- BUY Entry 2.76 – Target – 2.99 Stop Loss – 2.66
- HOBEE has a portfolio that covers many quality residential, commercial and high-tech industrial projects since its establishment in 1987. It is a developer of luxury homes in Sentosa Cove including Cape Royale. Its portfolio of investment properties includes a 1.08m sft of lettable commercial space in The Metropolis, situated at the gateway to the vibrant precinct of one-north. Headquartered in Singapore, HOBEE also has a presence in Australia, China and the United Kingdom.
- Moved ~50% of units put up for sale, almost a decade after completion. HOBEE recently sold about 25 out of 50 units at Sentosa Cove’s 302-unit Cape Royale that were put up for sale on its first day of bookings last week. Prices for the apartments (with tenancy) hit S$2,103 psf. This compares with Seascape, and Residences at W, which sold at median prices of S$2,680 psf, and S$2,816psf respectively during their launches in March 2010. This comes almost 10 years after the project was completed in 2013 when both HOBEE and partner, IOI Properties, felt that prices were weak after 2 rounds of cooling measures.
- Share price corrected after initial spurt following insider acquisition. HOBEE’s share price has corrected 9.4% from its YTD high of S$3.08 after Ng Noi Hinoy, the spouse of HOBEE’s executive chairman, Chua Thian Poh, acquired 280,400 shares for S$801,905 or S$2.86 apiece. The acquisition increased Chua’s interest in HOBEE to 75.6% from 75.5%, and consequently free float down to ~25%, triggering perceptions that a buyout was in the pipes.
- Stable income and dividends akin to REITs. There is a single BUY rating on HOBEE, with TP of S$3.80. More than 90% of HOBEE’s revenue is generated from rental income, enabling HOBEE to pay out DPS of at least S$0.10 apiece over the last 4 years. At current prices, this represents a forward yield of about 3.6%. With an RNAV of S$6.28/share, HOBEE is attractively priced at 0.44x P/RNAV.