SINGAPORE (May 10): CGS-CIMB Securities is maintaining its “add” on Perennial Real Estate Holdings as activities for its Singapore property gain momentum.
TripleOne Somerset’s AEI works are on track to be completed in 2H18. It has leased 46,570 sf of space to NTUC Finest and Spaces co-working space provider.
Committed occupancy at AXA Tower rose q-o-q to 90.8% at end 1Q18.
Perennial is also exploring en bloc opportunities for this building to capitalise on the rising office market. It bought the remaining 50% stake in Capitol Singapore and is finalising the appointment of a hotel operator. It also owns 40% of the Goodluck Garden en bloc residential project, together with Qingjian Group.
In addition, Perennial International Health and Medical Hub has achieved committed occupancy of 87.6% and is slated to officially open on June 1.
Within the eldercare and senior living business, Shanghai RST was awarded a contract to operate the 768-bed Fengxian Second Welfare Home for five years.
This is the first government-built, privately-operated facility in Fengxian District, Shanghai.
“This home is expected to open in 3Q18. Once fully ramped up, we anticipate contributions from this business to improve in the medium term,” says analyst Lock Mun Yee in a Wednesday report.
In 1Q18, Perennial reported a 26.1% y-o-y decline in revenue to $14.9 million due to deconsolidation of TripleOne Somerset following the partial 20.2% stake sale in 2017.
See: Perennial posts 86.7% drop in 1Q earnings to $5.1 mil on absence of one-off gain
This was partly offset by higher China revenue, largely due to higher contributions from Perennial Qingyang Mall in Chengdu. On a comparable basis, 1Q18 revenue would have been 10% higher y-o-y.
However, bottomline declined 86.7% y-o-y to $5.1 million profit in 1Q18 due in part to a higher base in 1Q17 with divestment gains from the sale of its 20.2% stake in TripleOne Somerset and re-measurement gain for the remaining 30% stake in the property.
The y-o-y decline in 1Q18 was partly offset by higher associate contributions, mainly from the difference between the acquisition price and fair value of the acquired assets of the additional 19.9% stake in WBL, purchased in Feb 18.
“Our target price of $1.18 is based on a 40% discount to RNAV,” adds Lock.
Catalyst for the stock includes on faster-than-expected ramp-up of Capitol Singapore and Perennial International Health and Medical Hub.
As at 11.24am, shares in Perennial are trading at 86 cents.