Parc Botania is expected to boost the profits of Sing Holdings according to KGI Fraser securities as reported by Singapore Business Review.
According to Joel Ng, an analyst at KGI Fraser securities, the 735-unit project located at Fernvale Road is expected to sell well as the property market in Singapore is experiencing an upturn with increased sales transactions.
Sing Holdings has 70% stake of the development while Wee Hur holds the remaining 30%.
KGI expects the profits of the sale to reach $57 million or $103 psf on the 555,288 square feet of the saleable area.
The average Parc Botania price is expected to launch at about $1,000 psf in comparison to other properties in the area whose prices are from $970 psf to $1,060 psf.
The report further noted that High Park Residences by Chip Eng Seng that is located next to Parc Botania had been fully sold in 20 months at $988 psf despite the property market being weak in the period of 2015 to 2016.
“Prices of properties in Singapore have been declining for 15 quarters consecutively with a reduction of 12% since their peak in 2013. However, of late, sentiments have started to improve as indicated by the increased transactions and slower reduction of price in the last 2 quarters”, said Ng.
Developers in Singapore sold over 7,000 homes in the first 7 months of 2017, an increase of 50% in comparison to the same period in 2016. With these statistics, Ng believes that the prices of properties may start going up again even as the property cooling measures remain.
KGI is estimating the fair value of $0.54 of Sing Holdings and recommending a “buy”. This is based on P/B FY2016 earnings of 0.83 times and 30% discount to the estimated revalued net asset value (RNAV) of Sing Holdings at $0.77 with the sale of other developments including Robin Residences and BizTech Centre.
However, Ng also gives caution to his view by noting that Sing Holdings has no other development in its pipeline after Parc Botania since the company has diversified into hospitality business in Australia and the upside in the residential property may only be limited in the short mid-term.