We like Stamford Land's hotel properties in Australia and New Zealand for their prime location and branding. Recall that Stamford Land received an unsolicited offer of S$1.05b for its portfolio of 8 hotel properties a year ago. Although, we understand that the global economic condition has deteriorated substantially since then, but even at our current conservative valuation of S$674.8m (down about 36%), the hotels excess value over its book is still worth about S$0.20 per share.

Dividend payment could be maintained at normal level. Stamford Land has a track record of steady dividend payments. This is even despite the year (the only year since FY00) where it made losses in FY02. Our best estimate will be for management to scrap special dividend amid current economic turmoil and maintain normal payment, which will amount to 3.0 cents in total for FY09E considering the need to retain cash for current ongoing development projects.

We value Stamford Land base on RNAV of its hotel properties, as well as potential sales surplus from its residential properties. Our RNAV per share works out to be about S$0.75, implying that Stamford Land is trading at some 76% discount to RNAV per share. On account of illiquidity of Stamford Land's stock we factored a 50% discount to its RNAV per share in consensus with current market valuation. We fix our target price at S$0.37 and initiate coverage with a BUY.

Translation risk as Stamford Land derives revenue mainly from Australia and New Zealand. 9M09 saw Stamford Land greatly affected by depreciation of Aussie dollar against Singapore dollar

Worse than expected global economic outlook will negatively affect our basic assumption and adversely impact Stamford Land's profitability forecast