MARKET PULSE: CMT, SPH, Cache & FCT (19 Jan 2012)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.02

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.99

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.19

MARKET PULSE: CMT, SPH, Cache & FCT

19 Jan 2012

KEY IDEA CapitaMall Trust: Upgrade to BUY - results in line CMT announced 4Q11 distributable income of S$75.5m, or a DPU of 2.30 S-cents. Cumulatively, FY11 distributable income came in at S$301.6m, in line with our forecast of S$300.3m. Net property income for the year increased 4.8% YoY to S$418.2m, driven mostly by contributions from Clarke Quay and Illuma acquired in Jul10 and Apr11, respectively, and positive rental reversions. Management's execution remains solid with new projects tracking closely to schedules. We also like that a substantial portion of income is derived from resilient suburban malls, given an uncertain economic outlook. Upgrade to BUY with a lower S$2.02 fair value (versus S$2.06 previously) with a 12m DPU forecast of 10.0 S-cents. (Eli Lee) MORE REPORTS SPH: Top bid for Sengkang commercial site A 70:30 JV between SPH and United Engineers bid S$328m (S$1,156 psf) for a commercial site at Sengkang West Avenue beside Fernvale LRT station. We expect total development cost (including land) to be ~S$2,450 psf NLA (net leasable area). Assuming rentals of S$15 psf per month (roughly in line with levels seen at Clementi Mall and Bukit Panjang Plaza), this works out to a rental yield of 5.3% which we are fairly neutral about. We are neutral on this acquisition and keep our fair value estimate unchanged. Maintain BUY at fair value estimate of S$3.99 and 12m dividend of S$0.24. (Eli Lee) Cache Logistics Trust: On a clear growth trajectory Cache Logistics Trust (CACHE) delivered a good set of 4Q11 results, with DPU growing 8.5% YoY to 2.102 S cents. Looking ahead, we believe CACHE will continue to perform. While its master lease arrangements may appear to limit its growth potential, we expect the REIT to continue to benefit from full-year contributions from its 2011 acquisitions. CACHE is also certainly in a comfortable position to seek growth via asset injection, with its aggregate leverage at a healthy 29.6%. Maintain BUY with a revised fair value of S$1.19 on CACHE. (Kevin Tan) Frasers Centrepoint Trust: 1QFY12 results in line Frasers Centrepoint Trust (FCT) reported NPI of S$24.9m (+33.6% YoY) and distributable income of S$19.5m (+31.3% YoY) for 1QFY12, supported by strong uplift from Causeway Point (CWP), full-quarter contribution from Bedok Point and positive rental reversions. DPU for the quarter stood at 2.20 S cents (+12.8% YoY), and will be paid on 29 Feb 2012, together with DPU of 0.28 S cents announced in Oct 2011. The results were within our estimates, with headline numbers forming 23.5-26.7% of our full-year forecasts. Over the quarter, we also note that FCT's portfolio continued to register improvement in its occupancy. Looking forward, management guided that its portfolio performance is expected to remain stable, with positive growth in overall rental reversions. We will be tuning in to the analyst teleconference call scheduled this morning to get more details on its outlook. For now, we keep our BUY rating but put our fair value under review. (Kevin Tan)

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NEWS HEADLINES - The euro rose as the IMF proposed to raise its lending capacity by up to US$500b to insulate the global economy from further effects of the debt crisis in Europe. - US stocks rose as a gauge of confidence among American homebuilders climbed to the highest level in over four years and data showed that US industrial production recovered in December. - Courage Marine's wholly-owned subsidiary has agreed to sell MV Raffles, a 38,000 dwt vessel, to generate cash, and the company estimates that it will record a loss on the disposal of ~US$2.1m for the FY ending 31 Dec 2012. - China Oilfield Technology Services announced that the Daqing government has compulsorily acquired two pieces of land from the company that were used mainly for warehousing purposes. The total compensation amount of ~RMB40.0m is higher than the net book value of ~RMB16.5. - Frencken Group announced that its wholly-owned subsidiary will acquire 80% equity interest in US Motion Inc. for ~US2.6m to provide its opportunities to expand in the US and to gain a portfolio of proprietary products.