3 Things Investors May Not Know About Perennial Real Estate Holdings Limited

Perennial Real Estate Holdings Limited (SGX: 40S) is a Singapore-listed real estate and healthcare company with a sizeable market capitalisation of S$1.45 billion. It has businesses in China, Singapore, Malaysia, and Ghana.

Some of you reading this may have come across some of Perennial’s properties in Singapore.

The company’s portfolio has properties such as Capitol Singapore, CHIJMES, AXA Tower, TripleOne Somerset and more. Some of them are located in Singapore’s downtown civic district or central business district. TripleOne Somerset is within the iconic Orchard Road shopping belt.

While the company’s real estate portfolio in Singapore may be well-known, here are three things about Perennial that some investors may not know about:

1. Perennial’s China focus for growth

In the second-quarter of 2016, Perennial derived $9.7 million of earnings before interest and taxes (EBIT) from Singapore, and S$8.4 million of EBIT from China. While Singapore is now the more important geography, China could catch up in the future.

In terms of Perennial’s total property value, 32% are from completed projects in Singapore and 36.6% are from completed projects in China. But, the company has no projects under development in Singapore that are accounted for in its total property value. In contrast, 26.3% of its total property value come from projects under development in China.

2. The big influence of Wilmar

As of 27 July 2016, agri-business giant Wilmar International Limited (SGX: F34) has a 15.0% stake in Perennial. But that’s not all – Kuok Khoon Hong, the co-founder, chairman, and chief executive of Wilmar, holds 36.9% of Perennial’s shares.

Pua Seck Guan, the chief executive of Perennial, has a 10.3% stake in the company. He’s also the chief operating officer of Wilmar.

All told, Wilmar and its important leaders collectively own 62.2% of Perennial, which equates to a S$902 million stake at Perennial’s current market capitalisation. Wilmar’s 36.9% interest works out to be worth around S$535 million. For perspective, Wilmar has total assets of US$35.2 billion as of 30 June 2016.

China is one of Perennial’s most important geographical markets, as already mentioned. Wilmar may not have a presence in real estate or healthcare in China, but the company had generated US$19.4 billion in revenue in 2015 from its agri-business in the world’s second largest economy.

3. Singapore-dollar loans funding Chinese assets

The bulk of Perennial’s property values are made out of Chinese real estate that are either completed or under development.

But, the company’s primary funding source comes from Singapore and not China.

Source: Perennial earnings presentation

Perennial has total debt of S$2.34 billion as of 30 June 2016. Of that sum, nearly S$1.4 billion come from Singapore. It’s worth noting that the S$1.4 billion excludes retail bonds and medium term notes, some of which are priced in Singapore dollars.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.