I was at the soft launch of the Boutiq yesterday. The projectwas quite well received. Heeton sold almost 70% of released units. The units sold were mainly 1 bedders. So far no Penthouse sold yet.
UOB Privilege banking clients who bought units there were given good loans at special interest rates.
Gallant: DBS buy call today, Tgt 88cts. Shd be the same RNAV story.
Tuan Sing: seems to move in sympathy with Gallant. RNAV story intact.
Heeton/Tee Intl: I understand their new launch at Killiney, The Boutiq (JV between Heeton, Tee, KSH), has sold about 15 units (out of 130 units of 1-2 bedders) prior to preview, at about $2,300-2,500psf. Nearby Oxley's Devonshire Residences has sold more than 70% at above $2,500 psf. The Boutiq will be previewed or launched next week. The land was bought at a very low $1,080 psf, so this will be quite a profitable project. I expect 70-80% to be sold within a month cos of the Mickey Mouse factor. Heeton shares are however, not liquid, but RNAV of about $1.20-1.30 is supporting share price. Tee has some insider buying recently but there seems to be a big seller out there as well.
For long-term holders & value investors, Tuan Sing is a buy.
Can't wait for the redevelopment of Robinson Towers and International Factors Building.
An announcement on the plans will be the key reârating catalyst for the stock price. Now only 28.5 cents when the Kim Eng analyst has a target of $0.58, pegged at a 20% discount to its RNAV of $0.73.
Sale of properties at new launches recently has been much more resilient than my, and I believe many others', expectations. Despite stock market falls and worries about the situations in Europe and the US, there seems to be no shortage of buyers at developers' launches even over past weekend. I believe the overriding factor for this strong demand is the continuous low mortgage interest rates. Also, demand for properties (whatever is driving it) has been greater than expected.
With mortgage rates as low as 1%, it is easy for investors to cover their loan installments with their rental income, even if the rental yield (because of the high purchase prices) is as low as 2%. There is therefore no urgency to sell anything, even when property owners are warned of a big jump in property completions in the years 2014/5. So, I believe mortgage rates have to rise first before demand can finally be dampened, since even government measures have failed to shake it.
Over the last weekend, for example, Hong Leong Hldgs sold about 33% of the 239 units available at The Meyerise along Meyer Road at an average price of slightly below $2,000 psf. Also, at The Luxurie near Sengkang MRT, KepLand sold about 200 units over the same weekend at an average price of $980psf.
One stock I like, and own, is Chip Eng Seng. It's especially related to the 2 new launches over the past weekend.
(1) The company is expected to soon launch its Fort Road condo, near The Meyerise. The 136-unit project sits on a piece of 47,900 sq ft land that was bought at about $1,080 psf. If CES achieve a sale price of $1,950 psf, the potential gross profit could be $40-50 million.
(2) CES also has a 35%-sold project near to Simei MRT called My Manhattan. I believe this project is overpriced in today's market (selling price seems to be about $1,200-1,300+psf vs The Luxurie's sub-$1,000 psf) and hence sales seemed to have stagnated, but CES has shown in the past that it is willing to lower its asking price to clear out unsold units (eg Grange Infinite and City Vista). CES can afford to cut its selling price and still achieve reasonable profit at My Manhattan.
Dividend wise, the company paid out 3ct for FY 2009 and 4ct in FY 2010. With first half 2011 profit already hitting $70m (up 100%) compared to last year's full year earnings of $109.6m, I would not be surprised if it proposes another 4ct dividend for FY2011. It should have no problem paying this as it sits on cash of $147m as at June 2011.
I like the company also because (1) it has not bought any land recently, probably because of its cautious reading of the Singapore property market. This is in line with my thinking of what a prudent developer should do; (2) it is exposed to the construction industry, especially the HDB sector where the government is ramping up supply. CES' recent win of a $113m HDB contract is a sign of what is to come in the next couple of years.
I do not foresee the pending lawsuit against the company (for Grange Infinite units sold to a fund) to affect it materially, whether it loses the case or not.
RNAV of about 65ct-70ct and the potential 10%+ dividend yield should provide the stock some support should the general market continue to falter and drag down all and sundry, including the best stocks.