Orchard Parade Holdings (OPH) posted a net profit of $14.7m for 3Q08, a 94% increment YoY,219% QoQ. Its revenue grew more modestly at 17% YoY to $19.2m due to higher average roomrates for its hotels. Boosted mainly by an $8.0m fair value gain on investment properties, as wellas higher profits from YHS due predominantly to a tax write back, we estimate that 3Q08 coreearnings basis grew by 30% YoY.

The sales progress at Floridian remains slow amidst the weak property market in general. Basedon the URA’s statistics, only 14 of the 75 units launched have been taken up. The median priceof units sold since September is $1,456 psf, versus $1,700 psf for the units sold in 1H08. Wehave lowered our ASP assumption to $1,400 psf.

OPH saw a marginal $1.8m YoY improvement in its hotel revenue due to higher average roomrates. As we expect sales of Floridian to be relatively slow for the rest of 2008 and 2009, its hoteloperations are likely to remain as OPH’s main income drivers. However, as tourist arrivals are onthe wane, OPH’s earnings are likely to come under pressure with average room rates likely toease together with occupancy rates in 2009.

OPH’s share of profit of associated companies was $3.5m in 3Q08, attributable to YHS’ 3Q08 netprofit of $7.0m, boosted by a tax credit of $4.5m. However, gross profits from its F&B businessare showing signs of strengthening, but we remain cautious going into the economic downturn.Like Floridian, sales of units at Jardin are slow, with only 21 out of the total 140 units sold to date.

We have adjusted our FY08 and FY09 earnings forecasts by 5.7% and -60.3% respectively, aswe expect slow sales of its residential units in 2009, coupled with reduced hotel earnings. We aredowngrading OPH to a HOLD due to a lack of catalysts, with a target price of $0.72 based on a60% discount to RNAV.