Soundwill sells 13 & 15 Mercury Street for HKD180m

DMG expecs the sales will generate HKD75m in gross profit in FY12F.

Here's more from DMG OSK:

What’s new?
1) On 15 Oct, Soundwill Holdings (Soundwill) announced that they have completed the sales of 13 & 15 Mercury Street, North Point to an independent third party for HKD180m. The property is currently an old low rise block, comprising mainly of apartments and two GF shops and could be re-developed into a hotel. As the property has a GFA of 38,600 sq ft, the implied price per sq ft fetched is HKD4,663.

2) According to the SCMP, Soundwill has: i) to date successfully pre-sold 169 units (89% of total units) of Park Haven for c.HKD2.4bn or c.HKD21,000/sq ft and ii) launched presales of 3 special units at HKD26,368/sq ft.

Implications:
1) The price fetched on 13 & 15 Mercury Street is 4.2% or HKD8m below our estimate of HKD188m. We estimate the sales will generate HKD75m in gross profit in FY12F, based on management’s GPM guidance of 40%. Assuming a 16.5% tax rate, we believe the sales will contribute a net profit of HKD65m in FY12F or c.9.6% of our existing FY12 earnings estimate of HKD681m.

2) Since Park Haven's launch in April 2012, sales response has been good, with 169 units (89%) sold at c.HKD21,000/sq ft, in line with our estimate of HKD20,892/sq ft. If fully sold, we estimate that Park Haven will contribute HKD980mn in net profit or 90% of the Group's FY13 earnings, based on the assumption that Soundwill will obtain Park Haven’s occupation permit by end-FY13F and sales will be fully booked in FY13F.