Ho Bee Land's earnings from overseas developments delayed

Here's what to blame.

According to CIMB, the lacklustre market for high-end properties in Singapore has prompted Ho Bee Land to expand overseas, particularly in Australia and China.

While CIMB views the shift away from high-end Singapore properties positively, earnings contributions are likely to be delayed as profits are recognised on a completed basis.

Here's more:

In China, Ho Bee owns stakes in several joint ventures for residential projects that are located in Shanghai, Tangshan and Zhuhai.

Among the projects, the Tangshan Nanhu Eco-city should provide the earliest earnings contribution from FY14 onwards, when it is estimated to be complete. Sales is expected to kick off in early 2014 according to the management. We expect other projects are expected to be completed from 2016 onwards.

In Australia, four residential sites were acquired in the past two years, underpinned by low land costs and bottoming property prices.

Ho Bee's Australian landbank now amounts to about 1.1m sq ft in GFA and costs A$36.5m. Developments are largely in the preliminary stage and we expect earnings contributions to filter in from FY16 onwards as well.