In a move that turned heads across the market, PhillipCapital has initiated coverage on Singapore-listed Wee Hur Holdings with a resounding “buy” recommendation and an ambitious price target of 62 cents. The forecast, announced on January 3, stands well above Wee Hur’s closing price of 42 cents on January 2, sparking investor interest and speculation.
The brokerage’s upbeat report highlights a “strong likelihood” of special dividends for shareholders following Wee Hur’s monumental sale of its Australian student accommodation portfolio in December. The $1.37 billion (A$1.6 billion) deal involves seven purpose-built student accommodation (PBSA) properties spanning over 5,500 beds in key Australian cities. Wee Hur owns 50.1% of the portfolio, with the remaining 49.9% held by Singapore’s sovereign wealth fund, GIC.
Massive Windfall Expected
The PBSA deal, set to be finalized by mid-2025, is poised to bring substantial gains for Wee Hur. The company expects to pocket net proceeds of $320 million in cash after the sale, pending shareholder and regulatory approvals. Additionally, Wee Hur will retain a 13% stake in the new ownership structure, valued at A$208 million.
Wee Hur’s profitability is already robust. For the first half of 2024, the company reported a net profit of $75 million, with $60 million stemming from its PBSA joint venture with GIC. Analysts expect similar, if not better, contributions in the second half, pushing the full-year profit to approximately $150 million. This estimate positions Wee Hur at an attractive price-earnings ratio of just 2.6 times—well below industry averages.
A Cash-Rich Future
Wee Hur’s financial standing is set to strengthen even further. By mid-2025, its cash reserves could balloon to nearly $500 million, thanks to multiple revenue streams:
- $320 million from the PBSA sale.
- A$19.8 million in final proceeds from GIC’s earlier acquisition of a 49.9% stake in the PBSA portfolio.
- $20-$30 million in rental income from PBSA and workers’ dormitories in the second half of 2024.
- Over $20 million in high-occupancy performance bonuses from the PBSA deal.
As of June 2024, Wee Hur already had $117 million in cash on hand, making these additional inflows even more significant.
The Road Ahead
PhillipCapital’s confidence in Wee Hur stems not only from its cash-generating potential but also from its prudent financial management and strategic investments. Investors are eagerly awaiting further announcements, including the possibility of special dividends, which would reward shareholders handsomely.
With a 62-cent price target and a strong financial outlook, Wee Hur is shaping up to be one of Singapore’s most promising stocks in 2025. Market watchers are keeping a close eye on this evolving story, as the company’s transformative moves continue to unfold.
Stay tuned for more updates as Wee Hur makes headlines in the coming months.
Thank you
