BukitSem

Offering good mix of projects. While the prime luxury residential segment in SingaporeWhile the prime luxury residential segment in Singapore

remains hot, the mid-end segment has started to play catch-up. Against this backdrop, BS

has the potential to capitalise on its vast development land bank of 4.2m sf GFA. We

visited the company recently and understand that BS will be launching at least three

projects in the next 12 months, ranging from terrace houses in the suburban north to a

luxury condominium in prime District 9.

Launching last phase of Mimosa. There are altogether six phases to the freeholdThere are altogether six phases to the freehold

Mimosa Terrace project along Mimosa Road in the Yio Chu Kang/Seletar area. BS will be

launching Phase 6 (44 units) this quarter. BS launched Phase 4 (39 units) in April last year

and the development has been fully sold at an estimated price of S$520 psf on average.

As the annual absorption of terrace houses in Singapore is typically 200-300 units, we

expect healthy take-up for Phase 6, as was the case in the previous five phases.

Parc Mondrian to blossom. BS also plans to launch Parc Mondrian (freehold, 100 units),BS also plans to launch Parc Mondrian (freehold, 100 units),

its condominium project at Woodleigh Close, soon. This mid-end development is within

walking distance of the Woodleigh MRT station. We note the strong sales at nearby

Blossoms@Woodleigh (freehold, 240 units), which was launched early this month. Some

100 apartments or 42% of the available units were sold in a week at an average price of

S$650 psf.

And now the crown jewel. BS?s luxury condominium project (freehold, 200 units) at theBS?s luxury condominium project (freehold, 200 units) at the

junction of Paterson Road and Lengkok Angsa in prime District 9 is scheduled for launch

soon (possibly in two phases in anticipation of further property price increases in that

area). The residential component (99-year leasehold, 168 units) of the landmark Orchard

Turn development further down Paterson Road is said to be ready for launch in the next

two months at prices as high as S$3,000 psf. SC Global (SG SP, S$3.40, NR) has also

announced that its project on Paterson Hill, marQ (freehold, 60-70 units) will be launched

in 2Q or 3Q this year at S$2,800 psf. Given the proximity of BS?s project to these two

developments (across Paterson Road from marQ), we expect its prices to reach S$2,500

psf by the time of its launch.

Valuation and recommendation

Positive news flow. As high-profile developments like Orchard Turn and marQ areAs high-profile developments like Orchard Turn and marQ are

launched over the next few months and as the mid-tier segment?s recovery gains

momentum, we anticipate favourable news flow to increase investors? interest in the stock.

BS?s only investment property at 7th storey Tong Building, beside the prime shopping mall

The Paragon in Orchard Road, could potentially add to the positive news flow, should a

collective sale of the building take place.

Stock has potential to trade up to S$11.25. Since November last year, the stock hasSince November last year, the stock has

appreciated 9%. At the current price, we believe it remains undervalued. We have raised

our fully-diluted RNAV estimate for BS from S$9.53 to S$11.25 to reflect higher selling

price assumptions for its residential projects. This represents a 20% premium to the

stock?s current valuation. Our RNAV estimate of S$11.25 is also 2.6x BS?s book value of

S$4.30 as at end-Sep 06, which is in line with the highest P/B multiple that the stock

traded at during the last property stock upcycle in 1998-1999.