As expected, FY08 revenue grew strongly backed by strong pre-sales of Espa, Leonie Parc View, Montebleu and The Centrio in 2007. Top line surged about 126% YoY from S$105.5m to S$238.0m. Operating expenses was well contained and consequently, net profit rose 44% from S$52.4m to S$75.2m in FY08. During the year, Soilbuild booked revaluation gain of about S$25.6m for the completion of Tuas Connection factories. Adjusting for this gain, FY08 Patmi should stand at about S$54.2m.

Finance cost increased a hefty 86.2% YoY to S$6.8m in FY08 due to full-year amortization of CB interest and higher working capital term loan. Total borrowings increased further from S$376m in 3Q08 to S$406.7m in 4Q08 on higher drawdown to finance on-going projects. Debt-to equity reached a high of 2.7x back in 2Q08 which raised concerns. In 4Q08, Soilbuild raised approximately S$12.6m from rights issued and repurchased about S$15m worth of CB. These measures were intended to reduce funding cost and shore up its capital base – debt-to- equity improved to 2.0x in 4Q08.

Rental income target of S$10m was achieved attributable mainly to 100% occupied Eightrium. In accordance with Soilbuild’s dividend strategy to match payout with recurrent cashflow from rental, management has declared SG 4 cents (2 cents final and 2 cents special) dividend for FY08. This represents a yield of about 7.4% with book closure on 12 May 08.

We are placing our rating, target price and estimates Under Review and intend to provide an update following a meeting with the management.