Falling Knife of the Week: Ho Bee Land Limited

Ho Bee Land Limited (SGX: H13) closed at $2.29 on Wednesday, falling close to 5% thus far. This makes it this week’s Falling Knife.

Ho Bee Land Limited is a real estate development and investment company with an extensive and diverse portfolio covering high quality residential, commercial and high-tech industrial projects. Some of its projects include luxurious homes in the Sentosa Cove enclave. On top of Singapore, Ho Bee Land has a presence in Australia, China and United Kingdom.

On 28th April, the firm released an announcement to the Singapore Exchange about the resolutions that were passed during the Annual General Meeting that was held on the same day.

Later in the evening, Ho Bee Land posted its first quarter results where revenue plunged 71.9% year-on-year to S$17.1 million. Net profit went south even further at 93.9% to S$4.1 million. In the previous year, net profit was at S$66.2 million.

The steep decline in revenue was mainly due to absence in “recognition of revenue for development projects as there was no new sale and all units previously sold have been fully recognised as at the end of last year”.

However, one bright spot was that rental income from all its industrial and commercial properties, which was 93% of total turnover, rose 495% to S$15.9 million in the latest quarter. This was on the back of rentals received from the leasing of office buildings, The Metropolis in Singapore and Rose Court in London. Rentals of residential properties accounted for the remaining 7% of total turnover.

Ho Bee had just acquired another commercial building in London, 1 St Martin’s Le Grand in March this year. Going forward, it said that the rental income will contribute significantly to its earnings for the next few years, on top of the rental income from The Metropolis and Rose Court.

The company is currently trading at 0.7 times its historical book value and sports a dividend yield of 2%.