Roxy-Pacific Holdings sees "fairly strong" sales in 2Q13

Selling prices also exceeded forecasts.

Roxy-Pacific Holdings launched three three land-bank sites during 2Q13, and according to OCBC Investment Research, "the pace of sales to be fairly strong with selling prices above expectations."

Here's more from OCBC:

A key quarter for ROXY. We met with ROXY’s management yesterday. Over 2Q13, ROXY launched three out of four land-bank sites – LIV on Sophia, WhiteHaven and Jade Residences – which are 100%, 71% and 50% sold to date, respectively. Overall, we judge these pace of sales to be fairly strong with selling prices above expectations. In addition, the sold-out launch at LIV on Sophia, located in the same vicinity as ROXY’s final land-bank site (Wilkie Terrace), likely points to positive demand when it is launched ahead.

Successful harvest is a milestone. We see these successful launches to be a key milestone for ROXY given their significant combined size – S$407m and S$76m in estimated total sales and net profits – relative to the group’s project portfolio. ROXY now sits on a whopping S$1,188m of unrecognized progress billings from sold units (up 38% from end FY12), which is 8.5 times total FY12 development revenues and would underpin earnings growth over FY13-16.

Record of sharp execution. Management continues to acquire and launch niche sites expediently with high sell-through rates, while deftly navigating the property cycle. We understand ROXY is now prudently sourcing for more land-bank; already it has entered into agreements to acquire Sunnyvale Apartments (Telok Kurau) for S$25m and Yi Mei Gardens (near Kovan MRT station) for S$136m. By our calculations, these two acquisitions would accrete 3.5 Scents to RNAV.

Upgrade to BUY with increased S$0.74 FV. We update our model with latest sales data and acquisitions and our fair value increases to S$0.74 (30% RNAV disc.) versus S$0.61 (25% discount) previously. Note that our RNAV discount is raised to 30% given increased residential uncertainties from rising mortgage rates and physical supply ahead. We deem this to be conservative and reflect a sturdy margin for safety, particularly since a large portion of ROXY’s value comprises its hotel segment (Grand Roxy Mercure Hotel worth S$0.47 per share) and that only 10% of ROXY’s total launched development GDV is now left unsold. Upgrade to BUY with a FV of S$0.74 (30% RNAV disc.).