Policy risks hang over Roxy Pacific's latest launches

Sales might be strong for the Toh Tuck Road project, but OCBC Research says policy overhang might slow down the company's momentum.

Aside from the property expected to be up in the market by 3Q11, Roxy has also announced the launches of Marine House and Singapura Theatre by 1H12.

"Strong sales at these launches could be price catalysts but we are wary about more policy risks at this juncture,” OCBC Research said in a statement.

In 1Q11, Roxy Pacific sold 237 units at Spottiswoode 18 and 29 units at Space@Kovan, a sale the bank said was done at an “impressive pace” considering that most of its launched projects had already sold out.

OCBC Research said S$555.2mln of progress billings from the projects would underpin revenue over FY11-14.

The bank added Roxy Pacific's acquisition activity would like be cautious and stay “bite-sized for now” due to its relatively full gearing-- pegged at 1.04x NAV.

The company acquired a site at McKenzie Road in April for S$24.6mln with an estimated breakeven ASP of S$1,350-$1,400 psf.

“In our view, it is possible that [Roxy Pacific's] management would explore a meaningful diversification into other property sectors, such as commercial or retail properties. GMRH continues steady growth,” the bank said.

OCBC noted, however, that positive catalysts such as launch performances and acquisitions, may also slow due to the expected increases in interest rates and physical completion in FY12-13.

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