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Roxy-Pacific directors raise respective stakes as firm flips Ginza property

The Edge Singapore
The Edge Singapore • 3 min read
Roxy-Pacific directors raise respective stakes as firm flips Ginza property
On May 6, investment company Winmark Investments acquired 50,000 shares in Roxy-Pacific Holdings for $16,250, or at an average price of 32.5 cents each.
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SINGAPORE (May 15): On May 6, investment company Winmark Investments acquired 50,000 shares in Roxy-Pacific Holdings for $16,250, or at an average price of 32.5 cents each.

Winmark is wholly owned by Winston Tan, an independent director of Roxy-Pacific, and his wife. Together with the 35,000 shares that he owns directly, Tan now owns a total of some 9.7 million shares in Roxy-Pacific, or a 0.747% stake.

Indeed, Tan has been acquiring shares in the property and hospitality firm from the open market since March. His earlier purchases were made on March 27, March 30, April 7, April 13, April 22, April 28 and May 4. The largest block of shares was acquired on April 7, when he acquired 150,000 units. The prices Tan paid for the shares ranged between 32 and 33 cents.

Tan was not the only director who bought Roxy-Pacific shares recently. Koh Seng Geok, Roxy Pacific’s deputy CEO and one of its executive directors, also made a series of purchases in February and March. Koh bought the largest block of 110,000 shares on Feb 24, paying an average of 36.9 cents each. His most recent purchase was for 20,000 shares at 28.5 cents each on March 19. With the purchases, Koh now owns a total of nearly 7.3 million shares, or a 0.56% stake in the company.

Interestingly, Tan sold 658,000 shares on Jan 16 at an average of 38 cents via a married deal to Kian Lam Investment, which holds a direct and deemed stake of more than 51% of the company. Kian Lam is controlled by Teo Hong Lim, Roxy-Pacific’s executive chairman and CEO.

Ginza flip

On March 6, Roxy-Pacific announced that its indirect associate, Leon TMK, held through an entity called Nigella SG, had entered into a sale and purchase agreement to sell a retail building located at Tokyo’s Ginza district for JPY8.7 billion ($114.7 million).

Roxy-Pacific and its joint venture partners bought the property last June for JPY6 billion, or some $75.7 million. This quick flip resulted in a gross profit excluding costs of around $38.7 million, or a profit margin of 50%, in barely nine months. Roxy-Pacific, which owns 53.07% of the building, is poised to book a profit share of around $20.5 million.

Three months ago, Roxy-Pacific had invested in another retail property in Japan. On Feb 7, the company, together with other partners, paid JPY5.2 billion for a property in Shibuya, Tokyo. Roxy-Pacific holds a 49% stake in the property and plans to receive recurring income from renting out the property.

In FY2019 ended Dec 31, 2019, Roxy-Pacific reported earnings of $30.3 million, up 42% over FY2018’s $21.3 million. Revenue more than trebled to $444 million, as the company recognised more revenue from its various projects.

As at Dec 31, 2019, Roxy-Pacific holds cash and bank balances of $331 million. Net asset value stood at 39.16 cents. The company has declared a final cash dividend of 1.09 cents. On top of the interim dividend of 0.195 cent, this brings total dividend declared for FY2019 to 1.285 cents.

Although Roxy-Pacific did warn investors of the negative impact from the Covid-19 pandemic when it made its FY2019 earnings announcement, the situation has deteriorated significantly since then.

In written responses to shareholders’ questions at its AGM held on May 4. Roxy-Pacific said it was able to enjoy an occupancy rate of 85% for its Grand Mercure Roxy Singapore hotel as at the end of last year. However, after the pandemic struck earlier this year, the hotel “has experienced almost a standstill in occupancy”.

Still, Grand Mercure Roxy is now enjoying some support as it has been designated as one of the various hotels here used to house people serving the mandatory 14-day “stay-home notice”. The company adds that it will receive wage subsidies worth some $2.34 million as well as save another $0.7 million, and as a result of property tax exemption this year.

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