Page | 1 | PHILLIP SECURITIES RESEARCH (SINGAPORE) MCI (P) 074/10/2017 Ref. No.: SG2018_0039 Pacific Star Development Limited Uncovering Puteri Harbour’s best kept secret SINGAPORE |REAL ESTATE| SITE VISIT NOTE We were hosted by Pacific Star Development Limited (PSD) to visit their latest development, Puteri Cove Residences & Quayside, in Iskandar Puteri, Malaysia on 1 February 2018. We were shown various units, amenities and briefed on the economic prospects and other upcoming developments, such as the One°15 managed private marina, in Puteri Harbour. Company Background PSD is an ASEAN property developer with previous property launches and investments in Kuala Lumpur and Bangkok, and pipeline projects in Iskandar and Bangkok. PSD was formed from a reverse takeover (RTO) and subsequently listed on the SGX Catalist Board on 16 February 2017. It also has a non-property division comprising its aluminium building works business in Singapore. Site Visit Highlights 1. Prime asset within a Waterfront CBD Premium mixed-use project (residential units priced at ~RM1,450psf) located right opposite the upcoming One°15 Marina Clubhouse Puteri Cove Residences (Tower 1 and 2) expected to be issued its Certificate of Completion and Compliance before the end of February 2018 2. Diverse demand pool due to unique nature of development No restrictions on foreign ownership, affordable housing, or Bumiputera quotas Diversified nationality of buyers (28 different nationalities - 50% are Singaporeans) Average 75% sold for the residences 3. Iskandar Puteri key pillar of up-and-coming special economic zone Iskandar Puteri is poised to be the key commercial centre of Iskandar, Malaysia Puteri Harbour is nestled within Iskandar Puteri, along with Legoland and EduCity - which are seen to be among the main draws for tourists and foreigners Investment Actions No stock rating or price target provided, as we do not have coverage on PSD. Peer Comparison – PSD’s P/B and ROA is the highest among its peers Company Mkt Cap (SGD mn) EBITDA Margin (%) EV/EBITDA TTM EV/EBITDA FY1 P/E P/E FY1 Net D/E (%) ROA (%) ROE (%) P/B PACIFIC STAR DEVELOPMENT LTD 109.9 43.2 5.7 N.A. 10.9 N.A. 52.6 7.5 51.6 3.3 Malaysia MAH SING GROUP 1,023.1 15.7 10.9 6.2 9.4 9.2 2.0 5.5 9.9 1.1 LBS BINA GROUP BHD 520.9 19.7 7.5 10.2 13.1 13.9 32.0 3.5 9.2 1.2 Singapore ASPEN (GROUP) HOLDINGS LTD 186.3 8.8 N.A. 4.5 N.A. 6.7 34.6 -0.1 -0.8 N.A. CAPITAL WORLD LTD 101.5 64.0 23.5 N.A. N.A. N.A. Net cash -13.2 -36.3 1.1 Average 458.0 27.1 13.9 7.0 11.2 9.9 22.9 -1.1 -4.5 1.1 Source: Bloomberg, Company 15 February 2018 Site Visit LAST CLOSE PRICE COMPANY DATA BLOOMBERG CODE PSTAR SP O/S SHARES (M N) : 500 MARKET CAP (USD mn / SGD mn) : 83 / 110 52 - WK HI/LO (SGD) : 0.35 / 0.15 3M Average Daily T/O (mn) : 0.17 MAJOR SHAREHOLDERS (%) 35.52% GLA XIER CITY LIM ITED 21.02% DOUBLE BLESSING HOLD LTD 12.92% 4.80% PRICE PERFORMANCE (%) 1M T H 3MTH 1Y R COMPANY (13.7) (8.3) - STI RETURN (2.84) 0.27 13.33 PRICE VS. STI Source: Bloomberg, PSR CH BIOVEST PTE LTD HO LEE GROUP SGD 0.220 0. 15 0. 20 0. 25 0. 30 0. 35 0. 40 0. 45 Feb-17 May-17 Aug-17 Nov-17 PS TAR SP EQU IT Y FSSTI index KEY FINANCIALS Y/E Dec, SGD'000 F Y 16 * 12 M F Y 17 Revenue 59,113 83,913 EBITDA 25,908 34,573 NPAT 17,318 19,968 P/B N.A. 3.3 ROE, % N.A. 52% Source: Company Phillip Research Team (+6212 1850) [email protected]*The Company announced the change of financial year end from 31December to 30 June
We were hosted by Pacific Star Development Limited (PSD) to visit their latest development, Puteri Cove Residences & Quayside, in Iskandar Puteri, Malaysia on 1 February 2018. We were shown various units, amenities and briefed on the economic prospects and other upcoming developments, such as the One°15 managed private marina, in Puteri Harbour.
Company Background PSD is an ASEAN property developer with previous property launches and investments in Kuala Lumpur and Bangkok, and pipeline projects in Iskandar and Bangkok. PSD was formed from a reverse takeover (RTO) and subsequently listed on the SGX Catalist Board on 16 February 2017. It also has a non-property division comprising its aluminium building works business in Singapore.
Site Visit Highlights 1. Prime asset within a Waterfront CBD
Premium mixed-use project (residential units priced at ~RM1,450psf) located right opposite the upcoming One°15 Marina Clubhouse
Puteri Cove Residences (Tower 1 and 2) expected to be issued its Certificate of Completion and Compliance before the end of February 2018
2. Diverse demand pool due to unique nature of development No restrictions on foreign ownership, affordable housing, or Bumiputera quotas Diversified nationality of buyers (28 different nationalities - 50% are Singaporeans) Average 75% sold for the residences
3. Iskandar Puteri key pillar of up-and-coming special economic zone
Iskandar Puteri is poised to be the key commercial centre of Iskandar, Malaysia Puteri Harbour is nestled within Iskandar Puteri, along with Legoland and EduCity -
which are seen to be among the main draws for tourists and foreigners
Investment Actions No stock rating or price target provided, as we do not have coverage on PSD. Peer Comparison – PSD’s P/B and ROA is the highest among its peers
Company
Mkt Cap
(SGD mn)
EBITDA
Margin (%)
EV/EBITDA
TTM
EV/EBITDA
FY1
P/E P/E
FY1
Net D/E
(%)
ROA
(%)
ROE
(%)
P/B
PACIFIC STAR DEVELOPMENT LTD 109.9 43.2 5.7 N.A. 10.9 N.A. 52.6 7.5 51.6 3.3
Malaysia
MAH SING GROUP 1,023.1 15.7 10.9 6.2 9.4 9.2 2.0 5.5 9.9 1.1
LBS BINA GROUP BHD 520.9 19.7 7.5 10.2 13.1 13.9 32.0 3.5 9.2 1.2
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PACIFIC STAR DEVELOPMENT LIMITED SITE VISIT
Background PSD is the resultant entity of the S$140 million RTO with LH Group limited, which previously only comprised the non-property division. PSD’s Management has collective experience in deal origination and property investment management, having managed 3 closed-end property funds since 2005. PSD disposed of its non-core business (Autotrax) in May 2017, and had inked a MOU in September 2017 with an Indonesian Master Developer to develop an iconic waterfront project, and in October 2017 entered into a strategic partnership with a DFM-listed property developer in Dubai to develop luxury properties in key cities across Southeast Asia over the next five years. Property division: Current projects PSD has two current projects – Puteri Cove Residences and Quayside (51% owned with DB2 Land) in Iskandar and The Posh Twelve (51% owned joint-venture) in Bangkok
Figure 1: Puteri Cove Residences and Quayside, Iskandar Malaysia
Source: Company
Freehold mixed-use development comprising luxury apartments (Tower 1 & 2), Pan Pacific Serviced Suites (Tower 3), SOHO and lifestyle retail centre
Average 75% sold for the residences
Price range to-date: RM1,200-1,850 per square foot
Certificate of Completion and Compliance to be issued before the end of February 2018
Figure 2: The Posh Twelve, Bangkok, Thailand
Source: Company
Freehold mixed-use development comprising mid-end condominium and lifestyle retail outlets
Tower 1: 60% sold
Tower 2: Multi-country sales launch from June 2017
Property division: Pipeline projects Different stages of negotiations in Malaysia, Thailand, Indonesia and Vietnam
o On-going negotiations in mid to advanced stages with land owners and strategic partners in Thailand and Malaysia to develop 400,000 sqm GFA in various prime locations
o Exploratory discussions with landowners in Jakarta and Ho Chi Minh City
PSD’s Aluminium Division provides design, fabrication and installation of building facade and exterior walls
PSD’s Aluminium Division is one of the 8 approved Singapore Housing Development Board (HDB) window suppliers and installers, and has also completed various iconic landmarks in Singapore such as Changi Airport Terminal 3, The Sail@Marina Bay, Orchard Central, Yale-NUS College, Sky Terrace@Dawson and Waterbay EC
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PACIFIC STAR DEVELOPMENT LIMITED SITE VISIT
Prime asset within a Waterfront CBD Premium mixed-use project (residential units priced at ~RM1,450psf) located right
opposite the upcoming One°15 Marina Clubhouse
Puteri Cove Residences (Tower 1 and 2) expected to be issued its Certificate of Completion and Compliance before the end of February 2018
Pan Pacific Serviced Suites (205/340 units of Tower 3) will be operational in 2H2018
Figure 4: Entrance of Puteri Cove Residences
Source: PSR
Figure 5: Puteri Cove, once the private marina and waterfront retail development come online (artist’s impression)
Source: Company
Figure 6: Actual photo of Puteri Cove, January 2018
Source: Company
Figure 7: View from the Delta Promenade (rooftop) on Tower 2 - overlooking the private marina and waterfront retail
Source: PSR
Figure 8: Puteri Cove’s waterfront development
Source: PSR
Figure 9: Puteri Cove Quayside – modelled after Monaco and Sentosa Cove – that will house specialty retail stores, restaurants, cafes, and leisure offerings
Source: Company
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Figure 13: Foosball tables in the Grand Lounge and Games Club
Source: PSR
Figure 14: Gym overlooking the private marina area
Source: PSR
Figure 15: Owners will be able to book the Private Dining Room for events or meetings
Source: PSR
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PACIFIC STAR DEVELOPMENT LIMITED SITE VISIT
Diverse demand pool due to unique nature of development No restrictions on foreign ownership, affordable housing, or Bumiputera quotas
Diversified nationality of buyers o 28 different nationalities – 50% are Singaporeans
Average 75% sold for the residences o Tower 1: 90% sold (~RM1350psf) o Tower 2: 60% sold (~RM1600psf)
High-income buyers form 50% of Puteri Cove purchases and they have paid up to 80% of their purchase price, with a substantial proportion of buyers paying in cash
Move-in condition with 11 Concepts under 4 Series (Urban, Art, Sophistication, Marina) Buyers can opt for separate Interior Designer (ID) packages – priced at S$30,000-100,000
Figure 16: One of the concepts under the “Marina” series
Source: PSR
Figure 17: Fully furnished dining room – everything from the chairs to the cutlery are included in the ID package
Source: PSR
Figure 18: All master bedrooms come with an en-suite bathroom
Source: PSR
Figure 19: Children’s bedroom
Source: PSR
Figure 20: Living room
Source: PSR
Figure 21: Welcome package and luggage for homeowners
Source: PSR
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PACIFIC STAR DEVELOPMENT LIMITED SITE VISIT
Bird’s eye view of Puteri Cove Figure 22: Artists’ impression of Puteri Cove
Source: Company
Figure 23: Puteri Cove on a map of Iskandar Puteri
Source: Company
Iskandar Puteri key pillar of up-and-coming special economic zone With Iskandar Puteri being identified as one of the four “Flagship Zones” within the
“Special Economic Zone” that is Iskandar, Puteri Harbour and other projects within this region are expected to drive Iskandar’s economic and population growth – which translates to a longer runway for growth for Puteri Harbour and in turn, Puteri Cove
By 2025, more than 800,000 jobs will be created and GDP per Capita will reach USD31,100 - according to the Iskandar Regional Development Authority
Puteri Cove is a 10-minute drive from Singapore via Tuas Second Link, a 20-minute drive from Senai International Airport and a 5-minute walk to Puteri Harbour International Ferry Terminal
Surrounding landmark
developments include Edu City,
Legoland, Columbia Asia Hospital,
Ascendas-UEMS Tech Park and
Mitsui-Ascendas-UEMS Tech Park
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PACIFIC STAR DEVELOPMENT LIMITED SITE VISIT
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