MARKET PULSE: Singapore Post & Lippo Malls Indonesia Retail Trust (5 Jan 2012)

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.45

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

MARKET PULSE: Singapore Post & Lippo Malls Indonesia Retail Trust

5 Jan 2012

KEY IDEA Singapore Post: Set to deliver on rainy days 2012 is likely to present a highly uncertain environment for investors, and we think the 1) defensiveness of SingPost's business, 2) its consistently decent dividends and 3) the recent stock price correction means the stock's risk-reward ratio is increasingly favourable for equity investors. The group is also on an acquisition trail, and sizeable M&A deals may be catalysts for the stock should SingPost make acquisitions that are well-perceived by the investing community. Given SingPost's recent stock price correction, we upgrade our rating to BUY with an unchanged fair value estimate of S$1.14 (derived from both the FCFE and DDM models). (Low Pei Han) MORE REPORTS Lippo Malls Indonesia Retail Trust: Outlook remains healthy We remain positive on Lippo Malls Indonesia Retail Trust's (LMIRT) financial performance in 2012. The demand for its retail malls/spaces is likely to remain healthy, supported by growing retail sales in the cities where most of its assets are located. The recent acquisitions of Pluit Village and Plaza Medan Fair are also expected to contribute significantly to its rental revenue in 2012. Noting that LMIRT has successfully refinanced its bank borrowings due 26 Mar with a drawdown of S$147.5m under its new loan facility arrangement, we see no immediate refinancing requirements for the REIT over the next year. Maintain our BUY rating and S$0.45 fair value. (Kevin Tan)

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NEWS HEADLINES - The Federal Reserve is set to start publishing the predictions of short term interest rates later this month. This move hopes to increase its influence over economic activity by guiding investor expectations. - Data from the Commerce Department showed that orders to US factories rose in November, by the most in four months - bookings for factory goods rose 1.8%. - Singapore's Purchasing Managers' Index gained 0.8 points to reach 49.5 in December, failing to break the 50 point mark, indicating that Singapore's manufacturing sector remained in contraction mode. - According to SouFun, China's biggest real estate website owner, China's home prices fell for a fourth month in December. - IEV Holdings announced yesterday that it received the official renewal of the Gas Sales and Purchase Agreement by PT Indofood for delivery of compressed natural gas. - Sino Grandness announced yesterday that it secured a new supplier to produce bottle juices under its own brand in anticipation of strong order growth in 2012. Production capacity is expected to double, reaching approximately 140,000 tonnes per annum.