SALES

London +44 (0)20 7588 2828 Hong Kong +852 2526 4211 New York +1 212 376 1225+44 (0)20 7588 2828 Hong Kong +852 2526 4211 New York +1 212 376 1225

Singapore +65 6227 1511+65 6227 1511

London ? Frankfurt ? Paris ? Hong Kong ? Beijing ? Shanghai ? Singapore ? New York? Frankfurt ? Paris ? Hong Kong ? Beijing ? Shanghai ? Singapore ? New York

IMPORTANT DISCLOSURES ARE INCLUDED IN THE APPENDIX AT THE END OF THIS REPORT

Singapore

Research

Initiating coverage 18 January 2007

SC Global ? Simply compelling

STOCK RECOMMENDATION PRICE

OUTPERFORM S$3.12S$3.12

SECTOR REUTERS CODE BLOOMBERG CODE

Property SCGO.SI SCGD SP

12 MONTH RANGE MARKET CAPITALISATION PRINCIPAL LISTING

S$3.12 ? 1.25 S$631m (US$410m) SES

NEXT RESULTS DUE LAST RESULTS CHANGE IN STOCK RECOMMENDATION

February 2007 (FY) 10 November 2006 (Q3) n/an/a

CHANGE IN EPS ESTIMATES

n/a

ANALYSTS

George.Koh@cazenove.com@cazenove.com

Tel +65 6395 7686+65 6395 7686

Elaine.Khoo@cazenove.com@cazenove.com

Tel +65 6395 7685+65 6395 7685

Share price performance

1.0

1.3

1.6

1.9

2.2

2.5

2.8

3.1

3.4

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

SCGD SCGD relative to STI (rebased) SCGD relative to SESPROP (rebased)

Source: Bloomberg

Share price (%)
1 mth
3 mth
12 mth

Ordinary shares +29 +29 +138

Relative to sector +16
0 +40

Relative to STI +24 +12 +86

Average daily volume shares 0.3m

STI 3037.66

Year to 31 Dec (S$m) 2005 2006E 2007E 2008E

Turnover 136.4 234.0 168.8 325.6

EBIT 13.1 57.9 23.5 52.5

Pre
tax profit 16.7 52.4 20.5 49.0

Tax (2.0) (9.4) (3.0) (9.6)

Profit after tax 14.7 43.0 17.5 39.414.7 43.0 17.5 39.4

Minority interests (5.4) (14.7) (4.7) (0.0)

Net profit 9.4 28.3 12.8 39.4

Basic EPS (cents) 7.8 19.5 8.8 27.2

Fully diluted EPS (cents) 5.3 14.0 6.3 19.5

DPS (cents) 3.0 3.0 3.0 3.0

NAV (S$) 1.50 1.80 1.87 2.12

NAV fd (S$) 1.50 1.72 1.76 1.94

fd PE (x) 16.0 35.3 11.5

fd PNAV (x) 1.82 1.77 1.61

P/RNAV (x) 0.50

Total debt/ equity (%) 149 199 351 303

Major shareholders: Simon Cheong CEO & Chairman
55%

Legg Mason
6.21%

We initiate coverage on SC Global Developments (SCGD)

with an OUTPERFORM rating. We set a fair value of S$6.28,

potential upside of 101%.

Singapore?s SCGD is a pure luxury developer. It is renowned

for quality finishes at premium pricings, which often

establish higher benchmark pricing. With over 0.8m sq ft

of prime land
bank, SCGD is in a good position to

take advantage of the current re
rating cycle in the

high
end residential segment.

We expect near
term releases by its competitors at

Orchard Turn and Ascott Residences at circa S$3,000psf.

This supports our assumed ASPs of S$3,200 (the marQ

on Paterson Hill) and S$2,200 (Hilltops). Additionally,

we can expect further upside from its future launch at

Martin Road, and contributions from its Chinese JV with Lion

Group, as well as a potential re
rating in its Australian

associate, AV Jennings. We estimate these projects will

result in a three
fold increase in SCGD?s NAV to S$6.28.

Identifying (land
banking) opportunities and its ability to

recycle its capital at pace is crucial for SCGD to sustain its

niche strategy. Inevitably, the success of the group has

resulted in a substantial increase in borrowings and a high

debt/equity ratio. We believe this should be viewed as

asset
backed lending, within a secular asset inflationary

environment.

Despite the strong rally in its share price in recent months,With over 0.8m sq ft

of prime land
bank, SCGD is in a good position to

take advantage of the current re
rating cycle in the

high
end residential segment.

We expect near
term releases by its competitors at

Orchard Turn and Ascott Residences at circa S$3,000psf.

This supports our assumed ASPs of S$3,200 (the marQ

on Paterson Hill) and S$2,200 (Hilltops). Additionally,

we can expect further upside from its future launch at

Martin Road, and contributions from its Chinese JV with Lion

Group, as well as a potential re
rating in its Australian

associate, AV Jennings. We estimate these projects will

result in a three
fold increase in SCGD?s NAV to S$6.28.

Identifying (land
banking) opportunities and its ability to

recycle its capital at pace is crucial for SCGD to sustain its

niche strategy. Inevitably, the success of the group has

resulted in a substantial increase in borrowings and a high

debt/equity ratio. We believe this should be viewed as

asset
backed lending, within a secular asset inflationary

environment.

Despite the strong rally in its share price in recent months,to

take advantage of the current re
rating cycle in the

high
end residential segment.

We expect near
term releases by its competitors at

Orchard Turn and Ascott Residences at circa S$3,000psf.

This supports our assumed ASPs of S$3,200 (the marQ

on Paterson Hill) and S$2,200 (Hilltops). Additionally,

we can expect further upside from its future launch at

Martin Road, and contributions from its Chinese JV with Lion

Group, as well as a potential re
rating in its Australian

associate, AV Jennings. We estimate these projects will

result in a three
fold increase in SCGD?s NAV to S$6.28.

Identifying (land
banking) opportunities and its ability to

recycle its capital at pace is crucial for SCGD to sustain its

niche strategy. Inevitably, the success of the group has

resulted in a substantial increase in borrowings and a high

debt/equity ratio. We believe this should be viewed as

asset
backed lending, within a secular asset inflationary

environment.

Despite the strong rally in its share price in recent months,current re
rating cycle in the

high
end residential segment.

We expect near
term releases by its competitors at

Orchard Turn and Ascott Residences at circa S$3,000psf.

This supports our assumed ASPs of S$3,200 (the marQ

on Paterson Hill) and S$2,200 (Hilltops). Additionally,

we can expect further upside from its future launch at

Martin Road, and contributions from its Chinese JV with Lion

Group, as well as a potential re
rating in its Australian

associate, AV Jennings. We estimate these projects will

result in a three
fold increase in SCGD?s NAV to S$6.28.

Identifying (land
banking) opportunities and its ability to

recycle its capital at pace is crucial for SCGD to sustain its

niche strategy. Inevitably, the success of the group has

resulted in a substantial increase in borrowings and a high

debt/equity ratio. We believe this should be viewed as

asset
backed lending, within a secular asset inflationary

environment.

Despite the strong rally in its share price in recent months,assumed ASPs of S$3,200 (the marQ

on Paterson Hill) and S$2,200 (Hilltops). Additionally,

we can expect further upside from its future launch at

Martin Road, and contributions from its Chinese JV with Lion

Group, as well as a potential re
rating in its Australian

associate, AV Jennings. We estimate these projects will

result in a three
fold increase in SCGD?s NAV to S$6.28.

Identifying (land
banking) opportunities and its ability to

recycle its capital at pace is crucial for SCGD to sustain its

niche strategy. Inevitably, the success of the group has

resulted in a substantial increase in borrowings and a high

debt/equity ratio. We believe this should be viewed as

asset
backed lending, within a secular asset inflationary

environment.

Despite the strong rally in its share price in recent months,and S$2,200 (Hilltops). Additionally,

we can expect further upside from its future launch at

Martin Road, and contributions from its Chinese JV with Lion

Group, as well as a potential re
rating in its Australian

associate, AV Jennings. We estimate these projects will

result in a three
fold increase in SCGD?s NAV to S$6.28.

Identifying (land
banking) opportunities and its ability to

recycle its capital at pace is crucial for SCGD to sustain its

niche strategy. Inevitably, the success of the group has

resulted in a substantial increase in borrowings and a high

debt/equity ratio. We believe this should be viewed as

asset
backed lending, within a secular asset inflationary

environment.

Despite the strong rally in its share price in recent months,

SCGD trades at only 49% of our RNAV. This implies the

profitability of SCGD?s landbank at only S$330psf, or a

27% correction in the market price. We initiate coverage

on SC Global Developments with an OUTPERFORM rating.

We set our fair value at S$6.28 (101% upside potential).. This implies the

profitability of SCGD?s landbank at only S$330psf, or a

27% correction in the market price. We initiate coverage

on SC Global Developments with an OUTPERFORM rating.

We set our fair value at S$6.28 (101% upside potential).fair value at S$6.28 (101% upside potential).

Source: Company, Cazenove

SC Global ? Simply compelling

2 CC

1.0 Executive Summary 3

2.0 Valuation 4

3.0 Background 8

4.0 Market dynamics 11

5.0 Australia & China 13

5.1 Australia?s AV Jennings (42% owned)13

5.2 New venture in Liaoning, China 15

6.0 Financials 17

SC Global ? Simply compelling

C 33

1.0

Executive Summary

We met with CEO Simon Cheong and David Tsang (an executive director) prior to initiating our

report on SC Global Developments (SCGD). We are impressed with management?s depth of

knowledge on the real estate cycle and its pursuit of excellence. We discussed key issues such as

its land
banking strategy, its outlook on the sustainability of price inflation in Singapore?s high

end residential segment, developments at AV Jennings and its recent foray into China.

Echoing its corporate mantra of delivering "The Ultimate Living Experience", we find that SCGD is

uncompromising in its application throughout its entire organisational and project developmental

chains. Focused quality enhancements, as opposed to quantity economics, are prevalent at all

levels; ranging from basic material selection, to intimate ergonomic designs and ultimately, quality

finishes to deliver a holistic and luxurious living environment. It projects are supported by its

marketing team, which embeds itself from the conception phase of each project, makes input

based on sales feedback through to the concluding phases. This approach helps drive full

subscription and at premium rates for all their projects in our view.

Despite its strategic and operational parallels with other manufacturers of "premium" products,

and perhaps because of its short history, SCGD unfortunately does not trade at their average

premium multiples to its peer group. In other luxury brand segments, the likes of Porsche AG

consistently trade at premiums to their peer groups. In Porsche?s case, this is despite its low

liquidity levels. SCGD, meanwhile, has never traded close to its peer averages.

Furthermore, SCGD?s current market capitalisation implies a future net profit of only S$330psf on

its current land
bank, which implies a 27% contraction in current property prices (compared to

current transactions at neighbouring projects).

Additionally, we concur with management that AV Jennings, its 42% associate in Australia, is on

the cusp of a strong recovery after 4 years of uninterrupted declines brought about by more than

200bp of interest rate hikes. We expect a declining rate cycle going forward, continuing

government inertia in housing approvals and a sharply declining residential vacancy rate. These

factors should translate into a structural re
rating of AV Jennings. Its announcement of recent

losses was largely due to compliance with International accounting standards, which backlog

profit recognition. Hence, applying an average mid
cycle P/NTA multiple of 1.5x, its stake in AV

Jennings would equate to S$0.31 for SCGD.

We have strong expectations of SCGD?s recent foray into China. The joint venture with the Lion

Group [RM0.67, LION MK, No Recommendation], a Malaysian group that owns 55.5% of the

Parkson retail brand [HK$41, 3368 HK, No Recommendation], targets the mid
tier residential

segment, where there is negligible foreign competition at this stage. There is also a retail

component, which the Parkson chain is expected to manage. We believe this niche strategy will

not only allow SCGD tremendous hands
on residential experience, but it will also lower its

investment risk. Given the project?s short duration, we expect residential sales to commence by

H2 2007 with estimated TOP by Q1 2008.

We expect SCGD to launch "The MarQ on Paterson Hill" and "Hilltops" over the next six months.

Management is quietly bullish on the prospects despite competing sales in its vicinity. We believe

"The MarQ on Paterson Hill" will set benchmark pricing in Singapore. We estimate it is likely to

achieve average sales above S$3,200psf. We expect "Hilltops" to fetch average sales of

S$2,200psf. At these levels, SCGD?s RNAV would be S$6.28, which will offer investors compelling

potential upside of 120%. We initiate coverage on SCGD with an OUTPERFORM recommendation.

SC Global ? Simply compelling

4 CC

2.0

Valuation

We use a sum
of
the
parts approach to value SC Global Developments. For its current projects

not yet fully sold, we assume the remainder will sell at the project?s average selling prices. With

regards to new launches, for the marQ on Paterson Hill we assume it will fetch S$3,200psf on the

premise that upcoming launches at Orchard Turn and Ascott Residences will launch at

S$3,000psf. We assume average selling prices at Hilltops and Martin Road using 30% and 10%

premium, respectively, to the average transacted prices from recent Q4 2006 sales at "The Light

@ Cairnhill" and "RiverGate". We value 200 Newton using a 6% cap rate, while we expect

associate AVJennings to re
rate on the back of recovering property cycle, especially in New

South Wales, hence we assume 1.5x book.

Fig 2.1 NAV tableNAV table

RNAV Valuation Current Future projects

S$m $ per share S$m $ per share

SCGD Q3 2006 NAV 237.7 1.64

Assume Wt conversion 86.31 0.43

NAV FD Q3 2006 324.02 1.60

Quoted Associate
AV Jennings @ 1.5x book 61.4 0.30

Surpluses not yet recognised;

The LadyHill 18 0.09

Thelincolnmodern 2.3 0.01

The Boulevard Residence 11 0.05

Thr3e Thre3 Robin 0 0.00

The Tomlinson (80% owned) 7.3 0.04

the marQ on Paterson Hill 369.0 1.82

Hilltops 342.4 1.69

Martin Road 79.9 0.39

200 Newton 29.3 0.14

Shenyang, China

Residential 16.9 0.08

Retail 11.2 0.06

Total RNAV FD 362.7 1.79

Last traded price of SCGD 631.4 3.12

Premium / (discount) 74%

Redevelopment surpluses 910.1 4.50lincolnmodern 2.3 0.01

The Boulevard Residence 11 0.05

Thr3e Thre3 Robin 0 0.00

The Tomlinson (80% owned) 7.3 0.04

the marQ on Paterson Hill 369.0 1.82

Hilltops 342.4 1.69

Martin Road 79.9 0.39

200 Newton 29.3 0.14

Shenyang, China

Residential 16.9 0.08

Retail 11.2 0.06

Total RNAV FD 362.7 1.79

Last traded price of SCGD 631.4 3.12

Premium / (discount) 74%

Redevelopment surpluses 910.1 4.50

Total RNAV 1,273 6.28

Last traded price of SCGD 631.4 3.12

Premium / (discount)
50%

Source: Company data and Cazenove estimates

In the above table, we use the latest Q3 2006 NAV release from the company. We assume full

conversion on its warrants to reflect the fully diluted (FD) basis for our calculations.

The current FD RNAV estimate of S$1.79 implies market price of S$3.12 at 74% premium.

However, if we were to include future surpluses from projects not yet launched, our RNAV

estimate would go up to S$6.28. This would offer investors potential upside of 101%.

SC Global ? Simply compelling

C 55

Fig 2.2 Current implied profitability of land
bankCurrent implied profitability of land
bank

Surplus $m Landbank (sqft) Nett surplus $/psf

Cazenove's

assumed ASP $psf implied ASP Implied profit psf

the marQ on Paterson Hill 369.0 241,406 1,528.5 3,200 1,595 137

Hilltops 342.4 448,695 763.1 2,200 1,384 137

Martin Road 79.9 124,536 641.3 1,600 936 1371,595 137

Hilltops 342.4 448,695 763.1 2,200 1,384 137

Martin Road 79.9 124,536 641.3 1,600 936 1371,384 137

Martin Road 79.9 124,536 641.3 1,600 936 137936 137

sub
total 791.3 814,637 971.3

Mkt cap less NAV 268.8

Implied net profit psf 330

Difference
66%

Source: Cazenove estimates

Conversely, if we were to take the current market capitalization, the implied average net profit is

S$330psf of landbank. This works out to an average ASP margin of S$137psf for each of the 3

projects. This implies an average selling price for Paterson Hill at S$1,595psf (29% discount to

Q4 2006 BLVD purchases) or S$1,676psf for Hilltops (17% discount to "The Light@ Cairnhill"),

and S$1,452psf for Martin Road (36% discount to "RiverGate").

As a producer of premium real estate products, we certainly think SC Global is comparable to the

likes of what Porsche is to discerning automobile owners.

Fig 2.3 Porsche vs peers Fig 2.4 SCGD vs peersPorsche vs peers Fig 2.4 SCGD vs peers

Source: Bloomberg & Cazenove estimates

However, in terms of valuations, Porsche AG trades at a huge premium to its domestic peers, as

in figure 2.3, whereas SCGD still lags substantially behind its larger peers as we show in figure

2.4.

0

1

2

3

4

5

6

7

8

9

10

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Dec
01

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Apr
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Apr
06 VOW BMW POR3 NSU DCX

0.75

1.25

1.75

2.25

2.75

3.25

3.75

0.0 0.5 1.0 1.5

Historical P/B (x)VOW BMW POR3 NSU DCX

0.75

1.25

1.75

2.25

2.75

3.25

3.75

0.0 0.5 1.0 1.5

Historical P/B (x)

Current P/B (x)

Kland

Capl CDL

SCGD

WINGT

AG

WP

SC Global ? Simply compelling

6 CC

Fig 2.5 SCGD?s capital structure and gearingSCGD?s capital structure and gearing

Source: Company data, Bloomberg & Cazenove estimates

The above figure 2.6 shows SCGD?s recent capital raising activities, through which it managed to

reduce its gearing from over 200% to 1x equity. With upcoming cash
calls for Paterson Hill and

Hilltops, however, we estimate that the group?s gearing will increase from 1x to circa 3x equity.

While this may seem prohibitively high, we should view this in the context of project financing as

these are asset
backed loans, which typically have 70% debt funding, equal to what we assume.

Given the secular trend in high
end property, plus the company?s successful record, we are

confident that SCGD will secure all its necessary funding requirements.

Fig 2.6 SCGD?s capital raising and debt/total assetsSCGD?s capital raising and debt/total assets

Source: Company data, Bloomberg & Cazenove estimates

0%

50%

100%

150%

200%

250%

300%

350%

400%

Jan
05

Mar
05

Jun
05

Aug
05

Sep
05

Oct
05

Nov
05

Dec
05

Feb
06

Mar
06

Apr
06

May
06

Jul
06

Aug
06

Sep
06

Oct
06

Nov
06

Nov
06

Dec
06

Feb
07

Mar
07

0.00

0.50

1.00

1.50

2.00

2.50

3.00

S$

Debt/Equity (LHS) Share price (RHS)

20/7/05: Placed out 19.18m

new shares to Chip Lian

Investments, Mark Well

Investments & Dr. Choo Yeow

Ming @ S$1.23 per share

27/9/05: 1
for
2 rights

issue of 54.54m warrants

@ S$0.05, exercise price

of S$1.50 per share

9/12/05: Placed out 5.75m new shares to

Mass Noble (unit of Yawson Invt Group) @

S$1.35 per share

6/9/06: Placed out 24m new

shares @ S$1.95 per share

20%

30%

40%

50%

60%

70%

80%

Jan
05

Mar
05

Jun
05

Aug
05

Sep
05

Oct
05

Nov
05

Dec
05

Feb
06

Mar
06

Apr
06

May
06

Jul
06

Aug
06

Sep
06

Oct
06

Nov
06

Nov
06

Dec
06

Feb
07

Mar
07

0.00

0.50

1.00

1.50

2.00

2.50

3.00

S$

Debt/Assets (LHS) Share price (RHS)

20/7/05: Placed out 19.18m

new shares to Chip Lian

Investments, Mark Well

Investments & Dr. Choo Yeow

Ming @ S$1.23 per share

27/9/05: 1
for
2 rights issue of

54.54m warrants @ S$0.05,

exercise price of S$1.50 per share

9/12/05: Placed out 5.75m

new shares to Mass Noble

(unit of Yawson Invt Group) @

S$1.35 per share

6/9/06: Placed out 24m new

shares @ S$1.95 per share

SC Global ? Simply compelling

C 77

Fig 2.7 SCGD?s capital raising activitiesSCGD?s capital raising activities

2004 2005 2006

No of shares issued ('000) 95,904 95,904 120,838

Add: New share issues ('000)

Jul
05 Chip Lian Investments (Oei Hong Leong) @ S$1.23 9,590

Aug
05 Mark Well Investments @ S$1.23 5,275

Sep
05 Choo Yeow Ming @ S$1.23 4,315

Dec
05 Mass Noble (Yawson Investment Group) @ S$1.35 5,754

120,838

Sep
06 Placement @ 1.95 24,000

144,838

Add: Warrants ('000)

Sep
05 57542

Total diluted no. of shares (?000) 202,380

Source: Company data

Fig 2.8 Sensitivity of fair value to launch price assumptionsSensitivity of fair value to launch price assumptions

the marQ on Paterson Hill (S$ psf)

2,600 2,800 3,000 3,200 3,400 3,600 3,800

1,600 4.62 4.82 5.02 5.22 5.43 5.63 5.83

1,800 4.98 5.18 5.38 5.58 5.78 5.98 6.18

2,000 5.33 5.53 5.73 5.93 6.13 6.34 6.54

2,200 5.69 5.89 6.09 6.28 6.49 6.69 6.89

2,400 6.04 6.24 6.44 6.64 6.84 7.05 7.25

2,600 6.40 6.60 6.80 7.00 7.20 7.40 7.606.28 6.49 6.69 6.89

2,400 6.04 6.24 6.44 6.64 6.84 7.05 7.25

2,600 6.40 6.60 6.80 7.00 7.20 7.40 7.60

Hilltops (S$ psf)

2,800 7.75 6.95 7.15 7.35 7.55 7.75 7.96

Source: Cazenove estimates

In figure 2.8, we present our sensitivity table of our RNAV against the two key projects, namely

the marQ on Paterson Hill and Hilltops. A variation of S$200psf for both projects would impact

our RNAV by 9%.

our ASP assumption on

the marQ and Hilltops

largely drives our RNAV

of S$6.28

SC Global ? Simply compelling

8 CC

3.0

Background

SCGD was born out of the former ANA Hotels (hotel proprietor) back in 1999 through a reverse

takeover. The group has since repositioned itself as developer of prime residential properties. It

has successfully developed and sold 4 residential projects; The Ladyhill, BLVD, Thr3e Thr3e Robin

and The Lincoln Modern, are all almost fully sold. Its niche strategy to be the leader in the high

end segment of the residential market is underpinned by management?s ability to recycle its

capital and to push prices to the next level. It does this by targeting 25% sales to recoup its initial

development costs and then releasing the rest at higher prices over an extended period.

Essentially its transactions typically command at least a 15% premium over neighbouring projects.

Its first residential launch was "The Ladyhill", which marked SCGD?s entry into the market as a

credible high
end luxury developer. Set on one hectare of prime freehold land opposite the

Shangri
La hotel, this exclusive 4
storey development with 55 plush residences was launched in

Dec 2000 and fetched an average of S$1,700psf or S$4.3m per unit.

Fig 3.1 The Ladyhill ? sales at launch Fig 3.2 Resale transactions at The LadyhillThe Ladyhill ? sales at launch Fig 3.2 Resale transactions at The Ladyhill

Source: URA, Cazenove estimates

SCGD achieved operational breakeven with its initial sales. Thereafter it was able to hold back its

launches to maximise its yield on the project, as in figure 3.1. Despite being the most expensively

constructed development (construction costs estimated at S$400psf) in Singapore, SCGD was

still able to post a decent net profit surplus of S$350psf, despite the weak property sentiment at

that time.

Resale values of "The Ladyhill", as in figure 3.2, have generated substantially higher price

appreciation in the after market. This is to become a recurring feature in most of SCGD projects.

The next launch was "Thelincolnmodern", located in prime Newton area. This is a unique

architectural development with 20
foot high ceilings in all apartments. It was recognised with the

RIBA Worldwide Award.lincolnmodern", located in prime Newton area. This is a unique

architectural development with 20
foot high ceilings in all apartments. It was recognised with the

RIBA Worldwide Award.

Fig 3.3 Thelincolnmodern ? sales at launch Fig 3.4 Resale transactions at ThelincolnmodernThelincolnmodern ? sales at launch Fig 3.4 Resale transactions at Thelincolnmodern

Source: URA, Cazenove estimates

recycling capital and

pushing prices to the next

level is key.

The Ladyhill is SCGD?s first

test case project and it

won tremendous credibility

with design, finishes and

established new pricing

benchmarks.

800

1,000

1,200

1,400

1,600

1,800

2,000

Jul
00

Jan
01

Jul
01

Jan
02

Jul
02

Dec
02

Jun
03

Dec
03

Jun
04

Dec
04

Jun
05

Dec
05

As of end

S$ psf

est.

breakeven

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

Jun
05

Dec
05

Jun
06

Dec
06

Jun
07

As at end

S$ psf

est.

breakeven

following closely behind

was Thelincolnmodern, its

first attempt in creating a

niche within the middle

market segmentlincolnmodern, its

first attempt in creating a

niche within the middle

market segment

600

700

800

900

1,000

1,100

1,200

Aug
00

Feb
01

Jul
01

Jan
02

Jul
02

Jan
03

Jun
03

Dec
03

As at end

S$ psf

est.

breakeven

700

750

800

850

900

950

1,000

1,050

1,100

Jun
04

Dec
04

Jun
05

Dec
05

Jun
06

Dec
06

Jun
07

As at end

S$ psf

est.

breakeven

SC Global ? Simply compelling

C 99

As seen in figure 3.3 and 3.4, the project was marginally breaking even at best, given that the

timing of the launch was during a lull in the domestic property cycle. It was, however, able to

establish itself as a serious niche developer with great architectural flair.

Thr3e Thre3 Robin, was the third launch by SCGD. It was similar to Thelincolnmodern with its

own unique style and exquisite features. With 36 units in 10 different apartment or penthouse

layouts, it is located in District 10 nested in the private enclave of Stevens Road and Balmoral

Road.lincolnmodern with its

own unique style and exquisite features. With 36 units in 10 different apartment or penthouse

layouts, it is located in District 10 nested in the private enclave of Stevens Road and Balmoral

Road.

Fig 3.5 Thr3e Thre3 Robin ? sales at launch Fig 3.6 Resale transactions at Thr3e Thre3 RobinThr3e Thre3 Robin ? sales at launch Fig 3.6 Resale transactions at Thr3e Thre3 Robin

Source: URA, Cazenove estimates

Although its project profitability was depressed given the launch timing, it has, nevertheless,

consolidated its position as a lifestyle developer and the development sold out within 10 months

from its construction completion.

Again, similar to after
market activity at "The Ladyhill", figure 3.6 shows the strong resale value

of 33 Robin, where units recently transacted in Q4 2006 at a 20% premium to the project?s

average sales. The lack of transaction volume is testament to the fact that most of the units are

owner
occupied, in our view.

SCGD?s latest launch, "The Boulevard Residence", better known as BLVD, is the tallest residential

landmark development in the prime Orchard road area. It consists of two slender 36
storey

towers linked by a sky bridge and offers a compelling view of the Orchard skyline. It has 46

apartments (two junior and two super penthouses).

Fig 3.7 BLVD ? sales at launch Fig 3.8 Resale transactions at The TomlinsonBLVD ? sales at launch Fig 3.8 Resale transactions at The Tomlinson

Source: URA, Cazenove estimates

In October 2005, BLVD set benchmark pricing with transactions at S$2,200. It continued to post

records in 2006 with units exceeding S$2,300psf. In May 2006, a super penthouse was sold for

S$16m (US$10.3m) or S$2,286psf and is among the highest recorded for Singapore.

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

Jan
04

Apr
04

Aug
04

Nov
04

Feb
05

May
05

Sep
05

Dec
05

Mar
06

Jul
06

Oct
06

Jan
07

est.

breakeven

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

Oct
06 Nov
06 Dec
06

est.

breakeven

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Dec
02

Jun
03

Dec
03

Jun
04

Dec
04

Jun
05

Dec
05

Jun
06

Dec
06

Jun
07

As at end

S$ psf

est.

breakeven

1,400

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

Dec
05 Jun
06 Dec
06 Jun
07

As at end

S$ psf

est.

breakeven

BLVD established a series

of benchmark pricing over

the last 12 months ?

? while The Tomlinson

was a trading opportunity

SC Global ? Simply compelling

10 CC

Management?s keen eye for opportunity has resulted in its acquisition of assets at The Tomlinson

apartments plus recent acquisition of Newton 200. SCGD acquired the remaining 13 units (total

35,866 sq ft) of "The Tomlinson", an up
market luxury condominium developed by WingTai. As we

show figure 3.8, SCGD re
sold it at substantial premiums on the back of improving market

conditions.

We expect the acquisition of Newton 200 for redevelopment into an office asset to generate a

surplus of almost S$30m (or S$0.14 per shr). Again, similar to the acquisition of The Tomlinson, it

was a trading opportunity with attractively priced assets.

Newton 200 another

trading play, but on supply

shortage in office space

SC Global ? Simply compelling

C 1111

4.0

Market dynamics

Residential prices in Singapore increased by 10% in 2006, with an estimated take
up rate of

9,700 new homes (Source: CBRE), supported by a strong Q4 2006 of about 3,000 units. Looking

ahead, we expect momentum to carry through over the next 18 months, largely on foreign

purchases and replacement demand from en
bloc activities. Unlike the two previous property

cycles, whereby increasing en
bloc activities were a factor in both corrections, the current en

bloc cycle is not driven by changes in plot ratios and consequently does not stress the supply

situation as much as previously.

Fig 4.1 URA Price Index Fig 4.2 Total residential take
up for new unitsURA Price Index Fig 4.2 Total residential take
up for new units

Source: URA

Although the overall index is still some 8% below the mini
peak in Q2 2000 (see figure 4.1),

transaction prices of some projects in the high
end segment are setting all time highs (MBFC &

St Regis both achieved above S$3,000psf). In Q4 2006, almost 3,000 units were sold.

Despite the sharp rise, the price index is still 29% below the 1996 peak. We believe residential

prices in the high
end are likely to continue its upward trend and could rise by another 10
15% in

the next 12 months with continued strong demand from foreigners (see figure 4.4 below);

accounting for a significant portion (almost half) of the buyers in districts 9 (Orchard Road), 1

(Marina BFC) and 4 (Sentosa). SCGD?s projects have historically attracted a higher proportion of

foreign buyers (50%) vs sector wide.

Fig 4.3 En
bloc supply in districts 9, 10, 11 Fig 4.4 2006 Profile of buyers in districts 9, 10, 11En
bloc supply in districts 9, 10, 11 Fig 4.4 2006 Profile of buyers in districts 9, 10, 11

Source: Cazenove estimates, URA

As we show in figure 4.3, the current en
bloc activities have generated only an additional 116%

increase in supply vs 3x and 4x increases for the previous two cycles. This implies that current

replacement demand can help reduce oversupply concerns to a large extent by absorbing at least

half the projected supply. Given that foreigners account for 40% of new purchases in the prime

districts, we anticipate full take up of upcoming stocks.

40

60

80

100

120

140

160

180

200

Q190

Q191

Q192

Q193

Q194

Q195

Q196

Q197

Q198

Q199

Q100

Q101

Q102

Q103

Q104

Q105

Q106

2Q96: 181.4

2Q00: 140.4

4Q06:130

0

2,000

4,000

6,000

8,000

10,000

12,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006E

10,043

8,269

7,845

6,688

9,700

foreign buyers make up

50% of SCGD?s

purchases, higher than

prime district average

of 39%.

previous en
blocs

destabilized supply

situation with significant

increases in plot ratios

?

? as replacement

demand then accounted

for only 25%
30% of

new en
bloc supply vs

almost 50% currently

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2004
2006 1999
2002 1994
1997

No. of units pre
en bloc No. of units post
en bloc

116%

294%

396%

Malaysia

5%

Australia

2%

United

Kingdom

4%

India

3%

USA

2%

Others

13%

Singapore

61%

Indonesia

10%

SC Global ? Simply compelling

12 CC

Fig 4.5 Transactions for Prime districts (9, 10, 11) in 2006Transactions for Prime districts (9, 10, 11) in 2006

Source: URA

As an indicator of the degree of speculative activity (see figure 4.5), the current situation is not

yet approaching the excesses of 1996 whereby sub
sales (re
sale of new purchases before

project completion) accounted for 40% of new unit transactions vs the current level of only 13%.

In other words, newly sold units were being turned over almost 2x back in 1996 vs the 25%

turnover currently.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

New sale Resale Subsale

sub
sale activity

accounted for 40% of

new transactions in

1996 vs 13% currently

SC Global ? Simply compelling

C 13

Seeing this counter shot up makes my heartache. Does anyone know why it has gone up so much so soon? It has now reached uncharted territory, what is the upside? Any shi fu like to share his advice.