Rental income props up Ho Bee Land’s lacklustre results in FY14

The high-end segment is still in a rut.

A dearth of new property sales has pushed Ho Bee Land to rely almost entirely on rental income for revenue growth.

According to CIMB, Ho Bee is banking on recurring income from its office portfolio while waiting for sales to pick-up.

The group is also relying on overseas earnings from Australia to boost its bottomline. CIMB predicts that overseas earnings could post healthy margins in the high-teens, as highlighted by management in our recent meeting.

“While sales volume in Sentosa remains weak, we believe the exemption of extension premium will give Ho Bee the flexibility to rent out the units while waiting for the high-end residential segment to pick up. Maintain Add on cheap office portfolio We maintain our Add rating as Ho Bee offers a cheap way to gain exposure to office assets in Singapore,” stated CIMB.