SINGAPORE (Dec 7): OCBC Investment Research is upgrading its call on Roxy-Pacific to “buy” from “hold” while raising its fair value on the stock to 60 cents from 52 cents previously.
This follows news of the group’s acquisition of a six-storey commercial and retail building in Melbourne’s central business district (CBD), which has prompted the research house to update its valuation model with these latest acquisitions, firmer residential sales and average selling price (ASP) assumptions.
To recap, the freehold building known as Melbourne House occupies a total site area of 937 sqm at 260 Little Bourke Street, with a current net lettable area (NLA) of 4,504 sqm.
It is due to be acquired by Roxy-Pacific’s indirect wholly-owned subsidiary, Roxy-Pacific Melbourne House, for A$33 million ($33.7 million), after which the group intends to redevelop the property into a mixed-use development comprising a hotel and retail units.
See: Roxy-Pacific to acquire Melbourne property for $33.7 mil
In a Thursday report, analyst Eli Lee says Roxy-Pacific is now deemed as well positioned to benefit from a turnaround in the domestic property market, given its landbank of 271,000 of gross floor area (GFA) including the group’s recent acquisition of Dunearn Court.
See: Roxy-Pacific acquires Dunearn Court for $36.3 mil
“We like that the group continues to expand successfully in Australia. It had earlier taken a 45% stake in a JV that is acquiring a Melbourne office building for A$74.1 million ($76 million). The freehold building at 312 St Kilda Rd in Southbank sits on a 1.9k sqm site with net lettable area of about 9.8k sqm, and is minutes from Melbourne's CBD,” recalls Lee.
See: Roxy Pacific to acquire Melbourne commercial site for $76 mil through Australian JV
“In Singapore, we see Roxy to be well positioned to benefit from a turnaround in the domestic property market. The group has a landbank that can potentially generate over 400 homes in seven sites,” he notes.
As at 2.02pm, shares in Roxy-Pacific are trading at 54 cents.