Brokers' take

SingHaiyi Group | Buy

July 1 close: S$0.132

Target price: S$0.18

RHB, July 1

SINGHAIYI has entered into a joint venture (JV) with Gordon Tang and Chen Huaidan (Haiyi Holdings Pte Ltd) and Suntec Reit on a 35:35:30 ownership basis to acquire and redevelop Park Mall from the Reit. The purchase consideration is S$411.8 million, or S$1,541 psf, and Park Mall would be redeveloped into two office blocks with a retail component. Park Mall registered a net property income yield of 4.6 per cent in 2014.

We understand that the redevelopment will cost another S$422 million, bringing the gross asset value to some S$834 million. SingHaiyi's funding commitment, based on its 35 per cent stake, would amount to S$134.4 million, with the remaining S$157.5 million presumably geared at the asset level. The project has a total net lettable area of 382,500 sq ft (42 per cent higher than existing) and will likely get a temporary occupation permit in 2019. This works out to S$2,180 psf on a completion basis with a refreshed 99-year land tenure. We think valuations are rich, given that CapitaLand Mall Trust's The Atrium@Orchard (92 years remaining tenure) is valued at S$1,870 as at Dec 31, …