Roxy-Pacific's profits jumped 29% to S$11.7m

'Lumpy' contribution expected from Wis@Changi property.

According to OCBC Investment Research, ROXY reported 1Q13 PATMI of S$11.7m, which increased 29% YoY mostly due to a stronger contribution from property development. 

This forms 15% of OCBC's FY13 forecast (S$78.0m) and is judged to be mostly within expectations, given that we expect a “lumpy” contribution later in FY13 from Wis@Changi (COC recognition).

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Revenue for the quarter came in at S$53.7m – up 41% YoY – again mostly due to increased revenues from the property development, partially offset by a 16% dip in Hotel revenues from enhancement works.

The group continues to sit on S$918.4m of progress billings from sold projects, which would underpin earnings from 2Q13 to FY17.  

In the midst of major launches. The 171-unit Jade Residences was launched in Apr and 44% of the units have been sold to date at ~S1.6k psf. All considered, we believe this is a decent launch performance and would be keeping a close eye on the pace of sales over the new couple of months. 

We also understand that WhiteHaven at Pasir Panjang would be launching for sales soon, with Sophia Mansions to follow.

1Q13 hotel average room rates down YOY. RevPar for the the hotel segment (Grand Mercure Roxy) decreased by 17% to S$155.1 in 1Q13 mostly due to a lower occupancy rate of 79.2% from enhancement works.

However, we also note that 1Q13 room rates have fallen to S$195.9 versus S$201.5 in 1Q12 which, taken together with other datapoints in the hotel sector from our channel checks, could point to a muted RevPar outlook in FY13.

We see the next two to three quarters to be particularly key ones for ROXY as it executes on its first set of key launches (Jade Residences, WhiteHaven, Sophia Mansions) after the Jan-13 cooling measures.