New Issue Review : Heeton Holdings 3Y 6%


– New Heeton SGD 3yrs announced at the back of reverse enquiry
– IPG at 6% area

Comparable Bonds
Heeton 5.6 2015 @ 100.375, 5.30%
TA Corp 5.25 2016 @ 100.75, 4.91%

Another 225 million left for them to borrow so Heeton is back. [Note total MTN size is SGD 300 mio vs market capitalisation of SGD 185 mio

Not many units in their Singapore inventory. 76 unsold properties out of 588 units across 6 developments.

I would guess it must be their Thai portfolio ? Or new projects ?

Latest financial statement
Fixed deposits decreased substantially from S$47.12 million to S$6.0 million in 1Q2014 as a result of the acquisition of Woodley. Other receivables decreased from S$6.04 million to S$3.52 million was mainly attributed to: (a) deposit of S$4.29 million paid for the acquisition of Woodley and (b) deposit of S$2.16 million placed for the proposed purchase of a property in London.
Cash and cash equivalents decreased by S$48.95 million in 1Q2014. The following were the major movements during the period: (a) increase in development properties of $1.35 million as a result of progress made in the construction of Onze@Tanjong Pagar and Earlington in London; (b) net cash outflow of $46.37 million for the acquisition of Woodley; (c) loans of $5.72 million and $5.26 million to investee company and associated companies respectively.

My view and comments on the company remain unchanged from last year.
And their income last year was not too hot (pre-tax income of 20 mio vs 55 mio in 2012).

The market and  bankers are selling the idea of a shortage of investments and investors are chasing yields. This paper probably does not qualify for leverage for the ordinary buyer. I would personally prefer a higher yield buffer as I believe we should give ourselves some room to breathe and be discerning.

Yet having said that, and with reference to an article I had removed 2 weeks ago, I would expect decent take up for this bond.