SINGAPORE (Apr 18): OCBC Investment Research believes it is still too early to call the bottom for Roxy-Pacific Holdings, even though its share price has fallen 26% over the last 12 months.

The brokerage is keeping its “hold” rating on Roxy-Pacific with a fair value estimate of 41 cents.

“We believe the market will be focused on its upcoming launches,” says analyst Joseph Ng in a Wednesday report. “Looking at Roxy-Pacific’s landbank, we note that the four projects in its pipeline face somewhat mixed prospects.”

Ng points out that keen competition is expected for the group’s projects at 15, 17 & 19 Lorong Kismis and Dunearn 386. This is due mainly to new units coming onstream from the redevelopment of the former Royalville by Allgreen, as well as Mayfair Modern and the continued sales of Mayfair Gardens.

However, the launch of Roxy-Pacific’s 85-unit development at 22 Farrer Road could have received a boost, after the Controller of Housing issued a prohibition on sale of units at the former Normanton Park site.

“The bumper supply in 2019 should continue to drive sales, but potential buyer fatigue, translating into a more subdued sell-through rate would be a cause for concern,” says Ng.

Meanwhile, Ng notes that Roxy-Pacific recently announced that it has signed a management deal with Park Hotel Group to open Park Hotel Melbourne in 2022, as part of its plan to build recurring income streams.

As at 1.45pm, shares in Roxy-Pacific are trading flat at 41 cents. This implies an estimated price-to-earnings (PE) ratio of 11.9 times and a dividend yield of 2.5% for FY19.