Roxy-Pacific Holdings Limited Innccrreeaassee pEExxpoossuurreeroxypacific.listedcompany.com/misc/report_SIAS_250412.pdf · 2012-04-26 · Page 1 of 22 IInniittiattiioonn rRReeppoortt

Page 1 of 22

www.siasresearch.com IInniittiiaattiioonn RReeppoorrtt

25 April 2012

IInnccrreeaassee EExxppoossuurree

An All-Rounder with Undervalued Assets

S$0.605

S$0.430

Intrinsic Value

Prev Close

Main Activities Roxy-Pacific Holdings Limited is principally engaged in the development and sale of residential and commercial properties and the ownership of Grand

Mercure Roxy Hotel and other investment properties.

Financial Highlights

(Y/E Dec) S$ m FY11 FY12F FY13F

Revenue 183.7 241.8 230.8

Gross Profit 63.3 88.9 81.2

Profit from Assoc. 0.3 3.1 21.5

EBIT 63.2 66.8 77.4

Earnings 49.7 50.2 59.3

EPS (S cts) 5.2 5.3 6.2

All per share data are based on post-bonus issue number of

shares.

Source: Company, SIAS Research

Key ratios (FY12F)

PER 8.2

P/RNAV 0.7

Return on Common Equity 22.2%

Net Debt / RNAV 41.5%

Current ratio 5.8

RNAV refers to book value of equity + fair value in excess of book value for hotel and office premises. It excludes the

development value of projects in pipeline and landbank. Source: SIAS Research

Indexed Price Chart

Green (FSSTI)

White (ROXY)

Chart from Bloomberg is unadjusted for bonus issue in Apr 12.

Source: Bloomberg

52wks High-Low S$0.710 /S$0.370

Number of Shares 954.8m

Market Capitalization S$410.6m

Analyst: Liu Jinshu, Deputy Lead Analyst

[email protected] Tel: 6227 2107

We re-initiate coverage of Roxy-Pacific Holdings Limited

(Roxy) with an Increase Exposure rating and an intrinsic

value of S$0.605 (post-bonus issue). Strong recent sales

suggest that Roxy’s progress billings are now in excess of

S$750m, substantially confirming that the company will still

be able to deliver core earnings growth from now to 2014

and has time to cherry pick new land deals. Moreover, we

like the highly versatile nature of the company, which

reassures us that Roxy will be able to adapt to the evolving

property market and continue to roll out successful products.

Fundamental Drivers / Key Developments:

Recent Sales Have Boosted Progress Billings: We

estimate that Roxy has sold 91% of its units launched in

2012, adding about S$150m of unrecognized sales to

progress billings. Three out of four projects have attained

“sold out” status – TREESCAPE, Millage and

Natura@Hillview Phase 1. Sales of previously launched

projects added another ≈S$30m to progress billings in 2012.

Growing from Strength to Strength: Since its listing in

2008, we observed that Roxy has been expanding its suite

of property development capabilities. Its track record now

has substantial variety, in terms of product and design

innovation, development type, target market, geographical

spread, scale and unit configurations. These capabilities will

allow the company to adapt to changing market trends and

create sustainable growth.

Ready for HDR/HDA Rules: Roxy’s operational strength is

further demonstrated by the fact that it has already pre-

emptively put in place the operating systems even before

the latest URA changes to housing developer rules were

finalized.

Hotel & Investment Properties Buttress Valuation:

Moreover, Roxy owns a hotel and a portfolio of shop units

that are valued at S$461.6m (S$0.483 per share) as at end

2011 by an independent valuer. As such, Roxy’s current

market value does not incorporate much of the development

gains in its >S$750m of progress billings, that will be

recognized as profit from now to as late as 2016.

Roxy-Pacific Holdings Limited

mailto:[email protected]

Page 2 of 22


25 April 2012

A Specialty Property & Hospitality Group

Figure 1: Roxy’s Annual Profit after Tax Figure 2: Adjusted Net Assets Value

Established in 1967, Roxy-Pacific Holdings Limited (Roxy) is in the business of

developing and investing in Singapore properties.

Track Record and Key Assets

Property Development: Launched 30 wholly-owned and JV projects of >2,100

residential and commercial units since 2004 to now.

Hotel Property: Owns 569-room “Grand Mercure Roxy Singapore” hotel at 50

East Coast Road, which including Roxy’s office premise, is valued at S$416.9m.

Investment Properties: 51 shop units at Roxy Square Shopping Centre, which

is next to the hotel. 46 of these shops are valued at S$44.7m. Five units are

used as Roxy’s office and their fair value are included in the S$416.9m above.

FY11 Revenue Mix: Property Development – S$132.6m (72.2%), Hotel

Ownership – S$48.4m (26.4%), Rental Income – S$2.6m (1.4%)

Bonus Share Issue: As at 21 Mar 2012, Roxy’s directors have immediate and

deemed interests in 67.7% of the company’s shares (66.9% as at 31 Dec 2010).

To broaden its shareholder base and “to reflect the growth and expansion of

the Group’s business and at the same time to reward shareholders”, the

company will be issuing one bonus share for every two existing shares.

Shareholders with Roxy shares in their CDP accounts as at 5.00 pm on 25 Apr

2012 will be entitled to the bonus shares (23 Apr 2012 - Ex-Entitlement).

Resumption of coverage: Our last update report on Roxy was dated 24 Feb

2011. Since then, Roxy has, via its subsidiaries and associates, acquired at

least 10,102 sqm. of land at a cost of S$161.1m and launched seven properties

with estimated attributable sales of S$290.7m as at 4 Apr 2012. As a result,

progress billings rose by 10.9%, from S$540.0m as at 17 Feb 2011 to

S$598.6m as at 15 Feb 2012. In view of these developments and the amount of

time between our last update in Feb 2011 and now, we decided to resume

coverage of Roxy with a complete initiation report.

19.324.7

27.9

42.8

49.7

0

10

20

30

40

50

60

FY07 FY08 FY09 FY10 FY11

S$m

Profit After Tax



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25 April 2012

Figure 3: Roxy’s Past and Present Developments as Marked on a Map of Singapore

Figure 4: List of Recent Projects, By Development Types, No of Units

In no particular order: 1) The MKZ (upcoming launch), 2) EON Shenton, 3) Natura@Hillview, 4) Nottinghill Suites, 5)

Spottiswoode 18, 6) Space@Kovan, 7) The Florentine, 9) Nova 88, Nova 48 and The Marque@Irrawaddy, 10) Millage,

Treescape, Centropod@Changi, WiS@Changi, Jupiter 18, Studios@Tembeling, Straits Residences, Haig 162, The Verte, The

Adara, The Ambra, The Lucent, The Medley, The Ambrosia, The Azzuro, The Montage, Axis@Siglap, St. Patrick’s Loft, The

Nclave, The Treeline, Martia Residence and Veranda.

Source: Google Maps, Company, SIAS Research

1

2

3

4

5

6

7

8

9

Grand Mercure Roxy Singapore

& Roxy Square Shopping Centre

Project No of Units / Development Type (Residential = R)

Launch Est. TOP

The Verte 36 R 2008 Completed

Nova 88 88 R 2009 Jun-12

Haig 162 99 R 2010 Mar-13

Straits Residences 30 R 2010 Jun-13

Studios@Tembeling 25 R 2010 Nov-12

Jupiter 18 53 R 2010 Jun-13

Space@Kovan 56 Retail + 140 R 2010 Mar-15

Spottiswoode 18 196 R Jan-2011 Jun-14

Nottinghill Suites 124 R Jul-2011 Sep-14

WiS@Changi 23 Retail + 60 Office Sep-2011 Mar-14

Centropod@Changi 117 Retail + 75 Office Dec-2011 Mar-15

TREESCAPE 30 R Feb-2012 Jun-14

Millage 86 Retail + 70 R Mar-2012 Feb-16

Natura@Hillview 193 R Mar-2012 Sep-15

EON Shenton 23 Retail + 98 Office + 132 R Apr-2012 Jun-16

The MKZ 42 R Jun/Jul-2012 Mar-15 Source: Company, SIAS Research

Page 4 of 22


25 April 2012

Overview of the Singapore Property Market

Figure 5: Volume & Take-Up Rates Recovered in 2012

New Rules for Housing Developers: The Urban Redevelopment Authority

(URA) announced on 18 Apr 2012 changes to the Housing Developers Rules

(HDR) that will be effective from 18 May 2012. Essentially, the new rules

imposed higher disclosure and procedural requirements on developers.

For instance, developers will have to provide details such as project site plan,

unit floor plan, the unit’s floor area breakdown by spaces, as well as information

on at least one completed local project to buyers before the option-to-purchase

is issued. Among other new procedures, developers will also have to obtain the

buyer’s consent before making non-insignificant changes to a unit.

What’s Next? URA is currently finalizing changes to the Housing Developers

(Control & Licensing) Act (HAD) for implementation in 2H 2012. They will

include requirements on the accurate depiction of actual units at show flats and

the publication of transacted prices on a weekly basis.

Not as Harsh as ABSD: At initial glance, the new HDR and upcoming HDA

rules seem to be aimed at leveling the informational asymmetry between

developers and buyers. More subtly, they may also slow project turnaround as

developers now need to finalize their designs and plans to finer detail before

the project launch. Unlike the additional buyer’s stamp duty (ABSD), the new

rules are not designed to directly curb demand.

Market Has Recovered From Immediate Impact of ABSD: Following the

introduction of the ABSD, private residential property take-up rates have

recovered from an average of 67% in Dec 2011 to 93% in Mar 2012. Volume

has likewise recovered with 2,393 units sold (excluding executive

condominiums) in Mar 2012 versus 632 in Dec 2011.

0%

20%

40%

60%

80%

100%

120%

140%

0

500

1,000

1,500

2,000

2,500

3,000

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Take-Up RateNo of Units

No of Units Launched No of Units Sold

3-month avg. Take Up Rate (%) Actual Take-Up Rate (%)

Source: URA, SIAS Research

URA’s press release and details of

the changes can be viewed at

http://www.ura.gov.sg/pr/text/2012/

pr12-40.html

The URA press release on ABSD in

Dec 2011 can be viewed at

http://www.ura.gov.sg/pr/text/2011/

pr11-162.html

http://www.ura.gov.sg/pr/text/2012/pr12-40.html




Page 5 of 22


25 April 2012

Figure 7: Private Residential Property Price

Index

Figure 8: Private Residential Property Price

Index, By Regions (Rebased to 3Q 2010 = 100)

Figure 6: New Projects in 1Q 2012, By Area

Thanks to Strong Suburban Demand: There were 35 new private residential

project launches in 1Q 2012, comprising of 7,256 units. The bulk of these

projects – 17 of them – were located outside the Central Region (OCR). 4,918

out of 6,191 units were sold, translating to a take-up rate of 79.4% in the

suburban areas over Jan to Mar 2012. Projects that were launched in Jan or

Feb 2012 were actually 83.9% sold on average.

But, the ABSD is Taking Effect: However, URA’s flash estimate of the private

residential property price index for 1Q 2012 suggests that overall prices may

have retraced by 0.1% from 4Q 2011 due to a softer RCR/CCR market. Prices

in the Outside Central Region (OCR) grew by 1.2% quarter on quarter, while

prices in the Core Central (CCR) and Rest of Central Regions (RCR) fell by

0.9% and 0.7% respectively.

Competitive Offerings Will Still See High Take-up Rates: Against this

backdrop, we believe that developers that offer apartments with significant

points of differentiation at reasonable prices will continue to see strong sales.

Recent examples of these points of differentiation include being near MRT

station (e.g. Parc Rosewood), attractive sea/city/nature scenery or view (e.g.

Waterfront, Sky Habitat) and integration with retail mall (e.g. The Hillier).

189.6

194.8

199.1

203 205.7 206.2 206

180

190

200

210

3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012


100

111.2

95

100

105

110

115

3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012

Core Central Region Rest of Central Region

Outside Central Region

1Q 2012 Estimates: Rest of Central Region: 105.7Core Central Region: 105.35


Region No. of New Launches

No. of Units Launched

No. of Units Sold

Take-Up Rate

Outside Central 17 6,191 4,918 79.4%

Rest of Central 15 1,003 673 67.1%

Core Central 3 62 23 37.1% Source: URA, SIAS Research

The number of units launched in

Figure 6 only pertains to new

projects. Subsequent launches of

older projects are excluded.

Page 6 of 22


25 April 2012

Figure 9: New Projects in 1Q 2012 – No of Units Exclude Commercial Space

Developers’ Measures to Adapt: We think that well-managed developers with

established control and information systems will be able to meet most of the

new HDR (and upcoming HDA) regulations relatively easily.

The requirements concerning the disclosure of specific floor areas and the

accurate depiction of units by showflats may slow the trend of falling unit floor

areas as developers probe market limits on unit sizes more carefully.

We also think that developers may try to lower their risk by designing projects

to better compete for genuine buyers such as HDB upgraders, singles, new

couples and retirees as policy risk continues to cool investors and speculators.

Jan – Mar 2012

JAN 2012 LAUNCHES

No of Units

Launched No of

Units Sold Take-Up

Rate

PARC ROSEWOOD 626 607 97.0%

WATERTOWN 992 935 94.3%

FARRER PARK SUITES 29 27 93.1%

THE HILLIER 528 478 90.5%

THE RAINFOREST 466 408 87.6%

CENTRA RESIDENCE 78 68 87.2%

CARMINE COLLECTION 6 4 66.7% RIVERSOUND RESIDENCE 590 310 52.5%

IDYLLIC SUITES 71 26 36.6%

THE SANCTUARY @ GEYLANG 21 1 4.8%

MAR 2012 LAUNCHES

MILLAGE # 70 69 98.6% SELETAR PARK RESIDENCE 100 98 98.0%

LEVENUE 43 41 95.3%

EAST VILLAGE 90 83 92.2%

RIPPLE BAY 386 326 84.5%

NATURA@HILLVIEW # 73 56 76.7%

THE CRISTALLO 74 38 51.4%

THE LUSH 37 19 51.4% SMART SUITES 72 34 47.2%

PALM ISLES 297 102 34.3%

18 WOODSVILLE 101 30 29.7% Source: URA, SIAS Research

Jan – Mar 2012

FEB 2012 LAUNCHES

No of Units

Launched No of

Units Sold Take-Up

Rate

GUILLEMARD EDGE 275 275 100.0%

TREESCAPE # 30 30 100.0%

CASA CAMBIO 198 192 97.0%

ASPEN LINQ 18 17 94.4%

TWIN WATERFALLS 728 625 85.9%

BARTLEY RESIDENCES 300 251 83.7%

THE VANDERLINT 20 15 75.0% PRIMEDGE 36 22 61.1%

THE TAMPINES TRILLIANT 670 338 50.4%

NESS 62 31 50.0%

CRADELS 80 35 43.8%

SILVERSCAPE 45 17 37.8%

GREENWOOD MEWS 14 3 21.4%

26 NEWTON 30 3 10.0%

# Roxy’s developments. Natura@Hillview was launched on 31

Mar 2012. A 77% 1st day take-up rate is quite impressive, in

our opinion. A subsequent newspaper article mentioned that

the Natura@Hillview was 96% (70 units) sold within three

days. Phase 1 of the Natura@Hillview consisted of 73 units.

Page 7 of 22


25 April 2012

Roxy Already Has Its Growth in Place

Figure 10: Progress Billings as at 15 Feb 2012 (Projected Sales in Figure 8)

Next 4 Years’ Avg. Revenue 25% Higher than 2011 Level: As at 15 Feb

2012, Roxy had progress billings of S$598.6m that have not been recognized

as revenue. We further estimate that the company sold about S$161.0m of

properties from 16 Feb to 4 Apr 2012. In all, Roxy’s total attributable progress

billings, including revenue to be recognized in 2012, should be about S$759.6m

or 5.7 times 2011 property development revenue.

Some 87.5% of our estimated >S$750m of progress billings are from projects

that will TOP from now to 2015. This works out to average annual revenue of

S$166.1m to be recognized via Roxy’s subsidiaries and associates over 2012-

2015 – 25% higher than 2011 property development revenue of S$132.6m.

Incorporating projected future sales from existing projects and future launches,

we forecast Roxy’s property development segment to make average annual

PBT of S$63.6m from 2012 to 2015 on simple average yearly growth of 41.1%.

Roxy only has one project left that is completely unlaunched.

Roxy Has Time to Cherry Pick: In fact, our estimates suggest that Roxy’s

recognition of earnings from progress billings will peak between 2014 and 2015.

Therefore, Roxy has approximately up to 2013 to rebuild its land bank and up

to 2014 to launch new projects before earnings from existing sales begins to

decline. This means that Roxy has one to two years’ time to pick and time new

land acquisitions to generate the best returns. That said, the company is not

being complacent and is still on looking for “good” investments. Roxy recently

incorporated a new subsidiary RP Assets Pte Ltd, which may be used to hold

an upcoming acquisition.

as at 15 Feb 2012 as at 31 Dec 2011

Project Group's

Stake Attributable total sales value (S$m)

Recognized Revenue (S$m)

Progress Billings (S$m)

The Verte 100% 51.1 48.2 2.9

Nova 88 100% 75.7 69.1 6.6

Haig 162 45% 26.3 6.6 19.7 Straits Residences 100% 20.1 2.3 17.8

Studios@Tembeling 100% 18.5 10.4 8.1

Jupiter 18 100% 35.8 5.3 30.5

Spottiswoode 18 100% 234.3 10.7 223.6

Space@Kovan 100% 159.7 0 159.7

Nottinghill Suites 45% 22.2 0 22.2

Wis@Changi 100% 13.1 0 13.1

Centropod@Changi 100% 75.2 0 75.2

Treescape 100% 19.2 0 19.2

Total 751.2 (a) 152.6 (b) 598.6 (a)-(b) Source: Company, SIAS Research

Roxy’s accounting policy requires

revenue from purely commercial

developments i.e. WiS@Changi

and Centropod@Changi to be

recognized at project completion.

Mixed-use and residential projects

continue to be under the

“percentage of completion” method.

Our forecasts have already

factored in this accounting

treatment.

Page 8 of 22


25 April 2012

Roxy’s Versatility Outweighs Challenges

Figure 11: Estimated Sales – 16 Feb 2012 to 4 Apr 2012

Why Roxy? – Versatility: Our review of Roxy’s capabilities and product

portfolio left us with the impression that the company is highly versatile and has

already adapted its strategy/operations to outperform in the current

environment. More importantly, this quality will help the company to sustain its

long term performance.

When we met the management a couple of weeks ago, they shared with us that

Roxy has already updated their information management systems and

increased their project management headcount to pre-emptively meet the then

proposed new rules and regulations. These moves proved impressive when the

new rules were announced subsequently.

Roxy’s shift towards mixed-use and commercial properties provides further

evidence of the company’s adaptive ability. Prior to the acquisition of Kovan

Centre in 2009, Roxy’s development portfolio consisted of solely residential

projects. Since then, Roxy has been acquiring more sites for mixed and

commercial properties. Of the eight properties launched in 2011 and 2012 thus

far, half of them are mixed-use or commercial properties. The impetus for

diversification into non-residential space came about when the management

realized that the market has a shortage of strata-titled commercial properties,

as commercial properties were increasingly being acquired or injected into

REITs.

Key Assumptions

Project Roxy Stake

Attributable sales value

(S$m)

Est. Cum.

% Sold

Est. GFA Sold , sq. ft. (no of units)

Est. ASP (S$/psf) Residential = R, Shops = S, Restaurants = Rest., Offices=O

URA March Median

Price

Nottinghill Suites 45% 7.1 70% 10,007 (21) 1,569 (R) 1,560

WiS@Changi 100% 5.5 30% 4,278 (8) 3,600 (S), 2,800 (Rest.), 1,450 (O) NA

Centropod@Changi 100% 17.9 81% 12,759 (24) 2,900 (S & Rest.), 1,650 (O) NA

TREESCAPE 100% 9.6 100% 7,507 (10) 1,279 (R) 1,255

Millage 48% 52.6 100% 54,448 (156) 1,350 (R), 3,500 (S) 1,379 (R)

Natura@Hillview 49% 25.6 36%^ 41,848 (70) 1,250 (R) 1,334 (R)

EON Shenton 20% 42.7 43%^ 81,047 (108) 2,500 (R), 4,500 (S), 2,500 (O) NA Total 161.0

^% sold is based on both launched and unlaunched units. If we only refer to launched units, take-up rates for

Natura@Hillview and EON Shenton are about 96% and 78% respectively as at 4 Apr 2012.

No of units sold include both shops and offices and are approximate estimates gathered from various sources. They need not

necessarily match URA data due to timing differences and the fact that Roxy’s count as at 15 Feb 2012 is based on option-

to-purchase. Est. GFA sold is based on total sellable area from floor plans / number of units x estimated units sold. ASPs are

gathered from various sources, e.g. URA data, media articles and indicative ranges provided by the company. URA median

prices for the month of March pertain only to residential properties.

Source: Various Sources, Company, SIAS Research

Page 9 of 22


25 April 2012

Roxy’s strategic expansion into non-residential space has again proved to be

far-sighted as more investment capital may now flow towards non-residential

properties given the spectre of policy risks in the residential segment. In

particular, Roxy’s retail units have been popular. Of the 305 shop units

launched from Space@Kovan in 2010 to EON Shenton in 2012, only four units

are left. Selling prices, at S$2,900 to S$4,900 psf., are also typically higher than

that of residential units.

Wide Range of Capabilities Support Adaptive Ability: Roxy’s developments

used to be concentrated in the eastern part of Singapore. Since its IPO in 2008,

Roxy has developed projects in the CCR, RCR and OCR areas, which cater to

different target buyers, from the mass-market to upper middle income buyers.

Not only has Roxy expanded the geographical spread of its projects, it has

been stretching its capabilities to execute both small and larger projects. Prior

to 2009, most of Roxy’s projects had less than 50 units. In 2009 and 2010, it

scaled up to include Nova 88 and Haig 162 with 88 and 99 units respectively. In

2011, Roxy expanded its capabilities with the 251-unit Spottiswoode 18 project.

Today, Roxy’s portfolio includes small projects like the 30-unit TREESCAPE

and larger ones such as the 193-unit Natura@Hillview.

Advantage of Being Nimble: We think that small projects offer the advantage of

low land cost as they are less sought after by large developers. Moreover, they

are easier to “micro-manage” to maximize efficiency and saleability. Given the

smaller number of units, it is also easier for such projects to achieve high take-

up rates. Roxy’s upcoming launch is a 42 unit development at Mackenzie Road.

In term of unit types, Roxy has in recent years adapted to design more

small/compact units. Earlier projects tend to offer larger units of 900 to >1,000

sq. ft. each. The Nova 88, which was launched in 2009, had an average gross

floor area per unit of about 900 sq. ft. per unit. Since then, the average unit size

for most projects range between 500 sq. ft. to 700 sq. ft. per unit.

In a nutshell, Roxy’s know-how to develop different types of properties will allow

it to change its product offerings to meet market trends.

Strong Emphasis on Innovation: During our meeting with Roxy, the

management emphasized a strong focus on creating new ideas that add value

to a project. For instance, the company built on the “small residential unit”

concept to roll out small retail units (<200 sq. ft.) and office units (<600plus sq.

ft.), as well as compact three bedroom (3-BR) units (>600 sq. ft.).

At the EON Shenton, the high ceiling/double volume concept was stretched

further to allow as many floors as possible to have unblocked sea or city views

with residential units starting from the 23rd

floor onwards – which may very well

be equivalent to the 35th floor (or higher) of an existing office building in the

area.

Page 10 of 22


25 April 2012

Figure 12: Examples of Developments with Compact Retail/Office Units

How Small Can Units Go? Product Positioning is Key: There is some thought

that the new HDR/HDA units may render small units harder to sell. Small units

have been popular in part due to them catering to underserviced segments,

such as singles. Moreover, their low quantum and hence, affordability have

made them more accessible to young buyers and early upgraders.

Roxy’s current 1-BR/2-BR offerings at Natura@Hillview and EON Shenton are

reasonably sized; at 441 sq. ft. to 657 sq. ft. and 527 sq. ft. to 786 sq. ft.

respectively. We have to bear in mind that the market has been accepting

shoebox units of less than 500 sq. ft. in size for some time now.

Compact 3-BR units (>600 sq. ft.) are available at TREESCAPE and

Natura@Hillview. We note that TREESCAPE has been fully sold and that

compact 3-BR units make up for only 42 (22%) out of 193 units at

Natura@Hillview. Compact 3-BR units are new to the Singapore market (low

supply) and are aimed at a new target group – families – possibly HDB

upgraders given the low quantum of about S$0.8m/unit onwards. As a first

mover of such products, Roxy should be able to find buyers for these units.

Product Review: We further reviewed some of Roxy recent and upcoming

projects and noted that they typically have unique selling points that

demonstrate Roxy’s emphasis on quality, while being sold at reasonable prices

comparable to surrounding developments.

The MKZ (100% developed by Roxy)

Location 131 Mackenzie Road

Tenure Freehold

Launch Jun – Jul 2012 (Estimated)

TOP Dec 2016 (Target: Mar 2015)

No of Units 42 residential (R)

GFA (sq. ft.) 27,082 (R)

Avg. GFA / Unit 645 (R)

Avg. Land Cost S$912 psf of sellable area.

ASP (S$/psf) S$1,800 – S$1,900

Wis@Changi Shops Restaurants Office

GFA (sq.ft.) 1,368 3,918 37,884

No of Units 7 16 60

Avg GFA/ Units (sq. ft.) 195 245 631

Centropod@Changi Shops Restaurants Office

GFA (sq.ft.) 18,592 2,025 39,872

No of Units 108 9 75

Avg GFA/ Units (sq. ft.) 172 225 532 Source: Company, SIAS Research

EON Shenton Residential Shops Office

GFA (sq.ft.) 88,935 5,329 117,684

No of Units 132 23 98

Avg GFA/ Units (sq. ft.) 674 232 1201

Millage Residential Shops

GFA (sq.ft.) 37,636 16,812

No of Units 70 86

Avg GFA/ Units (sq. ft.) 538 195

Roxy’s Feb 2012 launch

TREESCAPE is 100% sold within

two months.

Millage, launched in Mar 2012 is

99% sold within one month.

Page 11 of 22


25 April 2012

Figure 13: Vicinity of The MKZ

Key Notable Attributes: One of the few, if not the only, new development in

the Mackenzie/Sophia Road side of the Istana vicinity at the moment. Most new

developments are in the Cavenagh/Orchard side of the Istana, Novena and

Dunearn Road area. Moreover, The MKZ is situated about 500m away from the

Little India MRT station and its adjacent amenities.

Transactions for new sales at developments on the Cavenagh/Orchard side of

the Istana (Hijauan and Waterscape at Cavenagh) averaged around S$1950 to

S$2450 psf. As such, the MKZ is being priced very competitively with ample

room for profit.

EON Shenton (JV development by five partners – Roxy has 20% stake)

Location 70 Shenton Way

Tenure 99-year

Launch Apr 2012

TOP Dec 2019 (Target: Jun 2016)

No of Units 132 residential (R), 98 offices (O), 23 shops (S)

GFA (sq. ft.) 88,935 (R), 117,684 (O), 5,329 (S) – sellable area

Avg. GFA / Unit 674 (R), 1,201 (O), 232 (S)


ASP (S$/psf) S$2,200–S$2,750(R),S$2,150–S$3,000(O),S$4,000– S$4,980(S)

Take-Up Rate >40 of 66 apartments, >30 of 50 offices and all 23 shops

launched were sold as at 4 Apr 2012.

Key Notable Attributes: To provide as many units as possible with unblocked

views, the EON Shenton was designed with tall ceiling heights of 5 m. for shops,

4.8 m. for offices and 3.3 m. for residential units. For instance, the 14 floors of

office space, from Level 7 onwards, will have a combined height of about 67.2m

equivalent to 26 to 27 floors of space of 2.5m height each.

Source: Company

Source: Google Maps, SIAS Research

The Marque@Irrawaddy, Nova 48 and Nova 88

fully sold developments by Roxy in the Balestier

Road area. We include them in Figure 13 for

information purpose.

Figure 13 does not include all private

developments in the map. We counted 40

developments with new sales caveats lodged with

URA in 1Q 2012. Due to space constraints, we

only show several of them.

However, none of them are adjacent to The MKZ

or in the Mackenzie/Wilkie Road vicinity

Page 12 of 22


25 April 2012

Figure 14: Vicinity of EON Shenton

The developer took care to price residential apartments with sea views at a

20% premium above city-facing units to ensure that both types of units will see

takers. Prior to its launch, the developer has already sought market feedback

on prices to determine the appropriate margin.

Prices at EON Shenton are relatively attractive. Over at the freehold Oxley

Tower, average prices are – street level shops: S$6,653 psf., 2nd

/3rd floor shops:

S$4,820 psf. and offices: S$3,048 psf.. Units at the Altez and

Skysuites@Anson were previously sold at average prices of about S$2,100 to

S$2,500 psf – partly due to them having more low-floor units. We expect EON

Shenton to contribute about S$45m of gross profit to Roxy – equivalent to 1.6x

its 2011 property development gross profit.

Natura@Hillview (JV development – Roxy has 49% stake)

Location Hillview Terrace

Tenure 999-year

Launch Mar 2012

TOP Dec 2016 (Target: Sep 2015)

No of Units 193 residential

GFA (sq. ft.) 115,382 – sellable area

Avg. GFA / Unit 598


ASP (S$/psf) S$1,200 – S$1,300

Take-Up Rate 70 out of 73 units launched as at 4 Apr 2012.

Skysuites@Anson

One ShentonMarina Bay Suites

The Clift

Altez

Lumiere

Eon Shenton

Spottiswoode 18

Robinson Square Oxley Tower


Source: Company

Page 13 of 22


25 April 2012

Figure 15: Vicinity of Natura@Hillview

Figure 16: Probable View from Top Floor Unit at TREESCAPE

The longer tenure of the project (999-year) justifies a closer pricing to that of

The Hillier – an integrated mall-cum-residential development also in the Hillview

area, which has a 99-year lease. Units at The Hillier were sold at about

S$1,300 psf.

Tapping on Strengths of Partners: We further noticed more joint-venture

developments in recent years from one JV launch in each of 2010 and 2011 to

three JV launches in 2012. Roxy pointed out that it has adequate financial

resources on its own for the projects thus far.

Some of the JVs were collaborative efforts to jointly acquire the site and avoid

confrontational bidding. Most of the time, the objective of a JV is to allow the

partners to pool their respective expertise in e.g. design, construction and

marketing and to share development profits. For instance, the JV project gets

higher construction priority or access to the best sales agents depending on the

partner of the project.


Example of Land Amalgamation Strategy to

Lower Costs

The Hillier was acquired at S$673 psf. ppr.

Part of the Natura@Hillview site was acquired at

S$662 psf. Subsequently the company

amalgamated the surrounding land to lower its

cost to the current S$600 psf. (based on the new

net sellable area).


The TREESCAPE site was acquired for its unblocked view of the

Siglap Park Connector, the Siglap Canal and developments on the

other side of the canal.

Launched in Feb 2012, the TREESCAPE was fully sold within two

months. Based on the planned GFA of 22,521 sq. ft., the TREESCAPE

had a land cost of about S$666 psf. Average selling prices are about

S$1,200 to S$1,400 psf.

Figure 16 was extracted from the product brochure. The view from the

property when completed may differ slightly.

Page 14 of 22


25 April 2012

Inventory Levels Remain at Low to Moderate Levels

Figure 17: Estimated Sales – As at 4 Apr 2012

On the whole, Roxy’s sales of launched properties have been strong.

Residential units launched in 2012 have been 93% sold – an improvement from

87% in 2011. Of the 305 retail units launched since 2010, only 4 units are

unsold (1% of total). Office sales have been slower at 70% in 2012 and 33% in

2011 of launched units – probably due to project specific reasons.

As at 4 Apr 2012, Roxy has another 228 residential units to be launched,

equivalent to only 19% of all uncompleted units, mainly from the

Natura@Hillview project, and another 48 office units to be launched at EON

Shenton. Unlaunched units are not too much of a concern right now, given that

recent sales have been strong.

Spottiswoode 18 – 11 available units (4.4%): The 11 remaining units are mainly

penthouses, which are generally slower moving. As the showroom has been

removed to make way for construction, the penthouses are expected to be sold

closer to expected TOP date in 2014. With 96% of the units sold, this project is

expected to be profitable.

By Year of Launch

No of Units Launched Sold

Launched & Unsold

Un-launched

Take-Up Rate (% of

Launched Units)

% Launched & Unsold

(% of ALL units)

% Unlaunched

(% of ALL units)

Residential (Includes The MKZ)

2010 347 347 347 0 0 100% 0% 0

2011 375 375 327 48 0 87% 13% 0

2012 467 239 220 19 228 92% 4% 49%

Total 1189 961 894 67 228 93% 6% 19%

Retail

2010 56 56 56 0 0 100% 0% 0%

2011 140 140 136 4 0 97% 3% 0%

2012 109 109 109 0 0 100% 0% 0%

Total 305 305 301 4 0 99% 1% 0% Office

2011 135 135 44 91 0 33% 67% 0%

2012 98 50 35 15 48 70% 15% 49%

Total 233 185 79 106 48 43% 45% 21% No. of units sold are estimates gathered from various sources. They need not necessarily match URA caveats lodged due to

timing differences and the fact that Roxy’s count as at 15 Feb 2012 is based on option-to-purchase.

Source: Various Sources, Company, SIAS Research

All instances of estimated number of unsold units in this section are as at 4 Apr 2012.

Page 15 of 22


25 April 2012

Figure 18: Vicinity Map of WiS@Changi

Nottinghill Suites – est. 37 available units (≈30%): This project was launched

in Jul 2011 and saw slow initial take-up due to marketing issues, which have

since been resolved. Located at Toh Tuck Road, Nottinghill Suites is allegedly the

first “shoebox” concept in the vicinity and will be a rare offering in the area

following guidelines by URA to restrict unit size to a minimum of 753 sq. ft. in

selected zones. As take-up rate has climbed steadily in 2012, we expect

inventory at this project to be gradually taken up.

Centropod@Changi – est. 37 available office units (≈19%):

Centropod@Changi was only launched in Dec 2011 and was 68% sold by 15

Feb 2012. By 4 Apr 2012, we estimate that Centropod@Changi is already 81%

sold. As such, month-to-month sales at Centropod@Changi are proceeding at

an acceptable pace and the entire project should be sold within this year.

WiS@Changi – est. 4 retail units and 54 office units are available (≈68%):

This is probably the slowest project in Roxy’s portfolio at the moment. Retail

units have largely been sold, leaving office space as the bulk of the inventory.

The Millage (est. 100% sold), Centropod@Changi and WiS@Changi are all

located within 200m to 300m of each other along Changi Road. WiS@Changi is

an asset addition and alteration project, while the other two developments will

be rebuilt from scratch. As such, they are currently more popular with buyers.

There is scope for WiS@Changi to be marketed at a relative value basis as

Roxy has priced the office units at WiS@Changi at a slight ≈10% discount from

units at Centropod@Changi. Roxy is also contemplating keeping some units as

investment properties as WiS@Changi may see more interest following the

completion of Centropod@Changi and Millage in the future, alongside the

development of the Paya Lebar Central new commercial hub.

WiS@Changi was acquired at S$822 per sq. ft, based on the post-asset

enhancement floor plan. URA data showed that office units were sold at

S$1,500 to S$1,600 per sq. ft., while shops positioned along Changi Road were

sold at an average price of S$3,600 per sq. ft. As an asset enhancement

project, construction costs will be relatively low. Therefore, there is a relatively

wide profit buffer built into this project.


1 2 3

4

1) WiS@Changi, 2) Centropod@Changi, 3)

Millage, 4) Jupiter 18 (a project by Roxy that is

under construction)

Nottinghill Suites Take-Up Rates

Jul 2011 Launch

Aug 2011 15%

Nov 2011 17%

15 Feb 2012 53%

7 Mar 2012 60%

4 Apr 2012 est. 70%

Page 16 of 22


25 April 2012

Hotel & Investments to Provide Recurring Income

Figure 19: Hotel Revenue and Op. Profit Figure 20: Hotel Operating Statistics

A) Hotel – A Significant Growth Driver in 2011: The Grand Mercure Roxy

Singapore (GMRS) contributed 43.7% of total profit before tax (PBT) growth of

S$5.3m. PBT from the GMRS grew by 20.3% year-on-year from S$11.4m in

2010 to S$13.7m in 2011, driven by higher average room rates. Average room

rate rose by 13.2% from S$166.4 in 2010 to S$188.3 in 2011. Occupancy rate

improved marginally from 94.2% to 94.6%.

Competitive Attributes: Although the GMRS is not located in the downtown

area, it is 15 minutes’ drive away from key destinations such as the Changi

Airport, Marina Bay, Suntec City and Orchard Road. As a hotel, it offers a full

suite of facilities for visitors, such as a selection for five restaurants and bars for

guests to wine and dine at. GMRS rooms are spacious. Its smallest room is

about 32 sq. m. in size or 343 sq. ft., about half to 2/3 of a compact apartment.

Managed by Leading International Hotel Operator: Roxy contracts the

management of the GMRS exclusively to the Accor Group, subject to contract

renewal after Dec 2016. Roxy will in turn pay the Accor Group a royalty fee

based on the total revenue of the hotel and a management fee as a percentage

of gross operating profit. In addition, it contributes to a shared marketing fund to

promote and market the Grand Mercure Brand.

Access to Customers via Accor’s Network: The Accor Group operates in

more than 90 countries and in Singapore alone manages four hotels under

three different brand names. As the GMRS can ride on the Accor Group’s

marketing activities, its international room reservation system and knowledge of

local and international room rates, keeping hotel occupancy at optimal levels

should not be challenging.

37.4

48.5

37.5

44.548.4

16.821.6

13.317.7

21.8

0

20

40

60


S$m

Revenue Net Operating Profit


154.4

200.3

147166.4

188.3

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

0

50

100

150

200

250


S$

Average Room Rate RevPar Average Occupancy Rate


Page 17 of 22


25 April 2012

Role of Owner: As the owner, Roxy implements improvement and upgrading

projects, e.g. the creation of new function space, upgrading of restaurants and

addition of rooms from underutilized facilities. Roxy now has 569 rooms versus

483 rooms in 2000.

Our View on GMRS: From this perspective, the GMRS can be seen as a

sustainable business with healthy profitability, albeit with some volatility in

performance from year to year as room rates fluctuate.

While the GMRS may benefit from the growth of the tourism industry in

Singapore, we see the property development segment as a more relevant

growth driver in the coming years as Roxy recognizes its huge progress billings

as revenue. In our forecasts, we assume 2% annual top-line growth and stable

margins for the hotel ownership segment.

But…There is Scope for Long Term Growth: Roxy has toyed with larger

growth ideas for the hotel ownership segment, such as the addition of another

hotel (which requires a site of attractive return on investment), resizing the

rooms to effectively double room count (which is very disruptive towards

operations) or monetizing the hotel for reinvestment in other businesses (which

requires a business of substantially favourable risk/reward profile). We felt that

Roxy’s key focus continues to be on property development and that these

options for the hotel ownership segment are not sufficiently attractive to the

company right now.

B) Investment Properties: Roxy earned S$1.8m of gross profit, mainly rental

income, from investment properties in 2011 – 24% lower than the S$2.4m

earned in 2010. The decline was largely due to the expiry or termination of

leases following the redevelopment of Kovan Centre. Kovan Centre has since

been demolished to give way to the construction of Space@Kovan.

Consequently, the property was reclassified from investment property to

development property on Roxy’s balance sheet. In the process, a fair value

gain of S$9.6m was recognized in 2011. We expect Roxy to make about S$2m

of annual revenue from investment properties over our three-year forecast

horizon of 2012 to 2014 – about S$0.6m lower than that of 2011 to account for

the demolition of Kovan Centre.

Fair Value Gains From Investments: Roxy made S$13.5m (2010: S$10.0m)

of fair value gains from its 46 shops at Roxy Square Shopping Centre in 2011,

bringing total fair value gains in the year to S$23.0m. There has been no

announced plan to enhance the Roxy Square Shopping Centre. As such, we do

not incorporate any further fair value gains out of Roxy Square Shopping

Centre in our forecasts to be conservative. Roxy’s 46 shop units are valued at

S$44.7m as at end Dec 2011. Roxy owns 51 shop units at Roxy Square.

However, five of the units are accounted at cost as they are used by Roxy as

offices.

Previous Work on GMRS Hotel

2000: Commence operations

2006: Upgraded lounge

2007: Increased rooms to 558

2011: Increased rooms to 569

Page 18 of 22


25 April 2012

Forecasts, Valuation and Risks

May Add More Investment Properties: According to media articles, Roxy and

the other co-developers of EON Shenton may keep four floors of offices –

Levels 15, 17, 19 and 21 for investment, possibly via the same JV developer

entity. Some of the unsold office space at WiS@Changi may also be retained

as investment property when completed. We do not assume the conversion of

any developed property to investment property in our forecasts as these moves

have not been confirmed by the company. Again, we prefer to focus our

assumptions and forecasts on the core property development segment.

Key Assumption: In our forecasts, we assume that Roxy will be able to sell all

of its properties that are in its current pipeline. This simplifies the forecasting

process and reduces sources of estimation error, i.e. the take up rate for each

project at the end of each period. Our assumption is reasonable as older

projects by Roxy are seeing some sales month-to-month, as we have

highlighted in an earlier section, and they will probably be fully sold over time.

Moreover, Roxy has the option of converting developed properties to

investments and recognize the development profit as fair value gains.

More Profits to Come from Associates: Five of Roxy’s current projects, EON

Shenton and Natura@Hillview, are JVs with other partners. As Roxy owns less

than 50% of these proejcts, sales revenue from these associates will not be

recognized as a line item in Roxy’s financial statements. Instead, Roxy’s share

of profit out of them will be disclosed in the income statement.

Financial Summary and Forecasts: Property development revenue fell by

21.6% in 2011 to S$132.6m, due to the completion of several projects and the

gap in activity until the commencement of construction of newer projects. As a

result, PBT for the property development segment fell by 31% in 2011. Property

development gross margin was slightly lower in 2011, but still above 20%.

We expect Roxy to post strong property development revenue growth of >40%

in FY12 due to the ramp up of construction of larger projects such as

Spottiswoode 18 and Space@Kovan which have combined progress billings of

S$383.3m as at 15 Feb 2012. Such a high growth rate is also not

unforeseeable as Roxy’s property development revenue grew by 36.2% in 2010.

Associated companies contributed S$0.3m of profit in 2011. We expect

associates to contribute S$3.1m of profit in FY12F and S$21.5m in FY13F.

Associates will be a crucial growth driver with more projects being JVs.

However, we expect Roxy to post slower net profit growth of just 1.0% in

FY12F, followed by 18.1% in FY13F. This is because Roxy’s FY11 profit was

elevated by fair value gains of S$23.0m. We do not incorporate any fair value

gains into our forecasts.

Page 19 of 22


25 April 2012

Figure 21: Financial Summary

Valuation: We value Roxy’s development gains at S$168.2m at a cost of

equity of 10%. Inclusive of the book value of its equity and the revaluation

surplus on Grand Mercure Roxy Singapore, we value Roxy at S$721.1m. To be

conservative, we included a 20% discount to our gross valuation, thus arriving

at a value of S$576.9m, or S$0.906 per share (pre-bonus issue). The ex-bonus

issue valuation is S$0.605 per share.

Key Risks: 1) There are concerns that property prices in Singapore may

moderate further. As such, our 20% discount to RNAV will keep our valuation

relevant even if property prices moderate somewhat. For the same reason, we

also do not include a perpetual component to our valuation of Roxy’s

development segment to avoid valuing the perpetual component from a high

base. We note that Roxy can continue to grow its property development

segment so long as new projects can afford a reasonable rate of return.

However, the revaluation surplus on Roxy’s hotel and the fair value of its shop

units may be reduced in a weak property market.

2) On a gross debt to equity basis, Roxy may seem highly leveraged at 2.3x

equity. However, the bulk of Roxy’s debt is loans for the development of sold

projects – they can be repaid when Roxy receives payment from the buyers.

Only S$109.0m is for unsold projects as at Dec 2011. Moreover, net debt to

equity, which takes into account cash in bank, is about 1.2x. Finally, we also

highlight that the book value of Roxy’s equity does not fully reflect the value of

its hotel. Net debt to adjusted net assets value as at Dec 2011 was actually at a

very comfortable 45.5%.

S$m FY07 FY08 FY09 FY10 FY11

Revenue

Property Development 64.2 80.3 124.1 169.1 132.6

Hotel 37.3 48.5 37.5 44.5 48.4

Property Investment 1.2 1.3 1.9 3.3 2.6

Gross Profit

Property Development 13.6 19.2 30.7 37.0 27.4

Hotel 27.1 35.2 25.4 31.1 34.1

Property Investment 1.2 1.3 1.9 2.4 1.8

Profit Before Tax

Property Development 10.6 11.9 25.2 30.7 21.3 Hotel & Property Investment 13.4 18.5 11.0 22.5 37.2

Group

Revenue 102.7 130.1 163.5 216.9 183.6

Gross Profit 41.9 55.7 58.0 70.5 63.3

PBT 23.9 30.4 36.2 53.2 58.5

Profit after Tax 19.3 24.7 27.9 42.8 49.7

Gross Margin 40.8% 42.8% 35.5% 32.5% 34.4%

Pre-Tax Margin 23.3% 23.4% 22.2% 24.5% 31.9%

Fair Value Gains on Investment Properties 3.3 1.8 0.3 10.0 23.0 Source: Company, SIAS Research

Page 20 of 22


25 April 2012

Figure 22: Valuation

Figure 23: Roxy’s Debt Profile

Property Development

(Inclusive of associates) FY12F FY13F FY14F FY15F FY16F

Revenue 205.6 267.9 318.6 227.7 18.4

Gross Profit 56.3 73.5 93.7 76.7 7.4

Other Expenses -9.3 -12.1 -14.3 -10.2 -0.8

Tax -8.0 -10.4 -13.5 -11.3 -1.1

Development Gains 39.0 51.0 65.9 55.2 5.4

Discount Rate 0.91 0.83 0.75 0.68 0.62

PV of Development Gains 35.5 42.1 49.5 37.7 3.4

Total PV of Development Gains 168.2

BV of Equity 209.9 Risk Free Rate 2.5%

Revaluation Surplus on Hotel 343.0 Beta 1.0

Value of Equity (S$m) 721.1 Market RP 7.5%

Discount to RNAV @ 20% -144.2 Cost of Equity 10.0% Adjusted Value of Equity 576.9

Number of shares (m) 954.8

Value per Share (S$) 0.605 Source: SIAS Research

Based only on existing

and known projects, their

current ASPs, available

GFA and estimated TOP

dates.

Source: Company Presentation Slides

Page 21 of 22


25 April 2012

Figure 24: Financial Forecasts and Estimates

S$m FY09 FY10 FY11 FY12F FY13F FY14F

Revenue 163.5 216.9 183.7 241.8 230.8 278.5

- Property Development 124.1 169.1 132.6 189.9 178.1 224.9

- Hotel Ownership 37.5 44.5 48.4 50.0 50.8 51.6

- Property Investment 1.9 3.3 2.6 2.0 2.0 2.0

Gross Profit 58.0 70.5 63.3 88.9 81.2 100.2

Share of Associates' Profit 0.0 0.1 0.3 3.1 21.5 22.9

Fair Value Gains 0.3 10.0 23.0 0.0 0.0 0.0

EBIT + Fair Value Gains 40.0 57.7 63.2 66.8 77.4 94.2

Net Profit 27.9 42.8 49.7 50.2 59.3 74.2

Total Current Assets 303.2 449.1 625.9 732.9 641.4 591.3

Total Non-Current Assets 122.3 152.5 122.7 126.3 148.2 171.5

Total Current Liabilities 200.5 332.1 433.5 484.8 393.2 328.5

Total Non-Current Liabilities 91.6 99.7 105.1 130.7 108.4 90.6

Total Equity 133.4 169.8 209.9 243.6 288.1 343.7

Revalued Net Assets Value (RNAV) 302.4 426.9 554.1 586.6 631.1 686.7

Cash from Operating Activities 46.7 -31.4 -2.1 47.8 44.4 37.0

Cash from Investing Activities -25.1 -33.3 -18.8 -22.5 -27.5 -32.5

Cash from Financing Activities -24.4 114.3 91.2 58.1 -126.1 -107.6

Net Change in Cash -2.8 49.6 70.3 83.4 -109.2 -103.0

Gross Margin 35.5% 32.5% 34.4% 36.8% 35.2% 36.0%

Net Margin 17.1% 19.7% 27.0% 20.8% 25.7% 26.6%

Return on Common Equity 22.9% 28.2% 26.2% 22.2% 22.3% 23.5%

Return on Assets 6.7% 8.3% 7.4% 6.3% 7.2% 9.6%

Net Debt / RNAV 46.9% 50.9% 45.5% 41.5% 38.3% 37.2%

Current Ratio 2.5 2.9 5.1 5.8 4.3 3.4

EPS (S cents) 2.9 4.5 5.2 5.3 6.2 7.8

BV / Share (S cents) 14.0 17.8 22.0 25.5 30.2 36.0

RNAV / Share (S cents) 31.7 44.7 58.0 61.4 66.1 71.9

PER 14.7 9.6 8.3 8.2 6.9 5.5

P/BV 3.1 2.4 2.0 1.7 1.4 1.2

P / RNAV 1.36 0.96 0.74 0.70 0.65 0.60 Per share data and ratios have been adjusted to reflect post-bonus issue values for easier comparison. Revalued Net Assets refers to fair value surplus on hotel, plus book value of equity; do not include development gains valued in our valuation. Source: Company, SIAS Research

Page 22 of 22


25 April 2012

Rating Definition:

Increase Exposure – The current price of the stock is significantly lower than the underlying fundamental value. Readers can

consider increasing their exposure in their portfolio to a higher level. Invest – The current price of the stock is sufficiently lower than the underlying fundamental value of the firm. Readers can

consider adding this stock to their portfolio. Fairly Valued – The current price of the stock is reflective of the underlying fundamental value of the firm. Readers may not

need to take actions at current price. Take Profit – The current price of the stock is sufficiently higher than the underlying fundamental value of the firm. Readers

can consider rebalancing their portfolio to take advantage of the profits. Reduce Exposure - The current price of the stock is significantly higher than the underlying fundamental value of the firm.

Readers can consider reducing their holdings in their portfolio.

IMPORTANT DISCLOSURE

As of the date of this report, the analyst and his immediate family may own or have positions in any securities mentioned

herein or any securities related thereto and may from time to time add or dispose of or may be materially interested in any such securities. Portfolio structure should be the responsibility of the investor and they should take into consideration their

financial position and risk profile when structuring their portfolio. Investors should seek the assistance of a qualified and

licensed financial advisor to help them structure their portfolio. This research report is based on information, which we believe

to be reliable. Any opinions expressed reflect our judgment at report date and are subject to change without notice. This research material is for information only. It does not have regards to the specific investment objectives, financial situation and

the particular needs of any specific person who may receive or access this research material. It is not to be construed as an offer, or solicitation of an offer to sell or buy securities referred herein. The use of this material does not absolve you of your

responsibility for your own investment decisions. We accept no liability for any direct or indirect loss arising from the use of this research material. We, our associates, directors and/or employees may have an interest in the securities and/or companies

mentioned herein. This research material may not be reproduced, distributed or published for any purpose by anyone without our specific prior consent.

Documents

Roxy-Pacific Holdings Limited Innccrreeaassee pEExxpoossuurreeroxypacific.listedcompany.com/misc/report_SIAS_250412.pdf · 2012-04-26 · Page 1 of 22 IInniittiattiioonn rRReeppoortt