Friday, November 9, 2018

5 Key Highlights From Hobee Q3 FY18 Results

Ho Bee Land Limited is a property developer and investing company which has developments in various parts of Australia, China and United Kingdom. 

The company has recently announced their Q3 FY18 results which brings about some of the key highlights: 

1.) Rental Income has once again grown both year on year (up 28.3%) and quarter on quarter (up 26.1%) mainly due to the full quarterly contribution from Ropemaker Place (25 Ropemaker Street) which they acquired on 15 June 2018. 

Extrapolating this to full year, this means that rental income contributes more than $200m to the company’s recurring income base. This translates to an earnings per share of about 28 cents before deducting the corresponding expenses. 

Rental income continues to play a large role in Ho Bee business model going forward. 

2.) Residential Sales in Singapore has remained lacklustre following the new cooling measures introduced in the 2H18. 

The company has only managed to record $1.95m sales for the quarter with a 36% net profit margin on the sales. 

The management continue to be pessimistic in this demand sector. 

3.) Shares of Profits from Associates continued to perform strongly this year and momentum in this quarter due to its sales from the residential development projects in Shanghai and Zhuhai. 

This will not yet trickle down to cashflow impact until the associates declare dividends at the end of their financial year. 

In Tangshan however, the company recorded lower profits from the sales. 

Management has also sounded cautious outlook on the demand for China residential properties.

4.) Following the European fund loan of EUR 90m made in March earlier this year, the company has not made any further announcement on the use of this fund. This however, has appeared in the balance sheet section under the “Financial Asset”. 

Separately, the company has also completed a 200m pounds Green Loan with HSBC in Aug, which we should expect some further acquisitions by the company. 

Gearing (Total Borrowings / Total Assets) has now grown to 0.42x, an increase from last year of 0.29x. 

5.) Leadership changes by promoting Mr. Nick Chua as Deputy CEO as well as Mr. Ong Chong Hua as COO of the company. 

The company currently trades at a P/BV of 0.51 and a trailing dividend yield of 4% (using 8 cents ordinary + 2 cents special).

I'll update the spreadsheet once the full year results are out.

Still in my watchlist with their strong growth potential.

Thanks for reading.

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  1. Thanks for the summary. What is your thought about rising bank interest rates onto HoBee's future earnings, considering the rise in its gearing?

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