UOB Kay Hian initiates coverage on Soon Hock; optimistic on its S$1 billion project pipeline
UOB also expects attractive dividend yields of 5.5% and 10% for 2025 and 2026, respectively
[SINGAPORE] UOB Kay Hian initiated coverage on industrial property developer Soon Hock Enterprise with a “buy” rating, citing a strong track record and “strong earnings visibility” from a S$1 billion project pipeline.
It gave the stock a target price of S$0.68, implying an upside of around 15 per cent. It last traded at S$0.59 on Monday (Dec 1) morning.
“After a lull in 2024 due to the absence of project temporary occupation permits, earnings are poised to rebound strongly,” said the brokerage in a Monday note.
It said the industrial developer’s growth outlook is supported by a robust pipeline of four active projects with a combined gross development value of about S$1 billion.
They include Stellar@Tampines, which achieved strong pre-sales, and Skye@Tuas, which will be Singapore’s first industrial project to provide electric vehicle truck-charging facilities.
UOB Kay Hian said these two 30-year leasehold projects underpin a three-year revenue compound annual growth rate (CAGR) of 178 per cent and net profit CAGR of 124 per cent over the 2024-27 period.
It added that strong pre-sales and the redevelopment of 20 Shaw Road “extend growth visibility” beyond 2027.
Soon Hock Enterprise specialises in industrial property development and investment in Singapore. It has delivered more than 1,200 strata-titled units across Singapore. UOB Kay Hian said the developer has sold over 900 strata-titled units with total gross development value exceeding S$1 billion, placing it among Singapore’s top five developers by gross floor area, with a 6 per cent market share.
It debuted on the mainboard of the Singapore Exchange on Oct 16 with an IPO price of S$0.58.
UOB Kay Hian also noted the company’s management has committed to a minimum 25 per cent dividend payout ratio for 2025 and 2026, translating into estimated attractive yields of 5.5 per cent and 10 per cent, respectively.
“Soon Hock Enterprise has expressed a clear commitment to rewarding shareholders after listing,” it said.
The brokerage said the stock is a beneficiary of policy tailwinds.
“(Soon Hock Enterprise) is well-positioned to capitalise on Singapore’s industrial upgrading, supported by initiatives like Tuas Mega Port and Changi T5,” it said.
“Its projects in Tuas, Tampines and Woodlands are aligned with Singapore’s industrial zoning roadmap, ensuring resilient end-user demand and high tenant retention.”
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