PhillipCapital analyst Tan Jie Hui has downgraded property developer First Sponsor Group (FSG) to “accumulate” from “buy”, as its recent share run-up has “priced in some positives”.

Over the past two months, the property developer’s share price has appreciated around 8%, with highs of around $1.43 on March 9, April 12 and April 20.

That said, Tan has kept her sum of the parts (SOTP) target price unchanged at $1.56.

In its 1Q business update on April 23, FSG reported an average PRC PF loan book of RMB2.36 billion ($483.9 million) for the quarter ended March.


SEE:First Sponsor reports 4.8% increase in 1Q earnings of $24.9 mil on one-off gain


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As at March 31, its PRC PF loan book stood at RMB2.60 billion.

To Tan, FSG’s operational update suggests that the group is “on track” to post record FY2021 pretax profits.

“Development sales yet to be recognised stand at $620 million, after $180 million recognised from the handover of Star of East River, Emerald of the Orient and Plot F. FSG’s share of GDV for unlocking from existing projects is S$3.2bn. This excludes its new Humen project, which is expected to contribute more to property financing,” she says.

FSG, on April 22, formed a joint venture (JV) with a wholly-owned subsidiary of a Hong Kong Exchange-listed property development company to develop a land parcel in Humen, Dongguan into a predominantly residential project.

The new Humen project lies between the group’s Humen TOD and The Pinnacle sites and is well connected within the Greater Bay Area.

FSG has an effective stake of 48% in the JV.

FSG will extend loans of $84 million and $90 million through junior and senior convertible bonds from annualised coupon rates of 15% and 12% to finance the acquisition and their conversion from industrial to residential use.

FSG’s European hotels are also expected to turn around gradually.

Lockdown measures in the Netherlands are expected to ease from next week. A nationwide night curfew that was in place for three months has been lifted on April 28.


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Universities and colleges will gradually reopen and stores will be allowed to admit more customers.

In addition, FSG possesses a strong balance sheet to capitalise on new opportunities.

“FSG is backed by a strong balance sheet, substantial unutilised committed credit facilities and a potential equity infusion from the exercise of outstanding warrants. In April 2021, the Group refinanced a $225 million committed revolving credit facility and extended its maturity date by four years. This should further strengthen its cash resources to capitalise on new business opportunities,” writes Tan.

As at 12.11pm, shares in FSG are trading 1 cent higher or 0.7% up at $1.41.