Wheelock Properties - Cleaning out the lemons

Wheelock's 1Q09 core net profit of S$33m forms only 17% our full-year forecast and 20% of consensus as recognition of Scotts Square fell short. 1Q09 revenue grew 31% yoy to S$85m on recognition of presales and higher passing commercial rents. Wheelock continued to have net cash of 42cts/share, despite write-downs of S$23m for investments in HPL and SC Global. We adjust our FY09-11 core EPS estimates by -14% to +15% as we factor in a later sales schedule for Scotts Square. Our end-CY09 RNAV has been lifted from S$1.86 to S$1.94 on higher valuations for HPL and SC Global. Our target price, still pegged at a 20% discount to RNAV, rises from S$1.49 to S$1.55. Maintain Outperform.

Ho Bee Investments - Presales beginning to stream in

1Q09 core net profit of S$4.7m came in within expectations, forming 13% of our full year. The quarter saw strong presales from two completed projects, pushing total revenue up by 17% yoy to S$110m. We expect stronger recognitions in the remainder of FY09 as The Coast, Orange Grove Residences and Paradise Island are scheduled to complete by 3Q09. Net gearing should also fall significantly from 1.16x currently. Commercial rents were up yoy in 1Q09 but hotel revenues disappointed on falling occupancy. We lower our FY09-11 core EPS by 0-20% on lower ASPs. Our end-CY09 RNAV is lowered from S$1.26 to S$1.11. The stock continues to trade at trough valuations of 0.4x P/BV. With balance sheet outlook improving, we think trough multiples for the stock is not justified at this point. . We lower our valuation discount from 50% to 30% and raise our target price from S$0.63 to S$0.78. Maintain Outperform.

City Developments Ltd - Tough times for hotels; rich valuations

CityDev's 1Q09 core net profit of S$82m forms only 19% and 18% of our full-year and consensus forecasts respectively. Revenue fell 18% yoy to S$623m as property developments and hotels disappointed. We expect sales proceeds from The Arte and Livia to lift residential income in FY09. Revenue and PBT for hotels fell by 24% and 60% to S$344m and S$21m respectively. Shrinking global demand could continue to affect hotels. That said, a strong balance sheet remains a positive. We lower our FY09-11 core EPS estimates by 6-10% on lower hotel and associate income assumptions. We lower our cap rate assumptions from 6.5% to 6% and reflect a higher M&C share price in our model. Our end-CY09 RNAV and target price (parity to RNAV) have been lifted from S$5.92 to S$6.81 as a result. Following its recent rally, the stock has run ahead of fundamentals, in our opinion. Maintain Underperform on valuations.