First Sponsor Group Limited announces SGD 5Y senior unsecured notes at FPG of 3.495%

First Sponsor Group Limited (“First Sponsor”) plans on issuing new SGD 5-year direct, unconditional, senior unsecured notes at the final price guidance (“FPG”) of 3.495%. It is expected to be issued on 14 May 2025, with a maturity date of 14 May 2030. The proceeds will be used for general corporate purposes which includes refinancing of borrowings and financing investments and general working capital for the Group. We wish to highlight that the new issuance is made available only for accredited and institutional investors.

First Sponsor was incorporated in the Cayman Islands on 24 September 2007 as an exempt company with limited liability under the Cayman Companies Law. It is a public company listed on the Mainboard of the Singapore Exchange Securities Trading Limited on 22 July 2014. Hong Leong group of companies (“Hong Leong Group Singapore”) is one of the major shareholders, through its shareholding interests in City Developments Limited and Tai Tak Estates Sendirian Berhad (“Tai Tak”).

Hong Leong Group Singapore is a globally diversified conglomerate. Its core businesses include investment holding, property holding and development, hotel ownership and management, hospitality real estate management, financial services, manufacturing, trading and distribution. On the other hand, Tai Tak is a private company with a long operating history which was incorporated in Singapore in 1954. It currently invests in a wide range of businesses including plantations, listed and private equities and property holding and development.

First Sponsor owns a property portfolio spanning five countries globally – The Netherlands, Italy, Germany, China and Australia. As of 31 December 2024, they have 17 development properties, 57 investment properties and 19 hotels. They also have a relatively significant presence in China (approximately 62% of total assets as of 31 December 2024).

For the year ended 31 December 2024 (“FY24”), its revenue has rose 12.4% YoY from SGD 283 million in FY23 to SGD 318 million. Property holdings – which accounts for revenue related to First Sponsor’s hotel operations and investment properties - remains the key revenue driver (63.5% of total revenue). This is followed by property development (22.3%), and property financing (14.2%). Consequently, First Sponsor’s gross profit rose 3.03% YoY from SGD 132 million in FY23 to SGD 136 million in FY24.

The Group’s profit before tax ballooned 303.6% YoY from SGD 28 million in FY23 to SGD 113 million in FY24. This is primarily driven by the maiden profit contribution from NSI N.V. (“NSI”), as an associated company of First Sponsor, as well as higher fair value gains, and net gain on settlement from financial derivatives. That said, in FY24, higher foreign exchange losses and net finance costs, stemming from elevated interest rates and a higher average level of borrowings, have weighed on profits.

As highlighted above, First Sponsor has significant assets in China. This is largely made up of residential projects that are projecting to be sold in the coming years as local sentiment improves. In view of this, the management maintains a cautiously optimistic stance that further governmental support expected this year would contribute to a gradual market recovery. The Group also highlighted that they will maintain a long-term perspective on the sales cycle and would avoid selling unsold units at deep discounts.

Beyond China, the group looks to capitalise on the strong demand in Netherlands’ residential property sector by increasing the number of units transacted and average transaction price. They also look to tap on Australia’s housing supply shortage which have been translated into steadily increasing residential prices. First Sponsor looks to continue monitoring for further opportunities in both Europe and Australia.

For First Sponsor’s credit profile, debt metrics are generally stable across the year. Total debt over total assets ratio fell slightly from 0.27x in FY23 to 0.26x in FY24. Similarly, its reported net gearing ratio also fell from 52% in FY23 to 47% in FY24. Meanwhile, total borrowings rose slightly from SGD 1,251 million in FY23 to SGD 1,292 million in FY24. Most of the debt is on floating debt (54%). The slight improvement in debt ratios are due to increases in both assets and equity.

Looking at the Group’s debt maturity profile, we think it is well spread with a higher debt load at FY26 (Figure 1). With a cash position of around SGD 188 million and the ability to tap into committed credit facilities amounting to SGD 430.5 million, we think it can cover its refinancing needs over the next two years.

Figure 1: Debt maturity as at 31 December 2024

Our recommendations

Table 1: Comparable real estate SGD papers

In our view, First Sponsor’s significant asset exposure to residential properties located in China represents greater operational and asset valuation risks, particularly as the property situation remains uncertain amidst an unstable macro backdrop. We see this as a source of earnings volatility for the Group despite its decent financial performance.

At the FPG of 3.50%, we do not think the yield is particularly attractive for investors, considering the China exposure. Wingtai is also a real estate developer with asset exposure to China, which offers similar yield at a shorter maturity. Perennial Holdings also has exposure to China and, in our view, has higher credit risk but is justified by higher yields. Relative to other comparable real estate developer SGD papers, we prefer OUESP 4.000% 08Oct2029 Corp (SGD) and HOBEE 4.350% 11Jul2029 Corp (SGD). Overall, we think First Sponsor’s new offering may be more suitable for investors who are willing to bet on the recovery of the China property crisis and are comfortable with the FPG.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in TSHSP 7.500% 02Nov2027 Corp (SGD) and OUESP 4.000% 08Oct2029 Corp (SGD). The analyst who produced this report holds an NIL position in the abovementioned securities.

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