Lots of hidden value

• Significant hidden value

• Large potential value accretion from MCH

• Upgrade to BUY with TP raised to S$9.53

Deep underlying value.

shares by its major shareholder, UIC, in recent months, renewed

investor interest and realization of the deep embedded value in

the company has prompted us to take a deep-dive look at

Singland. We believe Singland has significant hidden value

through its 53.06% stake in unlisted Marina Centre Holdings

(MCH), in addition to its large portfolio of 2.1msf of directlyowned

centrally located and suburban office space. The group

has also increased its landbank and now has 788,364sf

residential GFA in Singapore, to be developed over the next few

years. We anticipate these growth engines to continue to be

ramped up in the coming years.Increasing accumulation of Singland

MCH carried at below replacement cost.

look at the value of MCH reveals that there is significant hidden

value in its hotels and investment properties at MCH that are not

reflected in current book value. The hotels are carried at cost,

which we believe is below current replacement cost while

valuation of the investment properties is conservative. If marked

to market, this could add 97Scts to our RNAV for Singland to

S$13.61. As one of the largest hotel room owners in the Marina

enclave, with 1,880 hotel rooms or c4+% of total stock, there is

a scarcity value premium that can be attached.Our see-through

Redevelopment provides further room for value accretion.

In addition, there is more value creation through the

redevelopment of the Marina Bayfront office block into an

extension of the Marina Square retail space, to improve the

visibility and frontage of the shopping complex. In addition, the

current 20% valuation disparity between office and retail space

would also mean potential for value optimisation through space

conversion. We believe the makeover is timely and would enable

the group to benefit from the rejuvenation of the Marina area, in

tune with the AEI at Suntec City and completion of South Beach

by 2015. Conservatively, assuming similar valuations for the

additional retail space when completed, we reckon the group

could recognise a further 3Scts to RNAV.

Upgrade to BUY.

adjusted TP of S$9.53, pegged at a 30% discount to RNAV of

S$13.61. Share price is currently trading at a 32% discount to

book NAV and 38% below our RNAV estimate. We believe the

stock continues to offer good value backed by a portfolio of

quality assets. Furthermore, with a lowly geared balance sheet

and strong recurrent cashflow from leasing activities, Singland is

in a good position to maintain a reasonable dividend yield,

currently at 2.4%. The risk to our view for a potential closing of

price gap to RNAV is if the major shareholder does not raise its

stake further or if there is no recognition of the underlying value

of MCH given its unlisted status.



  We have raised our call to BUY with an

Singapore Land Limited

Steady As She Goes

Slight growth in core PATMI.

in its FY12 headline PATMI to SGD407.1m, but excluding revaluation

gains, core PATMI showed a mere 2% YoY

largely in line with expectations. FY13F earnings are likely to take a dip

on the back of expected weaker rental income and development profit

recognition, but we are not overly concerned. Maintain BUY.SingLand reported a 23% YoY increase

Development profits picked up the slac

closure of the Pan Pacific Singapore hotel for

gross profit from the hotel dropped from SGD41.2m in FY11 to a

marginal loss of SGD0.3m in FY12. The decline in hotel earnings was

largely buffered by an increase in development profits, mainly from The

Excellency in Chengdu, China.

Portfolio revalued upwards by 3.9%

properties enjoyed a 3.9% YoY revaluation gain, despite

remaining flat YoY. This is presumably due to lower cap rates used by

the valuers. However, we believe that Grade B office rents are likely to

come under greater pressure in FY13, given the upcoming new supply.

Landbank sufficient for now.

projects in the pipeline, we reckon that SingLand will not be actively

landbanking. The first project to be launched is likely to be the 109

Mon Jervois at Jervois Road, right at the edge of Chatsworth Park

Goodclass Bungalow Area. We estimate the proje

SGD1,750 psf.With four unlaunched residential

Cheap valuation privatization still possible

an undemanding 0.6x P/B and P/RNAV, suggesting that it remains a

fairly attractive privatization candidate. We have raised our RNAV

marginally to SGD8.32, and maintain our BU

Singapore Land – Summary Earnings Table

FYE Dec (SGD m) 2011A 2012A

Revenue 615.3 580.6

EBITDA 264.9 248.2

Recurring Net Profit 214.8 218.6

Recurring Basic EPS (SG cts) 52.1 53.0

EPS growth (%) 4.7 1.8

DPS (SG cts) 20.0 20.0

PER (x) 9.2 7.5

EV/EBITDA (x) 12.3 13.7

Div Yield (%) 2.7 2.7

P/BV(x) 0.6 0.6

Net Gearing (%) 4.2 6.6

ROE (%) 6.9 7.9

ROA (%) 5.5 6.3

Consensus Net Profit (SGD m)

Source: MaybankKE

TIONS

13 February 2013

Singapore

Co. Reg No: 198700034E

MICA (P) : 099/03/2012

increase to SGD218.6m,

slack.

major refurbishment,

n

rental income

. ojects 109-unit

project to have an ASP ofDue to the five-month3.9%. SingLand’s investment

possible.

2, BUY recommendation.SingLand is trading at

Singapore Land Limited

Navigating the Slowdown

Turning more to development.

sector remains muted, and the hotel sector also appears to have

peaked, SingLand has turned to residential development by acquiring

four sites in 2012. We see this as a proactive move by the management

to maintain returns for shareholders. With its

now see a higher probability of a privatisationAs the outlook for the Singapore office

On a shopping spree.

Government Land Sales (GLS) programme, acquiring four sites for

residential development (Bright Hill site is a 50

sites have a combined attributable GFA of

estimated GDV of SGD1.3b. At a blended pre

margins are decent.SingLand was an active participant in the 2012

Ongoing projects almost sold-out.

Trizon and Archipelago (50% stake) are now substantially sold at 92%

and 99% respectively. We expect the progressive recognition of income

from Archipelago to mitigate possible mild

rental income, with more development profits from FY14 onwards

the four newly acquired sites start to contributeAfter sluggish starts, both The

Getting closer to privatisation?

SingLand, while Silchester holds another 8.2%.

term institutional holder of the stock (more than 10 years), leaving

SingLand’s free float close to the 10%-mark

listing status. With SingLand still trading at a 40% discount to our

RNAV, UIC may finally pull the trigger and launch a privatisation bid

funded by the low current borrowing costs

SGD8.80/sh corresponding to SingLand’s 10

it will cost UIC SGD733m to buy the shares it does not already own.UIC hold

Upgrade to BUY.

commercial landlord, we like that management is actively navigating the

headwinds. We raise our target price to SGD8.20,

a narrower 30% discount to RNAV (from 40%). Upgrade to BUY.While SingLand remains predominantly a

Singapore Land – Summary Earnings Table

FYE Dec (SGD m) 2010A 2011A

Revenue 527.2 615.3

EBITDA 243.6 264.9

Recurring Net Profit 205.1 214.8

Recurring Basic EPS (SG cts) 49.7 52.1

EPS growth (%) 0.9 4.7

DPS (SG cts) 20.0 20.0

PER (x) 4.4 8.8

EV/EBITDA (x) 12.8 11.8

Div Yield (%) 2.8 2.8

P/BV(x) 0.7 0.6

Net Gearing (%) 4.9 4.2

ROE (%) 16.0 6.9

ROA (%) 11.7 5.5

Consensus Net Profit (SGD m)

Source: Maybank KE