Potential catalysts include changes in economic conditions, movements in home volumes and prices, and corporate announcements of asset recycling.
For China, after a strong year of volume and price rises in 2013, we expect property sales to moderate in 2014, due to a higher base, potential measures such as property tax, and supply risks, especially in Tier 3/4 cities.
Risks to our call Downside risks include worse-than-expected economic slowdown, a sharper-than-expected rise in interest rates, and a failure to restock sufficient land bank at reasonable prices in Singapore and China. Upside risks include resilient home prices, better-thanexpected economic recovery, low interest rates for a prolonged period, reversal of cooling measures, and delay of completion of supply, due to a shortage of construction workers.
We raise 2013E EPS by 2.5% on better-than-expected 3Q results, but cut 2014-15E EPS 6.8-11.1% and RNAV by 6.2% to reflect our new home price assumptions. Thus, we cut our TP 12% to SGD3.92. Our new TP is pegged at a 32% discount to 2013E RNAV, or -0.5x SD. Our discount for KLPD is narrower than that for covered peers, to reflect potential monetising of its office assets (eg MBFC T3), which could result in special dividends.
Company background
Key assumptions
Keppel Land is the property arm of the Keppel Group, one of Singapore's largest mutinational conglomerates. Keppel Land focuses on two core businesses - property development and property fund management. It has major projects in Singapore, China, Vietnam, India and Indonesia, with total gross assets of more than SGD6b. The group has more than 100m sqft of land across Asia and the Middle East, which could yield a total of 60,000 homes.
2013E
2014E
(%)
(%)
SG ASP growth
0
(5)
SG Comm rental growth
0
5
Source: BNP Paribas estimates
Principal activities, revenue split FY12
Earnings sensitivity
Rental from invested properties 6.0%
Fund management 9.2%
Change in SG ASP (%) RNAV (SGD)
RNAV (SGD)
Property development 77.1%
Key executives
(15)
(10)
(5)
5.76
5.53
5.61
5.68
(4)
(3)
(1)
Change from base (%) Change in rental (%)
Hotel and resorts operations 7.7%
Base
Change from base (%)
Base
(15)
(10)
(5)
5.76
5.58
5.64
5.69
(3)
(2)
(1)
Source: BNP Paribas estimates Age
Since
Title
Chiau Beng Choo
65
01/21/85
Chairman of the Board
Wee Gee Ang
51
01/01/13
CEO, ED
Kei Hin Lim
55
07/09/07
CFO
Keppel Land’s major revenue sources are property development and rental income from investment properties. As such, key earnings drivers are home selling prices and rental rates.
http://www.keppelland.com.sg
41
BNP PARIBAS
20 NOVEMBER 2013
Keppel Land
KPLD SP
Chong Kang Ho, CFA
EXHIBIT 1: Keppel Land – outstanding residential land bank in Singapore as of September 2013 Site
Reflections at Keppel Bay Marina Bay Suites The Luxurie
Region
Location
Tenure
Mid end
Keppel Bay
99-yr
High end
Marina Bay
Stake
Attri. unsold GFA
Attri. unsold
Selling price
Breakeven
Dev margin
(%)
(sqft)
(units)
(SGD/sqft)
(SGD/sqft)
(%)
30
121,711
66
2000
848
58
99-yr
33
16,254
8
2800
1,033
63
Mass
Sengkang Square
99-yr
100
0
0
1020
837
18
Keppel & GE Tower
High end
Tanjong Pagar Rd
FH
100
477,706
590
2800
1,563
44
Corals at Keppel Bay
Mid end
Keppel Bay
99-yr
30
86,950
62
2100
797
62
Keppel Bay Plot 4
Mid end
Keppel Bay
99-yr
12
40,300
27
2000
793
60
Keppel Bay Plot 6
Mid end
Keppel Bay
99-yr
30
67,813
26
2000
793
60
Mass
Tanah Merah
99-yr
70
337,236
446
1450
1,231
15
High end
Tiong Bahru
99-yr
100
473,200
500
2000
1,765
12
1,621,170
1,725
The Glades Kim Tian Rd Site
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 2: Keppel Land – Residential land bank in Singapore, breakdown by segment value as of September 2013
EXHIBIT 3: Keppel Land – Residential land bank in Singapore, breakdown by segment sq ft as of September 2013
Mass (% by val) 14%
Mass (% by sqft) 21%
Mid (% by val) 19%
High (% by sqft) 60%
High (% by val) 67%
Sources: URA; HDB; Company data; BNP Paribas
Mid (% by sqft) 19%
Sources: URA; HDB; Company data; BNP Paribas
EXHIBIT 4: Keppel Land – unbilled residential sales in Singapore as of September 2013 (SGD703m) (SGD m)
Estimated attributable unbilled sales (LHS)
(%)
500
Uncompleted (RHS)
100
450
90
400
80
350
70
300
60
250
50
200
40
150
30
100
20
50
10
0
0 Lakefront Residences
Marina Bay Suites
The Luxurie
Corals @ Keppel Bay
Sources: URA; HDB; Company data; BNP Paribas estimates
42
BNP PARIBAS
20 NOVEMBER 2013
Keppel Land
KPLD SP
Chong Kang Ho, CFA
EXHIBIT 5: Discount to RNAV – our TP is pegged to 32% discount to RNAV, or -0.5x SD from mean % Premium/(discount) to RNAV (LHS) Home price index (RHS)
(%) 60 40
EXHIBIT 6: Forward P/BV and ROE
(index)
(x)
250
3.5
50
3.0
40
P/BV (x)
ROE (RHS)
(%)
200
30
2.5
20 +1 SD = 2%
0
150
10
Mean = -20.7% 100
-0.5 SD = -32% -1 SD = -43.4%
Jan-13
Jan-11
Jan-09
Jan-07
Jan-05
Jan-03
(30) Jan-01
0.0 Jan-99
(20) Jan-91
Apr-13
Jun-12
Jul-11
Sep-10
Nov-09
0
Jan-09
(80)
(10)
0.5 Jan-97
50
(60)
Sources: URA; HDB; Bloomberg; BNP Paribas
0
1.0
Jan-95
(40)
1.5
Jan-93
(20)
20
2.0
Sources: Bloomberg; BNP Paribas
We raise our 2013E EPS for KLPD by 2.5% on better-than-expected 3Q13 results. But, we lower our 2014E/15E EPS by 6.8-11.1% to partly factor in our new Singapore home price assumptions (we now assume prices will fall 15% by 2015, vs our previous estimate of a 10% decline). We also lower our RNAV estimate by 6.2% to SGD5.76/share, partly to factor in our new Singapore home price assumptions and changes in stock prices of the listed entities. Accordingly, we trim our TP by 12% to SGD3.92, offering upside potential of 6%. Our new TP is pegged to a 32% discount to RNAV, or -0.5x standard deviation to the mean of its discount to RNAV. This discount is slightly lower that what we have assigned to its peers, to reflect potential monetising of its office assets (eg MBFC T3), which may result in special dividends, likely in 2014E. Our new TP of SGD3.92 offers limited upside potential from current levels, hence we downgrade KPLD to HOLD, from Buy.
43
BNP PARIBAS
20 NOVEMBER 2013
Keppel Land
KPLD SP
Chong Kang Ho, CFA
EXHIBIT 7: Keppel Land - RNAV derivation (SGD m)
Attrib. value
Surplus
RNAV
Investment properties Estimated market value
1,708
Less: Book value
(1,302)
Surplus/ (deficit to book value)
406
Development properties NPV of future resi development profits Listed entities K-REIT Asia (KREIT SP)
1,828 Stake (%) 44.7
Surplus/ (deficit to book value)
Other business segments Fund management business
153
Stake (%)
P/E
FY13E PATMI
100
8
44
370
Total shareholders' equity as at FY12E
6,169
Total equity value for 2013E
8,927
RNAV per share
5.76
Fully-diluted share base (m)
1,550
Applied discount to RNAV (%)
(32)
Target price
3.92
Sources: Company data; URA; Bloomberg; BNP Paribas estimates
44
BNP PARIBAS
20 NOVEMBER 2013
Keppel Land
KPLD SP
Chong Kang Ho, CFA
Financial statements Keppel Land Profit and Loss (SGD m) Year Ending Dec Revenue Cost of sales ex depreciation Gross profit ex depreciation Other operating income Operating costs Operating EBITDA
2011A
2012A
2013A
2014E
949
939
1,180
1,729
2015E 2,170
(636)
(625)
(685)
(1,089)
(1,411)
313
314
496
640
760
99
100
84
76
80
(140)
(123)
(157)
(234)
(273)
273
291
423
482
567
(9)
(11)
(10)
(10)
(9)
0
0
0
0
0
Operating EBIT
264
280
413
473
558
Net financing costs
(35)
(40)
(38)
(33)
(33)
Associates
175
374
99
83
185
0
0
0
0
0
Non recurring items
591
373
0
0
0
Profit before tax
996
987
475
523
710 (58)
Depreciation Goodwill amortisation
Recurring non operating income
Tax
(108)
(122)
(38)
(43)
Profit after tax
888
865
437
479
653
Minority interests
(30)
(27)
(29)
(31)
(155)
Preferred dividends
0
0
0
0
0
Other items
0
0
0
0
0
858
838
408
448
498
(591)
(373)
0
0
0
266
465
408
448
498
Recurring EPS *
0.18
0.32
0.28
0.31
0.34
Reported EPS
0.59
0.57
0.28
0.31
0.34
DPS
0.18
0.08
0.08
0.08
0.08
Revenue (%)
38.5
(1.1)
25.7
46.5
25.5
Operating EBITDA (%)
15.0
6.6
45.3
14.0
17.6
Operating EBIT (%)
15.7
6.0
47.5
14.3
18.0
Recurring EPS (%)
(0.7)
74.6
(12.2)
9.9
11.0
Reported EPS (%)
22.1
(2.2)
(51.3)
9.9
11.0
Gross margin inc depreciation (%)
32.1
32.3
41.2
36.4
34.6
Operating EBITDA margin (%)
28.8
31.0
35.8
27.9
26.1
Operating EBIT margin (%)
27.9
29.8
35.0
27.3
25.7
Net margin (%)
28.1
49.5
34.6
25.9
22.9
Effective tax rate (%)
10.9
12.4
7.9
8.3
8.1
Dividend payout on recurring profit (%)
96.5
25.2
28.7
26.1
23.5
Reported net profit Non recurring items & goodwill (net) Recurring net profit Per share (SGD)
Growth
Operating performance
Interest cover (x) Inventory days
12.6
16.2
13.6
17.0
22.6
1,787.7
2,524.8
2,284.1
1,246.1
962.0
Debtor days
232.6
233.8
117.1
46.1
21.8
Creditor days
558.7
733.4
701.7
514.7
561.2
Operating ROIC (%)
5.1
4.6
7.0
10.2
14.0
ROIC (%)
6.0
7.2
5.6
7.0
9.7
ROE (%)
5.6
8.0
6.6
7.2
7.6
ROA (%)
3.7
5.0
4.4
4.9
6.0
2011A
2012A
2013E
2014E
2015E
708
724
942
1,490
1,921
Hotel and resorts operations
78
72
78
79
80
Fund management
82
86
88
90
99
Rental income from investment properties
80
56
71
71
71
0
0
0
0
0
*Pre exceptional, pre-goodwill and fully diluted
Revenue By Division (SGD m) Property development
Others
Sources: Keppel Land; BNP Paribas estimates
45
BNP PARIBAS
20 NOVEMBER 2013
Keppel Land
KPLD SP
Chong Kang Ho, CFA
Financial statements Keppel Land Cash Flow (SGD m) Year Ending Dec
2011A
2012A
2013E
2014E
2015E
266
465
408
448
498
Depreciation
9
11
10
10
9
Associates & minorities
0
(374)
(411)
(452)
(498) (105)
Recurring net profit
Other non-cash items
(112)
82
(168)
(68)
Recurring cash flow
163
184
(161)
(62)
(96)
(1,101)
(831)
(1,041)
(446)
(407)
Change in working capital Capex - maintenance Capex - new investment Free cash flow to equity Net acquisitions & disposals Dividends paid Non recurring cash flows Net cash flow Equity finance
(676)
(42)
(34)
(27)
(29)
0
(350)
(261)
(479)
(400)
(1,614)
(1,039)
(1,497)
(1,015)
(931)
1,578
44
811
186
274
0
0
0
0
0
15
0
8
8
5
(21)
(994)
(679)
(821)
(652)
3
2
150
150
150
Debt finance
365
672
1,063
1,085
1,394
Movement in cash
347
(320)
535
414
892
(0.07)
Per share (SGD) Recurring cash flow per share FCF to equity per share Balance Sheet (SGD m) Year Ending Dec Working capital assets
0.11
0.13
(0.11)
(0.04)
(1.10)
(0.71)
(1.02)
(0.69)
(0.64)
2011A
2012A
2013E
2014E
2015E
4,579
5,564
4,054
4,125
3,874
(1,051)
(1,459)
(1,173)
(1,899)
(2,438)
Net working capital
3,528
4,105
2,881
2,225
1,435
Tangible fixed assets
838
1,591
1,163
1,326
1,481
4,366
5,696
4,045
3,551
2,916
Goodwill
0
0
0
0
0
Other intangible assets
0
0
0
0
0
2,118
2,709
2,563
2,820
3,102
Working capital liabilities
Operating invested capital
Investments Other assets Invested capital Cash & equivalents Short term debt Long term debt * Net debt Deferred tax Other liabilities Total equity
0
0
0
0
0
6,484
8,405
6,608
6,371
6,018
(1,942)
(1,597)
(2,125)
(2,558)
(3,470)
208
723
204
224
217
2,336
2,349
1,985
2,039
2,045
602
1,475
65
(296)
(1,207)
45
151
59
67
63
0
0
0
0
0
5,419
6,169
6,125
6,292
6,821
Minority interests
294
477
235
185
217
Invested capital
6,484
8,405
6,608
6,371
6,018
* includes convertibles and preferred stock which is being treated as debt
Per share (SGD) Book value per share
3.64
4.14
4.11
4.22
4.58
Tangible book value per share
3.64
4.14
4.11
4.22
4.58
Financial strength Net debt/equity (%)
10.5
22.2
1.0
(4.6)
(17.2)
Net debt/total assets (%)
6.3
12.9
0.7
(2.7)
(10.1)
Current ratio (x)
5.2
3.3
4.5
3.1
2.8
(45.4)
(16.1)
(31.8)
(15.4)
(15.2)
CF interest cover (x) Valuation
2011A
2012A
2013E
2014E
2015E
Recurring P/E (x) *
20.4
11.7
13.3
12.1
10.9
Recurring P/E @ target price (x) *
21.5
12.3
14.1
12.8
11.5
Reported P/E (x)
6.3
6.5
13.3
12.1
10.9
Dividend yield (%)
4.7
2.2
2.2
2.2
2.2
P/CF (x)
33.3
29.5
(33.7)
(86.8)
(56.7)
P/FCF (x)
(3.4)
(5.2)
(3.6)
(5.3)
(5.8)
Price/book (x)
1.0
0.9
0.9
0.9
0.8
Price/tangible book (x)
1.0
0.9
0.9
0.9
0.8
EV/EBITDA (x) **
14.5
10.4
12.7
9.9
6.6
EV/EBITDA @ target price (x) **
15.2
10.9
13.3
10.5
7.0
1.0
0.9
0.9
0.8
0.8
EV/invested capital (x) * Pre exceptional, pre-goodwill and fully diluted
** EBITDA includes associate income and recurring non-operating income
Sources: Keppel Land; BNP Paribas estimates
46
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Financial statements CapitaLand Profit and Loss (SGD m) Year Ending Dec
2011A
2012A
2013E
2014E
3,020
3,301
3,967
4,625
5,084
(1,947)
(2,073)
(2,499)
(2,867)
(3,076)
1,073
1,228
1,468
1,757
2,008
714
587
653
639
683
Operating costs
(619)
(681)
(842)
(877)
(1,030)
Operating EBITDA
1,168
1,134
1,279
1,519
1,662
(39)
(45)
(29)
(30)
(34)
0
0
0
0
0
Operating EBIT
1,129
1,089
1,250
1,489
1,628
Net financing costs
(392)
(405)
(399)
(418)
(385)
877
835
269
221
133
(285)
(155)
(75)
(75)
(75)
Revenue Cost of sales ex depreciation Gross profit ex depreciation Other operating income
Depreciation Goodwill amortisation
Associates Recurring non operating income Non recurring items Profit before tax
2015E
285
155
75
75
75
1,614
1,518
1,119
1,292
1,376
Tax
(191)
(202)
(138)
(145)
(155)
Profit after tax
1,423
1,317
981
1,147
1,221
Minority interests
(366)
(386)
(202)
(235)
(251)
Preferred dividends
0
0
0
0
0
Other items
0
0
0
0
0
Reported net profit
1,057
930
779
911
970
Non recurring items & goodwill (net)
(285)
(155)
(75)
(75)
(75)
772
775
704
836
895
Recurring EPS *
0.18
0.18
0.16
0.20
0.21
Reported EPS
0.25
0.22
0.18
0.21
0.23
DPS
0.06
0.08
0.06
0.06
0.06
Recurring net profit Per share (SGD)
Growth Revenue (%)
(10.8)
9.3
20.2
16.6
9.9
Operating EBITDA (%)
(27.0)
(2.9)
12.8
18.8
9.4
Operating EBIT (%)
(26.8)
(3.6)
14.8
19.2
9.3
Recurring EPS (%)
(18.8)
(0.1)
(9.2)
18.7
7.1
Reported EPS (%)
(25.9)
(11.8)
(16.2)
16.9
6.5
Gross margin inc depreciation (%)
34.2
35.8
36.3
37.3
38.8
Operating EBITDA margin (%)
38.7
34.3
32.2
32.8
32.7
Operating EBIT margin (%)
37.4
33.0
31.5
32.2
32.0
Net margin (%)
25.6
23.5
17.8
18.1
17.6
Effective tax rate (%)
11.8
13.3
12.3
11.3
11.3
Dividend payout on recurring profit (%)
33.3
44.5
36.5
30.7
28.7
Interest cover (x)
4.4
4.4
3.6
3.9
4.4
Inventory days
0.0
0.0
0.0
0.0
0.0
Debtor days
235.9
179.9
159.3
170.1
175.2
Creditor days
405.1
407.6
365.4
351.6
359.0
13.5
12.0
12.1
13.2
14.1
ROIC (%)
5.8
5.2
3.8
4.2
4.3
ROE (%)
5.3
5.2
4.6
5.2
5.4
ROA (%)
4.3
4.1
3.2
3.5
3.5
Operating performance
Operating ROIC (%)
*Pre exceptional, pre-goodwill and fully diluted
Revenue By Division (SGD m)
2011A
2012A
2013E
2014E
2015E
Residential
774
854
2,054
2,672
3,090
Commercial
97
87
106
106
106
Retail
246
354
338
372
391
Financial services
103
114
107
110
112
The Ascott Group & ART
377
382
341
324
324
0
0
0
0
0
1,422
1,511
1,020
1,040
1,061
RHL Group & RCH Others and consolidation adjustments
Sources: CapitaLand; BNP Paribas estimates
47
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Financial statements CapitaLand Cash Flow (SGD m) Year Ending Dec
2011A
2012A
2013E
2014E
2015E
772
775
704
836
895
39
45
29
30
34
(511)
(449)
(67)
15
118
Other non-cash items
414
506
407
449
418
Recurring cash flow
714
878
1,074
1,330
1,465
(1,328)
(476)
(1,527)
(106)
71
(135)
(146)
(500)
(306)
(403)
Capex - new investment
(1,981)
(916)
(1,448)
(1,182)
(1,315)
Free cash flow to equity
(2,730)
(660)
(2,401)
(264)
(182)
321
(1,490)
(919)
(1,153)
(1,036)
(402)
(493)
(403)
(405)
(404)
(6)
(39)
2,806
1,396
1,366
Net cash flow
(2,817)
(2,681)
(917)
(425)
(256)
Equity finance
(61)
1
12
7
9
Debt finance
1,941
2,000
2,626
(681)
(688)
Movement in cash
(937)
(680)
1,721
(1,100)
(935)
Recurring net profit Depreciation Associates & minorities
Change in working capital Capex - maintenance
Net acquisitions & disposals Dividends paid Non recurring cash flows
Per share (SGD) Recurring cash flow per share FCF to equity per share Balance Sheet (SGD m) Year Ending Dec Working capital assets Working capital liabilities
0.17
0.21
0.25
0.31
0.34
(0.64)
(0.16)
(0.57)
(0.06)
(0.04)
2011A
2012A
2013E
2014E
2015E
8,869
9,196
11,164
11,574
11,859
(2,712)
(2,792)
(3,238)
(3,569)
(3,931)
Net working capital
6,158
6,404
7,926
8,005
7,928
Tangible fixed assets
1,076
1,264
1,175
1,220
1,359
Operating invested capital
7,233
7,668
9,100
9,225
9,286
0
0
0
0
0
459
462
459
459
459
Investments
10,685
12,511
13,685
13,685
13,685
Other assets
7,966
8,857
8,054
8,069
8,087
Invested capital
26,343
29,498
31,298
31,438
31,517
Cash & equivalents
(6,264)
(5,498)
(5,146)
(6,081)
(7,432)
860
782
959
959
959
11,330
13,398
14,669
14,669
14,669
5,926
8,682
10,482
9,548
8,197
0
0
0
0
0
1,178
1,372
670
1,056
1,751 16,984
Goodwill Other intangible assets
Short term debt Long term debt * Net debt Deferred tax Other liabilities Total equity
14,902
15,080
15,610
16,266
Minority interests
4,338
4,363
4,536
4,569
4,585
Invested capital
26,343
29,498
31,298
31,438
31,517
* includes convertibles and preferred stock which is being treated as debt
Per share (SGD) Book value per share
3.51
3.57
3.69
3.85
4.02
Tangible book value per share
3.40
3.46
3.59
3.74
3.91
Net debt/equity (%)
30.8
44.7
52.0
45.8
38.0
Net debt/total assets (%)
16.8
23.0
26.4
23.2
19.1
4.2
4.1
3.9
3.9
3.9
(0.9)
1.6
(1.4)
3.2
3.9
2011A
2012A
2013E
2014E
2015E 14.8
Financial strength
Current ratio (x) CF interest cover (x) Valuation Recurring P/E (x) *
17.1
17.1
18.9
15.9
Recurring P/E @ target price (x) *
20.7
20.7
22.8
19.2
17.9
Reported P/E (x)
12.5
14.2
16.9
14.5
13.6
Dividend yield (%)
1.9
2.6
1.9
1.9
1.9
P/CF (x)
18.5
15.0
12.3
9.9
9.0
P/FCF (x)
(4.8)
(20.0)
(5.5)
(49.9)
(72.3)
Price/book (x)
0.9
0.9
0.8
0.8
0.8
Price/tangible book (x)
0.9
0.9
0.9
0.8
0.8
EV/EBITDA (x) **
12.4
13.7
18.4
16.6
15.4
EV/EBITDA @ target price (x) **
14.0
15.2
20.3
18.3
17.0
0.9
0.9
0.9
0.9
0.8
EV/invested capital (x) * Pre exceptional, pre-goodwill and fully diluted
** EBITDA includes associate income and recurring non-operating income
Sources: CapitaLand; BNP Paribas estimates
48
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Financial statements Fraser & Neave Profit and Loss (SGD m) Year Ending Sep
2011A
2012A
2013E
2014E
6,274
3,596
4,394
4,994
5,873
(4,162)
(2,412)
(2,724)
(3,321)
(3,994)
2,112
1,184
1,670
1,673
1,879
191
374
44
41
43
Operating costs
(961)
(655)
(722)
(822)
(973)
Operating EBITDA
1,342
903
992
892
949
Depreciation
(120)
(81)
(95)
(108)
(120)
Revenue Cost of sales ex depreciation Gross profit ex depreciation Other operating income
Goodwill amortisation Operating EBIT Net financing costs
2015E
0
0
0
0
0
1,222
822
897
785
829
(54)
(84)
(62)
(59)
(47)
Associates
69
60
247
289
241
Recurring non operating income
33
(48)
0
0
0
142
360
0
0
0
1,413
1,111
1,082
1,015
1,023 (222)
Non recurring items Profit before tax Tax
(299)
(100)
(234)
(222)
Profit after tax
1,114
1,010
848
793
801
Minority interests
(239)
(175)
(193)
(186)
(185)
Preferred dividends
0
0
0
0
0
Other items
0
0
0
0
0
875
836
655
607
616
(142)
(360)
0
0
0
733
476
655
607
616
Recurring EPS *
0.51
0.33
0.45
0.41
0.41
Reported EPS
0.62
0.59
0.45
0.42
0.42
DPS
0.18
0.18
0.18
0.29
0.27
Reported net profit Non recurring items & goodwill (net) Recurring net profit Per share (SGD)
Growth Revenue (%)
10.1
(42.7)
22.2
13.7
17.6
Operating EBITDA (%)
7.9
(32.7)
9.8
(10.0)
6.4
Operating EBIT (%)
8.3
(32.8)
9.1
(12.5)
5.7
Recurring EPS (%)
40.4
(35.2)
36.1
(8.4)
0.3
Reported EPS (%)
6.1
(5.7)
(22.5)
(8.4)
0.3
Gross margin inc depreciation (%)
31.8
30.7
35.8
31.3
30.0
Operating EBITDA margin (%)
21.4
25.1
22.6
17.9
16.2
Operating EBIT margin (%)
19.5
22.9
20.4
15.7
14.1
Net margin (%)
11.7
13.2
14.9
12.2
10.5
Effective tax rate (%)
21.1
9.0
21.6
21.9
21.7
Dividend payout on recurring profit (%)
35.4
54.6
40.0
69.5
64.7
Interest cover (x)
24.6
10.0
18.5
18.3
22.6
Inventory days
33.6
48.4
36.5
31.5
27.5
Debtor days
74.2
99.6
63.6
66.2
65.2
Creditor days
127.6
216.2
181.6
167.1
171.9
Operating ROIC (%)
18.2
13.7
13.5
13.8
17.0
ROIC (%)
10.2
7.2
8.1
7.6
7.9
ROE (%)
11.3
6.6
8.4
7.4
7.2
ROA (%)
7.4
5.1
6.0
5.5
5.5
Operating performance
*Pre exceptional, pre-goodwill and fully diluted
Revenue By Division (SGD m)
2011A
2012A
2013E
2014E
2015E
Sale of properties
1,831
1,033
1,498
1,846
2,502
Sale of goods
3,909
1,985
2,401
2,634
2,841
Sale of services
244
273
208
221
233
Gross rental income
267
280
263
269
273
23
25
24
25
24
Others
Sources: Fraser & Neave; BNP Paribas estimates
49
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Financial statements Fraser & Neave Cash Flow (SGD m) Year Ending Sep
2011A
2012A
2013E
2014E
2015E
Recurring net profit
733
476
655
607
616
Depreciation
120
81
95
108
120
Associates & minorities
170
114
(54)
(103)
(56)
Other non-cash items
(183)
(339)
466
592
(63)
Recurring cash flow
839
332
1,162
1,204
617
Change in working capital
311
1,285
(419)
(79)
(240)
Capex - maintenance
0
0
0
0
0
(233)
(53)
(143)
(98)
(121)
917
1,564
600
1,026
257
55
(80)
74
66
69
Dividends paid
(460)
(419)
(445)
(593)
(575)
Non recurring cash flows
Capex - new investment Free cash flow to equity Net acquisitions & disposals
(311)
(269)
(254)
(241)
(247)
Net cash flow
200
797
(25)
259
(496)
Equity finance
56
87
62
72
68
Debt finance
(410)
324
90
(358)
(659)
Movement in cash
(155)
1,207
127
(27)
(1,087)
Recurring cash flow per share
0.59
0.23
0.80
0.82
0.42
FCF to equity per share
0.65
1.10
0.42
0.70
0.17
2011A
2012A
2013E
2014E
2015E
Per share (SGD)
Balance Sheet (SGD m) Year Ending Sep Working capital assets
5,898
7,187
5,813
5,558
5,110
(1,795)
(2,304)
(1,897)
(2,510)
(2,680)
Net working capital
4,103
4,884
3,917
3,048
2,430
Tangible fixed assets
1,187
747
899
1,023
1,138
Operating invested capital
5,290
5,631
4,815
4,071
3,568
0
0
0
0
0
571
163
172
180
189
Investments
1,847
1,870
1,900
1,931
1,962
Other assets
2,598
3,003
4,396
4,564
4,733
Invested capital
10,378
10,698
11,314
10,776
10,483
Cash & equivalents
(1,600)
(1,649)
(2,153)
(1,966)
(1,804)
748
936
1,567
1,271
1,027
Long term debt *
3,216
2,972
2,755
2,208
1,794
Net debt
2,364
2,259
2,170
1,514
1,017
Deferred tax
176
129
185
190
196
Other liabilities
117
56
86
72
79
6,882
7,591
8,087
8,348
8,635
Working capital liabilities
Goodwill Other intangible assets
Short term debt
Total equity Minority interests
839
663
785
654
556
Invested capital
10,378
10,698
11,314
10,777
10,483
* includes convertibles and preferred stock which is being treated as debt
Per share (SGD) Book value per share
4.88
5.32
5.60
5.71
5.84
Tangible book value per share
4.42
5.18
5.46
5.57
5.70
Net debt/equity (%)
30.6
27.4
24.5
16.8
11.1
Net debt/total assets (%)
17.2
15.4
14.1
9.9
6.8
2.9
2.7
2.3
2.0
1.9
22.4
20.3
13.0
20.2
9.0
Financial strength
Current ratio (x) CF interest cover (x) Valuation
2011A
2012A
2013E
2014E
2015E
Recurring P/E (x) *
11.3
17.5
12.8
14.0
14.0
Recurring P/E @ target price (x) *
11.8
18.2
13.4
14.6
14.5
Reported P/E (x)
9.3
9.9
12.7
13.9
13.8
Dividend yield (%)
3.1
3.1
3.1
5.0
4.6
P/CF (x)
9.7
24.8
7.2
7.0
13.8
P/FCF (x)
8.9
5.3
13.9
8.2
33.2
Price/book (x)
1.2
1.1
1.0
1.0
1.0
Price/tangible book (x)
1.3
1.1
1.1
1.0
1.0
EV/EBITDA (x) **
8.0
12.3
9.1
9.3
8.7
EV/EBITDA @ target price (x) **
8.2
12.7
9.3
9.6
9.0
EV/invested capital (x)
1.1
1.0
1.0
1.0
1.0
* Pre exceptional, pre-goodwill and fully diluted
** EBITDA includes associate income and recurring non-operating income
Sources: Fraser & Neave; BNP Paribas estimates
50
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
Disclaimers and Disclosures APPENDIX DISCLAIMERS AND DISCLOSURES APPLICABLE TO NON-US BROKER-DEALER(S) (BNP Paribas Securities (Singapore) Pte Ltd, Co. Reg. No. 199801966C) ANALYST(S) CERTIFICATION Chong Kang Ho, CFA, BNP Paribas Securities (Singapore) Pte Ltd, Co. Reg. No. 199801966C, +65 6210 1956,
[email protected]. The analyst(s) or strategist(s) herein each referred to as analyst(s) named in this report certify(ies) that (i) all views expressed in this report accurately reflect the personal view of the analyst(s) with regard to any and all of the subject securities, companies or issuers mentioned in this report; and (ii) no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst herein. Analysts mentioned in this disclaimer are employed by a non-US affiliate of BNP Paribas Securities Corp., and are not registered/ qualified pursuant to NYSE and/or FINRA regulations.
IMPORTANT DISCLOSURES REQUIRED IN THE UNITED STATES BY FINRA RULES AND OTHER JURISDICTIONS
"BNP Paribas” is the marketing name for the global banking and markets business of BNP Paribas Group. No portion of this report was prepared by BNP Paribas Securities Corp (US) personnel, and it is considered Third-Party Affiliate research under NASD Rule 2711. The following disclosures relate to relationships between companies covered in this research report and the BNP entity identified on the cover of this report, BNP Securities Corp., and other entities within the BNP Paribas Group (collectively, "BNP Paribas"). The disclosure column in the following table lists the important disclosures applicable to each company that has been rated and/or recommended in this report: Company
Ticker
CapitaLand
CAPL SP
Disclosure (as applicable) 6
BNP Paribas represents that: 1. Within the past year, it has managed or co-managed a public offering for this company, for which it received fees. 2. It had an investment banking relationship with this company in the last 12 months. 3. It received compensation for investment banking services from this company in the last 12 months. 4. It expects to receive or intends to seek compensation for investment banking services from the subject company/ies in the next 3 months. 5. It beneficially owns 1% or more of any class of common equity securities of the subject company. 6. It makes a market in securities in respect of this company. 7. The analyst(s) or an individual who assisted in the preparation of this report (or a member of his/her household) has a financial interest position in securities issued by this company. The financial interest is in the common stock of the subject company, unless otherwise noted. 8. The analyst (or a member of his/her household) is an officer, director, or advisory board member of this company or has received compensation from the company.
IMPORTANT DISCLOSURES REQUIRED IN KOREA
The disclosure column in the following table lists the important disclosures applicable to each Korea listed company that has been rated and/or recommended in this report:
Company CapitaLand Keppel Land City Developments Fraser & Neave
1. 2. 3. 4. 5. 6. 7. 8. 9.
51
Ticker CAPL SP KPLD SP CIT SP FNN SP
Price (as of 19-Nov-2013 closing price) SGD3.10 SGD3.70 SGD10.24 SGD5.77
Interest NA NA NA NA
The performance of obligations of the Company is directly or indirectly guaranteed by BNP Paribas Securities Korea Co. Ltd (“BNPPSK”) by means of payment guarantees, endorsements, and provision of collaterals and/or taking over the obligations. BNPPSK owns 1/100 or more of the total outstanding shares issued by the Company. The Company is an affiliate of BNPPSK as prescribed by Item 3, Article 2 of the Monopoly Regulation and Fair Trade Act. BNPPSK is the financial advisory agent of the Company for the Merger and Acquisition transaction or of the Target Company whereby the size of the transaction does not exceed 5/100 of the total asset of the Company or the total number of outstanding shares. BNPPSK has taken financial advisory service regarding listing to the Company within the past 1 year. With regards to the tender offer initiated by the Company based on Item 2, Article 133 of the Financial Investment Services and Capital Market Act, BNPPSK acts in the capacity of the agent for the tender offer designated either by the Company or by the target company, provided that this provision shall apply only where tender offer has not expired. the listed company which issued the stocks in question in case where 40 days has not passed since the new shares were listed from the date of entering into arrangement for public offering or underwriting-related agreement for issuance of stocks The Company is recognized as having considerable interests with BNPPSK. The analyst or his/her spouse owns (including delivery claims of marketable securities based on legal regulations and trading and misc. contracts) the following securities or rights (hereinafter referred to as “Securities, etc.” in this Article) regardless of whose name is used in the trading. 1) Stocks, bond with stock certificate, and certificate of pre-emptive rights issued by the Company whose securities dealings are being solicited. 2) Stock options of the Company whose securities dealings are being solicited. 3) Individual stock future, stock option, and warrants that use the stocks specified in Item 1) as underlying.
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers History of change in investment rating and/or target price
CapitaLand (CAPL SP) Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13
Date 18-Nov-09
4.48
7-Dec-09 5-Jul-11
3.98
Reco
TP
REDUCE
3.14
HOLD
4.02
BUY
3.40
3.48 2.98 2.48 1.98 (SGD)
CapitaLand
Target Price
Chong Kang Ho started covering this stock from 05-Jul-2011 Price and TP are in local currency Valuation and risks: Key downside risks to our RNAV-based TP are more servere than expected cooling measures in Singapore and China, and failure to maximise value from recycling of non-core assets. Sources: Bloomberg; BNP Paribas
Keppel Land (KPLD SP) Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13
Date 18-Nov-09
5.20
26-Jan-10
4.70
5-Jul-11
4.20
Reco
TP
REDUCE
1.90
HOLD
3.40
BUY
4.60
3.70 3.20 2.70 2.20 1.70 (SGD)
Keppel Land
Target Price
Chong Kang Ho started covering this stock from 05-Jul-2011 Price and TP are in local currency Valuation and risks: Key downside risks to our RNAV-based TP are more severe than expected cooling measures in Singapore and China, and failure to miximise value from potential divestment of its office assets in Singapore. Upside risks include better than expected economic recovery. Sources: Bloomberg; BNP Paribas
52
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
City Developments (CIT SP) Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13
Reco
TP
18-Nov-09
BUY
10.83
17-Nov-11
HOLD
10.06
12.88
28-Feb-12
REDUCE
9.59
11.88
19-Jun-13
HOLD
9.95
14.88 13.88
Date
10.88 9.88 8.88 7.88 (SGD)
City Developments
Target Price
Chong Kang Ho started covering this stock from 05-Jul-2011 Price and TP are in local currency Valuation and risks: Key upside risks to our RNAV-based TP are better than expected economic recovery, less punitive or reversal in cooling measures, and better than expected performance from the hotel operations. Sources: Bloomberg; BNP Paribas
Fraser & Neave (FNN SP) Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 10.25
Date 18-Nov-09 19-Jul-12
9.25
Reco
TP
BUY
4.42
HOLD
7.60
8.25 7.25 6.25 5.25 4.25 3.25 (SGD)
Fraser & Neave
Target Price
Chong Kang Ho started covering this stock from 05-Jun-2012 Price and TP are in local currency Valuation and risks: Key downside risks to our RNAV-based TP are failure to maximise synergies with Thai Bev on F&B operations, more severe than expected cooling measures in Singapore and China, and rising raw material costs. Upside risks include better than expected economic recovery. Sources: Bloomberg; BNP Paribas
GENERAL DISCLAIMER
This report was produced by BNP Paribas Securities (Singapore) Pte Ltd, Co. Reg. No. 199801966C, member company(ies) of the BNP Paribas Group. This report is for the use of intended recipients only and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set forth herein. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Customers are advised to use the information contained herein as just one of many inputs and considerations prior to engaging in any trading activity. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or other investments. This report is not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Information and opinions contained in this report are published for reference of the recipients and are not to be relied upon as authoritative or without the recipient’s own independent verification, or taken in substitution for the exercise of judgment by the recipient. Additionally, the products mentioned in this report may not be available for sale in certain jurisdictions. As an investment bank with a wide range of activities, BNP Paribas may face conflicts of interest, which are resolved under applicable legal provisions and internal guidelines. You should be aware, however, that BNP Paribas may engage in transactions in a manner inconsistent with the views expressed in this document, either for its own account or for the account of its clients. Australia: This report is being distributed in Australia by BNP Paribas Sydney Branch, registered in Australia as ABN 23 000 000 117 at 60 Castlereagh Street Sydney NSW 2000. BNP Paribas Sydney Branch is licensed under the Banking Act 1959 and the holder of Australian Financial Services Licence no. 238043 and therefore subject to regulation by the Australian Securities & Investments Commission in relation to delivery of financial services. By accepting this document you agree to be bound by the foregoing limitations, and acknowledge that information and opinions in this document relate to financial products or financial services which are delivered solely to wholesale clients (in terms of the Corporations Act 2001, sections 761G and 761GA; Corporations Regulations 2001, division 2, reg. 7.1.18 & 7.1.19) and/or professional investors (as defined in section 9 of the Corporations Act 2001). Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent
53
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offence. Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by BNP Paribas Securities (Asia) Limited to persons whose business involves the acquisition, disposal or holding of securities, whether as principal or agent. BNP Paribas Securities (Asia) Limited, a subsidiary of BNP Paribas, is regulated by the Securities and Futures Commission for the conduct of dealing in securities, advising on securities, providing automated trading services, dealing in futures contacts and advising on corporate finance. For professional investors in Hong Kong, please contact BNP Paribas Securities (Asia) Limited for all matters and queries relating to this report. India: In India, this document is being distributed by BNP Paribas Securities India Pvt. Ltd. ("BNPPSIPL"), having its registered office at 5th floor, BNP Paribas House, 1 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 (Tel. no. +91 22 3370 4000 / 6196 4000). BNPPSIPL is registered with the Securities and Exchange Board of India (“SEBI”) as a stockbroker in the Equities and the Futures & Options segments of National Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd. (SEBI regn. nos. INB/INF231474835, INB/INF011474831). Indonesia: This report is being distributed by PT BNP Paribas Securities Indonesia and is delivered by licensed employee(s) to its clients. PT BNP Paribas Securities Indonesia, having its registered office at Menara BCA, 35th Floor, Grand Indonesia, Jl. M.H.Thamrin No.1, Jakarta, 10310, Indonesia, is a fully subsidiaries company of BNP Paribas SA and is licensed under Capital Market Law No. 8 of 1995 and the holder of broker-dealer and underwriter licenses issued by the Capital Market and Financial Institutions Supervisory Agency (BAPEPAM-LK). PT BNP Paribas Securities Indonesia is also a member of Indonesia Stock Exchange. Neither this research publication nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens except in compliance with applicable Indonesian capital market laws and regulations. This research publication is not an offer of securities in Indonesia. Some of the securities referred to in this research publication have not been registered with the Capital Market and Financial Institutions Supervisory Agency (BAPEPAM-LK) pursuant to relevant capital market laws and regulations, and may not be offered or sold within the territory of the Republic of Indonesia or to Indonesian citizens through a public offering or in circumstance which constitute an offer within the meaning of Indonesian capital market laws and regulations. Japan: This report is being distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited or by a subsidiary or affiliate of BNP Paribas not registered as a financial instruments firm in Japan, to certain financial institutions defined by article 17-3, item 1 of the Financial Instruments and Exchange Law Enforcement Order. BNP Paribas Securities (Japan) Limited is a financial instruments firm registered according to the Financial Instruments and Exchange Law of Japan and a member of the Japan Securities Dealers Association, the Financial Futures Association of Japan and the Type II Financial Instruments Firms Association. BNP Paribas Securities (Japan) Limited accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Malaysia: This report is issued and distributed by BNP Paribas Capital (Malaysia) Sdn Bhd. The views and opinions in this research report are our own as of the date hereof and are subject to change. BNP Paribas Capital (Malaysia) Sdn Bhd has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of BNP Paribas Capital (Malaysia) Sdn Bhd. This publication is being provided to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of BNP Paribas Capital (Malaysia) Sdn Bhd. Philippines: This report is being distributed in the Philippines by BNP Paribas Manila Branch, an Offshore Banking Unit (OBU) of BNP Paribas whose head office is in Paris, France. BNP Paribas Manila OBU is registered as an offshore banking unit under Presidential Decree No. 1034 (PD 1034), and regulated by the Bangko Sentral ng Pilipinas. This report is being distributed in the Philippines to qualified clients of OBUs as allowed under PD 1034, and is qualified in its entirety to the products and services allowed under PD 1034. Singapore: This report is distributed in Singapore by BNP Paribas Securities (Singapore) Pte Ltd ("BNPPSSL") and may be distributed in Singapore only to an Accredited or Institutional Investor, each as defined under the Financial Advisers Regulations ("FAR") and the Securities and Futures Act (Chapter 289) of Singapore, as amended from time to time. In relation to the distribution to such categories of investors, BNPPSSL and its representatives are exempted under Regulation 35 of the FAR from the requirements in Section 36 of the Financial Advisers Act of Singapore, regarding the disclosure of certain interests in, or certain interests in the acquisition or disposal of, securities referred to in this report. For Institutional and Accredited Investors in Singapore, please contact BNP Paribas Securities (Singapore) Ptd Ltd for all matters and queries relating to this report. South Africa: In South Africa, BNP Paribas Cadiz Securities (Pty) Ltd and BNP Paribas Cadiz Stock Broking (Pty) Ltd (hereinafter referred to as “BNPP Cadiz”) are licensed members of Johannesburg Stock Exchange and are authorised Financial Services Providers and subject to regulation by the Financial Services Board. BNPP Cadiz does not expressly or by implication represent, recommend or propose that the financial products referred to in this report are appropriate to the particular investment objectives, financial situation or particular needs of the recipient. Switzerland: This report is intended solely for customers who are “Qualified Investors” as defined in article 10 paragraphs 3 and 4 of the Swiss Federal Act on Collective Investment Schemes of 23 June 2006 (CISA) and the relevant provisions of the Swiss Federal Ordinance on Collective Investment Schemes of 22 November 2006 (CISO). “Qualified Investors” includes, among others, regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes, regulated insurance companies as well as pension funds and companies with professional treasury operations. This document may not be suitable for customers who are not Qualified Investors and should only be used and passed on to Qualified Investors. For specification purposes, a “Swiss Corporate Customer” is a Client which is a corporate entity, incorporated and existing under the laws of Switzerland and which qualifies as “Qualified Investor” as defined above." BNP Paribas (Suisse) SA is authorised as bank and as securities dealer by the Swiss Federal Market Supervisory Authority FINMA. BNP Paribas (Suisse) SA is registered at the Geneva commercial register under No. CH-270-3000542-1. BNP Paribas (Suisse) SA is incorporated in Switzerland with limited liability. Registered Office: 2 place de Hollande, CH-1204 Geneva. Taiwan: Information on securities that trade in Taiwan is distributed by BNP Paribas Securities (Taiwan) Co., Ltd. Such information is for your reference only. The reader should independently evaluate the investment risks and is solely responsible for their investment decision. Information on securities that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities. BNP Paribas Securities (Taiwan) Co., Ltd. may not execute transactions for clients in these securities. This publication may not be distributed to the public media or quoted or used by the public media without the express written consent of BNP Paribas. Thailand: Research relating to Thailand and Thailand based issuers is produced pursuant to an arrangement between BNP PARIBAS (“BNPP”) and Finansia Syrus Securities Public Company Limited (“FSS”). The International Investment Advisory Team at FSS prepares and distributes research under the brand name “BNP PARIBAS/FSS”. FSS is not an affiliate of BNPP. FSS also publishes a different research product under the brand name “FINANSIA SYRUS,” which is prepared by research analysts who are not part of the International Investment Advisory Team and who may cover the same securities, issuers, or industries that are the subject of this report. The ratings, recommendations, and views expressed in this report may differ from the ratings, recommendations, and views expressed by other research analysts or research teams employed by FSS. This report is being distributed outside Thailand by members of BNP Paribas. Turkey: This report is being distributed in Turkey by TEB Investment and outside Turkey jointly by TEB Investment and BNP Paribas. Notice Published in accordance with “Communiqué Regarding the Principles on Investment Consultancy Activities and the Investment Consultancy Institutions” Series: V, No: 55 issued by the Capital Markets Board. The investment related information, commentary and recommendations contained herein do not constitute investment consultancy services. Investment consultancy services are provided in accordance with investment consultancy agreements executed between investors and brokerage companies or portfolio management companies or non-deposit accepting banks. The commentary and recommendations contained herein are based on the personal views of the persons who have made such commentary and recommendations. These views may not conform to your financial standing or to your risk and return preferences. Therefore, investment decisions based solely on the information provided herein may fail to produce results in accordance with your expectations. United States: This report may be distributed in the United States only to U.S. Persons who are “major U.S. institutional investors” (as such term is defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) and is not intended for the use of any person or entity that is not a “major U.S.
54
BNP PARIBAS
20 NOVEMBER 2013
Chong Kang Ho, CFA
Singapore Developers
institutional investor”. U.S persons who wish to effect transactions in securities discussed herein must do so through BNP Paribas Securities Corp., a USregistered broker dealer and member of FINRA, SIPC, NFA, NYSE and other principal exchanges. Certain countries within the European Economic Area: This document may only be distributed in the United Kingdom to eligible counterparties and professional clients and is not intended for, and should not be circulated to, retail clients (as such terms are defined in the Markets in Financial Instruments Directive 2004/39/EC (“MiFID”)). This document will have been approved for publication and distribution in the United Kingdom by BNP Paribas London Branch, a branch of BNP Paribas SA whose head office is in Paris, France. BNP Paribas SA is incorporated in France with limited liability with its registered office at 16 boulevard des Italiens, 75009 Paris. BNP Paribas London Branch (registered office: 10 Harewood Avenue, London NW1 6AA; tel: [44 20] 7595 2000; fax: [44 20] 7595 2555) is authorised by the Autorité de Contrôle Prudentiel and the Prudential Regulation Authority and subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority are available from us on request.This report has been approved for publication in France by BNP Paribas, a credit institution licensed as an investment services provider by the Autorité de Contrôle Prudentiel whose head office is 16, Boulevard des Italiens 75009 Paris, France. This report is being distributed in Germany either by BNP Paribas London Branch or by BNP Paribas Niederlassung Frankfurt am Main, regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). Other Jurisdictions: The distribution of this report in other jurisdictions or to residents of other jurisdictions may also be restricted by law, and persons into whose possession this report comes should inform themselves about, and observe, any such restrictions. By accepting this report you agree to be bound by the foregoing instructions. This report is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. All research reports are disseminated and available to all clients simultaneously through our internal client websites. For all research available on a particular stock, please contact the relevant BNP Paribas research team or the author(s) of this report. Additional Disclosures Target price history, stock price charts, valuation and risk details, and equity rating histories applicable to each company rated in this report is available in our most recently published reports available on our website: http://eqresearch.bnpparibas.com, or you can contact the analyst named on the front of this note or your BNP Paribas representative. All share prices are as at market close on 19 November 2013 unless otherwise stated.
RECOMMENDATION STRUCTURE Stock Ratings Stock ratings are based on absolute upside or downside, which we define as (target price* - current price) / current price. BUY (B). The upside is 10% or more. HOLD (H). The upside or downside is less than 10%. REDUCE (R). The downside is 10% or more. Unless otherwise specified, these recommendations are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on market price and the formal recommendation. * In most cases, the target price will equal the analyst's assessment of the current fair value of the stock. However, if the analyst doesn't think the market will reassess the stock over the specified time horizon due to a lack of events or catalysts, then the target price may differ from fair value. In most cases, therefore, our recommendation is an assessment of the mismatch between current market price and our assessment of current fair value.
Industry Recommendations Improving (é): The analyst expects the fundamental conditions of the sector to be positive over the next 12 months. Stable (previously known as Neutral) (çè): The analyst expects the fundamental conditions of the sector to be maintained over the next 12 months. Deteriorating (ê): The analyst expects the fundamental conditions of the sector to be negative over the next 12 months. Country (Strategy) Recommendations Overweight (O). Over the next 12 months, the analyst expects the market to score positively on two or more of the criteria used to determine market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. Neutral (N). Over the next 12 months, the analyst expects the market to score positively on one of the criteria used to determine market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. Underweight (U). Over the next 12 months, the analyst does not expect the market to score positively on any of the criteria used to determine market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity.
RATING DISTRIBUTION (as at 20 November 2013) Total BNP Paribas coverage universe
642
Investment Banking Relationship
(%)
Buy Hold
326
Buy
5.2
194
Hold
1.6
Reduce
122
Reduce
3.2
Should you require additional information concerning this report please contact the relevant BNP Paribas research team or the author(s) of this report. © 2013 BNP Paribas Group
55
BNP PARIBAS
20 NOVEMBER 2013
HONG KONG
BEIJING
BANGKOK
BNP Paribas (China) Ltd Beijing Branch Room 2001, 20/F China World Tower 1 Jianguomenwai Avenue Beijing, China Tel: +86-10-6535 0888 Fax: +86-10-6535 0883
BNP Paribas Equities (Asia) Ltd Shanghai Representative Office Room 2630, 26/F Shanghai World Financial Center 100 Century Avenue Shanghai 200120, China Tel (86 21) 6096 9000 Fax (86 21) 6096 9018
JAKARTA
BNP Paribas Securities (Asia) Ltd 63/F, Two International Finance Centre 8 Finance Street, Central Hong Kong SAR China Tel (852) 2825 1888 Fax (852) 2845 9411
(In cooperation with BNP Paribas) FSS International Investment Advisory Securities Co., Ltd 990 Abdulrahim Place, 12/F, Room 1210 Rama IV Road, Bangrak Bangkok 10500 Thailand Tel (66 2) 611 3500 Fax (66 2) 611 3551
PT BNP Paribas Securities Indonesia Grand Indonesia, Menara BCA, 35/F JI. M.H. Thamrin No. 1 Jakarta 10310 Indonesia Tel (62 21) 2358 6586 Fax (62 21) 2358 7587
KUALA LUMPUR
MUMBAI
SEOUL
SINGAPORE
TAIPEI
BNP Paribas Securities Korea Co Ltd 22/F, Taepyeongno Building 310 Taepyeongno 2-ga Jung-gu, Seoul 100-767 Korea Tel (82 2) 2125 0500 Fax (82 2) 2125 0593
BNP Paribas Securities (Singapore) Pte Ltd (Co. Reg. No. 199801966C) 10 Collyer Quay 34/F Ocean Financial Centre Singapore 049315 Tel (65) 6210 1288 Fax (65) 6210 1980
BNP Paribas Securities (Taiwan) Co Ltd 72/ F, Taipei 101 No. 7 Xin Yi Road, Sec. 5 Taipei, Taiwan Tel (886 2) 8729 7000 Fax (886 2) 8101 2168
ISTANBUL
NEW YORK
BASEL
TEB Investment (A JV between TEB Bank and BNP Paribas) TEB Kampus D7 Saray Mahallesi Sokullu Sok No 7 Umraniye 34768 Istanbul Turkey Tel: (90 216) 636 44 44 Fax: (90 216) 631 44 00
BNP Paribas The Equitable Tower 787 Seventh Avenue New York NY 10019, USA Tel (1 212) 841 3800 Fax (1 212) 841 3810
BNP Paribas Aeschengraben 26 CH 4002 Basel Switzerland Tel (41 61) 276 5555 Fax (41 61) 276 5514
BNP Paribas Capital (Malaysia) Sdn Bhd Vista Tower, Level 48C The Intermark, 182 Jalan Tun Razak 50400 Kuala Lumpur Malaysia Tel (60 3) 2179 6222 Fax (60 3) 2179 6226
TOKYO
BNP Paribas Securities India Pvt Ltd BNP Paribas House 1 North Avenue, Maker Maxity Bandra Kurla Complex Bandra East Mumbai 400 051 Tel (91 22) 3370 4000 Fax (91 22) 3370 4386
CAPE TOWN
SHANGHAI
BNP Paribas Securities (Japan) Ltd GranTokyo North Tower 1-9-1 Marunouchi, Chiyoda-Ku Tokyo 100-6740 Japan Tel (81 3) 6377 2000 Fax (81 3) 5218 5970
BNP Paribas Cadiz Securities (Pty) Ltd Ground floor, Fernwood House The Oval, 1 Oakdale Road, Newlands Cape Town South Africa 7700 Tel (27 21) 657 8300 Fax (27 21) 657 8301
FRANKFURT
GENEVA
LONDON
MADRID
BNP Paribas Mainzer Landstrasse 16 60325 Frankfurt Germany Tel (49 69) 7193 6637 Fax (49 69) 7193 2520
BNP Paribas 2 Place de Hollande 1211 Geneva 11 Switzerland Tel (41 22) 787 7377 Fax (41 22) 787 8020
BNP Paribas 10 Harewood Avenue London NW1 6AA UK Tel (44 20) 7595 2000 Fax (44 20) 7595 2555
MILAN
BNP Paribas SA, sucursal en Espana Hermanos Becquer 3 PO Box 50784 28006 Madrid Spain Tel (34 91) 745 9000 Fax (34 91) 745 8888
BNP Paribas Equities Italia SIM SpA Piazza San Fedele, 2 20121 Milan Italy Tel (39 02) 72 47 1 Fax (39 02) 72 47 6562
PARIS
ZURICH
MANAMA
BNP Paribas Equities France Société de Bourse 20 boulevard des Italiens 75009 Paris France Tel (33 1) 4014 9673 Fax (33 1) 4014 0066
BNP Paribas Talstrasse 41 8022 Zurich Switzerland Tel (41 1) 229 6891 Fax (41 1) 267 6813
BNP Paribas Bahrain PO Box 5253 Manama Bahrain Tel (973) 53 3978 Fax (973) 53 1237
https://eqresearch.bnpparibas.com
M.I.C.A. (P) NO. 038/
Head of Research .
