It will be perfect timing for

Maintain BUY.Ow Chio Kiat to be “generous” when delivering full year results for Stamford Land ($0.555, unch) a month or so from now. (Last year’s was released on May 27th, when it paid 2 cents normal and 1 cent special. An unchanged payout means 5.4% yield). The Australian Prime Minister was in town yesterday to confer OCK Honorary Officer in the General Division of the of the Order of Australia. (Past recipients of  this “honor” include Emeritus SM Goh.)

4) Property investment continues to perform well, underpinned by lease income in excess of A$9m p.a. for its Perth office property.

Lapse of MOU a near term setback. While we view the lapsing of the MOU for the sale-andleaseback of its three hotels (in Melbourne, Sydney and Adelaide) as a setback to efforts to unlock value from its hotel assets, management highlighted that the buyer had asked for additional terms over that originally agreed in the MOU and the deal was also contingent on the funding availability through an IPO. Under the circumstances, management opt to maintain flexibility to explore other monetization options by allowing the MOU to lapse. STL’s hotels continued to perform well with improved occupancies and rates on the back of a buoyant Australian economy and strengthening of demand from the domestic corporate segment.

Hidden real estate value within hotel portfolio. STL acquired its hotels in the mid-1990s at depressed prices when the Japanese corporates beat a retreat from Asia to repatriate funds back to Japan. Today, its hotels are sitting on substantial surplus of S$365m, or $0.42/share, on our estimates. Management is seeking to further enhance land value through re-development opportunities, beginning with the conversion of its North Ryde hotel in Sydney.

Buy maintained. We revise our FY12-13 earnings by -24% and +6% respectively, to factor in slower residential sales going forward as the remaining units in its Sydney project are larger units with high absolute quantum of A$10m each. Maintain BUY with a lower TP of $0.73, pegged to 35% discount to RNAV (vs 30% earlier).

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