MARKET PULSE: NOL, SingPost, LMIRT, Raffles Med, MMH (30 Apr 2012)

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

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

Research House: OCBC

Price Call: BUY

Target Price: 0.45

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.29

MARKET PULSE: NOL, SingPost, LMIRT, Raffles Med, MMH

30 Apr 2012

KEY IDEA Neptune Orient Lines: Shanghai-Europe rates up again; upgrade to BUY Summary: The Shanghai (Export) Containerised Freight Index (SCFI) climbed 4% WoW in the week ended 27 Apr 2012. Shanghai to Europe freight rates gained 11% WoW, while Shanghai to Mediterranean rose 13% WoW, ahead of major shipping liners' announced general rate increase in Asia-Europe freight rates on 1 May 2012. Neptune Orient Lines' (NOL) share price has fallen 17% from its recent high of S$1.45/share on 3 Apr 2012 but the correction does not seem warranted. The SCFI is currently 43% higher than this time last year and shipping liners, including NOL, are profitable at current freight rates. Although there are concerns over increasing container shipping capacity, shipping liners seem to have learnt their lesson and are now using slow steaming to manage shipping capacity and refraining from price wars. We upgrade our rating on NOL to BUYand maintain our fair value estimate of S$1.38/share. (Eric Teo) MORE REPORTS Singapore Post: Dividends likely to remain intact despite transformation Summary: Singapore Post (SingPost) reported a 2.2% rise in revenue to S$578.5m but a 11.8% fall in net profit to S$142.0m in FY12, which were within our expectations. The logistics and retail divisions posted improved revenues in 4QFY12, while mail turnover remained steady. The group is pursuing a transformation programme for its future but we do not see this impacting the group's dividend payouts. Similar to last year, SingPost has declared a final dividend of 2.5 S cents per share, bringing the total dividend for the year to 6.25 S cents. The stock price has risen by about 9.0% since we upgraded it from Hold on 5 Jan, but we still see an upside potential of 17.3% (includes forecasted dividend yield of 6.1%) based on our DDM-derived fair value estimate of S$1.14. Maintain BUY. (Low Pei Han) Lippo Malls Indo Retail Trust: NPI boosted by acquisitions Summary: Lippo Malls Indonesia Retail Trust (LMIRT) reported 1Q12 NPI of S$30.9m and distributable income of S$15.0m, up 38.0% and 18.5% YoY. The strong performance was due primarily to a full-quarter contribution from the acquisition of two retail malls in 4Q11. DPU for the quarter was at 0.69 S cents (18.6% of our full-year forecast), lower than the DPU of 1.17 S cents registered a year ago due to a 1-for-1 rights issue in 4Q11. However, on a QoQ basis, it represents a significant improvement of 30.2%. As at 31 Mar, LMIRT's portfolio occupancy stood at 94.5% (94.1% in prior quarter), well above Indonesia's retail industry average occupancy rate of ~87.6%. In addition, its aggregate leverage was also healthy at 9.2%, with no refinancing requirements until Jun 2014. We are putting our BUY rating and fair value of S$0.45 under reviewas we adjust our estimates to incorporate the results. (Kevin Tan) Raffles Medical Group: 1Q12 earnings slightly below expectations Summary: Raffles Medical Group (RMG) reported its 1Q12 results this morning. Revenue was within our expectations but PATMI was slightly below. Revenue increased 13.2% YoY and 0.9% QoQ to S$72.9m, forming 23.2% of our full-year estimates. EBIT improved 11.0% YoY but fell 20.6% QoQ to S$14.2m, while PATMI was up 10.9% YoY but declined 29.6% QoQ to S$11.6m, meeting 19.6% of our FY12 forecasts. 1Q is typically RMG's weakest quarter, which explains the significant sequential drop in its earnings. We note also that approximately 15,000 sf of 'newly created' medical space at its Raffles Hospital would begin contributing from 2Q12, and hence we are expecting a stronger 2H (versus 1H). Both its Hospital Services and Healthcare Services divisions contributed positively, with revenue growth of 15.3% and 7.4%, respectively. This was driven largely by a higher patient load and acuity. We will provide more details on the outlook of RMG after the analyst briefing today. Until then, we place our BUY rating and S$2.66 fair value estimate (24x FY12F EPS) under review. (Wong Teck Ching Andy) Micro-Mechanics: 3QFY12 results within expectations Summary: Micro-Mechanics Holdings (MMH) reported its 3QFY12 results which were in line with our expectations. Revenue declined 15.8% YoY to S$9.4m, or 2.9% higher than our forecast. Net profit slumped 47.8% YoY to S$0.9m and was just 0.4% above our projections due largely to higher-than-estimated effective tax rate. Sequentially, revenue and net profit rose 7.2% and 16.7%, respectively, despite 3Q being a seasonally weaker quarter. We believe this provides a positive signal that MMH could experience gradual improvement moving forward, in line with the recovery in the semiconductor industry. For 9MFY12, topline fell 16.8% to S$28.4m, while bottomline dipped 47.6% to S$2.9m. On a segmental basis, sales for MMH's Semiconductor Tooling (SET) and Custom Machining & Assembly (CMA) divisions decreased 13.8% YoY (+5.1% QoQ) and 24.1% YoY (+18.4% QoQ), respectively. Nevertheless, MMH managed to maintain its gross margin for its SET segment at 53.1%. Although gross margin for its CMA segment slid from 12.8% in 3QFY11 to 12.0% in 3QFY12, there was an encouraging improvement of 11.9ppt on a sequential basis. We will provide more details after the analyst briefing. Meanwhile, our HOLD rating and S$0.29 fair value estimate is under review. (Wong Teck Ching Andy)

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NEWS HEADLINES - US stocks climbed on Friday and posted their best weekly gains in a month after better-than-expected earnings from Amazon.com and Expedia Inc boosted confidence in corporate performance. - Ho Bee's 1Q12 revenue fell 51% YoY to S$38.7m, while PATMI declined 71% to S$15.8m. - Sino Grandness posted 1Q12 revenue of RMB285.5m, up 61% YoY. PATMI increased by 81% to RMB56.7m. - Treasury China Trust reported 1Q12 revenue of S$26.0m, up 33.5% YoY. Earnings per unit increased 11% YoY to 3.0 S-cents. - Serial System's sales for 1Q12 declined 4% YoY to S$182m. PATMI declined by 43% YoY to S$1.8m.

OCBC upgrades NOL to buy

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

OCBC Investment Research upgraded container shipping firm Neptune Orient Lines to buy from hold but maintained its target price of S$1.38, citing a recent share price fall despite increasing freight rates.

NOL shares were up 0.4% at $1.21. The stock has fallen about 17% from its recent high of $1.45 on April 3, much further than a 1.5% fall in the broader market. “The correction in NOL’s share price does not seem warranted,” OCBC said.

The Shanghai (Export) Containerised Freight Index was currently 43% higher than last year, with Shanghai to Europe freight rates more than doubling, OCBC said. It added that transpacific freight rates were significantly higher than a year ago.

OCBC said shipping liners, including NOL, are profitable at current freight rates. After collectively losing at least US$6 billion ($7.4 billion) in 2011, liners are more disciplined in managing shipping capacity and refraining from price wars, it added.

UOB raises target on DBS to $19.50

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 19.50

UOB Kay Hian raised its target price on DBS Group Holdings, Southeast Asia’s largest bank, to S$19.50 from S$16.20 and maintained its buy rating.

As of 10:25 a.m. on Monday, DBS shares were down 0.4% at $13.94, but have risen more than 21% this year.

UOB Kay Hian raised its 2012 net profit forecast for DBS by 18.8%, citing net interest margin (NIM) improvements and lower credit costs, and projected its non-performing loan ratio to reach 1.4%, down from 1.8%, by year-end.

UOB Kay Hian said DBS planned to deploy surplus deposits in Singapore to expand consumer and small and medium-sized enterprise businesses to bolster loan growth and NIM.

Higher interest rates would also give DBS a huge boost because of its significant exposure to interbank lending and huge base of low-cost current and savings accounts, UOB added.

Phillip ups Ho Bee price target

Stock Name: Ho Bee
Company Name: HO BEE INVESTMENT LIMITED

Research House: Phillip Securities

Price Call: HOLD

Target Price: 1.43

Phillip Securities raised its price target on real estate developer Ho Bee Investment to $1.43 from $1.38 and maintained its neutral rating.

Shares of Ho Bee were flat at $1.39 and have risen about 36% so far this year.

Ho Bee’s revenue for the first quarter fell 51% year-on-year to US$38.7 million ($48 million), as residential sales were hurt by a stamp duty imposed by the government aimed at cooling the housing market, the broker said.

“We remain concerned over the slow residential sale in the high-end segment,” said Phillip in a report.

However, Phillip said one of Ho Bee’s industrial properties, One Pemimpin, sold out in less than a year.

The broker added that it expects Ho Bee’s office development, the Metropolis at One North, to be completed earlier than expected in the third quarter of 2013, and to provide a boost the company’s net asset value.

SG: Raffles Medical Group - Softening our growth assumptions

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.58

RAFFLES MEDICAL GROUP 30 Apr 2012

SOFTENING OUR GROWTH ASSUMPTIONS - Double-digit revenue and PATMI growth - Still room for expansion - Competition & cost pressures the key risks Raffles Medical Group (RMG) reported 1Q12 revenue of $72.9m (+13.2% YoY and +0.9% QoQ), forming 23.2% of our full-year estimates. This was in line with expectations. PATMI of S$14.2m (+10.9% YoY, -29.6% QoQ) formed 19.6% of our FY12 forecasts. Although 1Q is traditionally RMG's weakest quarter, this still came in slightly below our expectations. Moving forward, we see room for further expansion in RMG's operations, underpinned by robust demand for high quality healthcare services and the possibility of RMG taking on the treatment of subsidised patients as a collaboration with the Singapore government. Nevertheless, we ease our growth assumptions on the back of higher competitive and cost pressures. Maintain BUY on RMG, albeit with a revised fair value estimate of S$2.58, versus S$2.66 previously.

Phillip ups target on CDL Hospitality

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: Phillip Securities

Price Call: BUY

Target Price: 2.00

Phillip Securities Research raised its price target on CDL Hospitality Trusts, which invests in hospitality-related assets, to $2.00 from $1.91 and maintained its accumulate rating.

CDL units were up 0.5% at $1.865, having gained 21% so far this year.

Phillip said it believes CDL’s high revenue per available room will continue to gain traction in subsequent quarters, with new tourist attractions such as Garden by the Bay, the River Safari and the Marine Park opening in Singapore this year.

Phillip revised up its visitor arrival forecasts to 6% in 2012, versus 2% previously, and 8% in 2013 from 6%. It raised its 2014-2016 distribution per unit estimates for CDL by 5.6-6%.

MARKET PULSE: ART, CMA, Sheng Siong, CDL Hospitality, Yangzijiang (26 Apr 2012)

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.76

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.04

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.51

MARKET PULSE: ART, CMA, Sheng Siong, CDL Hospitality, Yangzijiang

26 Apr 2012

KEY IDEA Ascott Residence Trust: No surprises in 1Q12 results Ascott Residence Trust (ART) announced 1Q12 distributable income of S$24.2m, mostly flat on a YoY basis versus S$24.0m in 1Q11 and in line with our expectations. In terms of DPU, 1Q12 DPU came in at 2.14 S-cts which was identical to 1Q11. Topline for the quarter was S$71.6m, up 6% mostly due to Citadines Shinjuku Tokyo (acquired Dec 2011) and improved numbers from China, Philippines and the UK. We continue to see value in ART given a robust yield of 7.6% and undemanding P/B ratio of 0.8x which should underpin the share price and provide a reasonable margin of safety for bear case fair-value write-downs. We update our model and maintain our BUY rating with a marginally higher S$1.14 fair value estimate, versus S$1.12 previously. (Eli Lee) MORE REPORTS CapitaMalls Asia: 1Q12 below expectations - paring estimates CMA reported 1Q12 PATMI of S$66.8m, up 36.1% YoY mainly due to revaluation gains (S$30.7m) on three Japanese malls. Excluding these gains, we judge 1Q12 results to be below view, making up only 16% of our FY12 forecast due to higher operating expenses and a slower-than-expected ramp-up at new malls. We believe the street has generally baked in overly optimistic assumptions for FY12, and pare our core earnings forecast to S$170.7m from S$220.6m. Management also announced that it would acquire a shopping mall site in Daxing District south of Beijing. We judge the price paid to be reasonable but see little accretion to RNAV at this juncture. In addition, from latest data-points, we now assess the odds of a Chinese hard landing to be low, and transition our valuation model from a scenario-weighted methodology to a direct RNAV-discount method. We update our fair value estimate to S$1.76 (from S$1.79 previously) with a 10% discount on RNAV. Maintain BUY. (Eli Lee) Sheng Siong Group: Pickup in revenues as expected Sheng Siong Group's (SSG) 1Q12 results came in within expectations, with a 3.9% YoY (+15.1% QoQ) increase in revenue to S$159.8m while net profit rose 73.7% YoY (+348.9% QoQ) to S$16.8m. Excluding a one-time gain of S$10.5m from the sale of its old Marsiling warehouse and a S$1.6m prior-year tax provision, SSG's net profit actually fell 18.1% YoY (+111.6% QoQ) to S$7.9m. Going forward, with its retail space now exceeding 2010 levels, we expect SSG's revenue to continue growing. However, SSG could face some margin pressures from continued priced competition with other members of the Big 3 local supermarket chains although we expect SSG to hold firm given its strong consumer base, brand prominence and strategic store locations. Maintain HOLD with an unchanged fair value estimate of S$0.49. (Lim Siyi) CDL Hospitality Trusts: Solid set of results For 1Q12 ended Mar 2012, CDLHT registered gross revenue of S$38.4m, an increase of 19% YoY; net property income grew 20% to S$36.0m. Excluding Studio M Hotel, which was acquired in May 2011, Singapore hotels saw RevPAR grow 9.3% YoY, due to an increase in visitor arrivals and the return of the bi-annual Singapore Airshow in Feb. The strength in the resources sector in Australia and the receipt of a full-year's variable income of S$1.8m versus S$0.84m recognised for an 8-month period in 1Q11 drove up gross revenue contribution from Australia hotels. Total return for the period climbed 24% YoY to S$28.6m. Income available for distribution per security (after deducting income retained for working capital) climbed 17% YoY to 2.78 S-cents, which translates into an annualised DPU yield of 6.0% based on yesterday's close of S$1.87. We maintain our BUY rating on CDLHT but put our fair value estimate of S$2.04 UNDER REVIEW. (Sarah Ong) Yangzijiang Shipbuilding: 1Q12 results within expectations Yangzijiang Shipbuilding (YZJ) reported a 12% YoY rise in revenue to RMB3.7b and a 7% increase in net profit to RMB1.0b in 1Q12, accounting for 24.0% and 27.9% of our full year estimates, respectively. Bottom-line was also within the street's expectations, representing 28.4% of Bloomberg's mean full year estimate. Gross margin in the shipyard segment decreased slightly from 27.1% in 1Q11 to 26.4% in 1Q12, partly due to revenue recognition from the lower-margin ship demolishing business of about RMB123.5m. As at 31 Mar 2012, the group's order book stood at 96 vessels worth a total of US$4.5b vs. US$4.7b in Dec 2011. Pending an analyst briefing later, we maintain our BUY rating but put our fair value estimate of S$1.51 under review. (Low Pei Han)

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NEWS HEADLINES - US stocks rallied on Wednesday, with Apple's surge giving the Nasdaq its biggest gain of the year, while the Fed chairman reassured markets that the central bank would do more if necessary to lift the economy. - Diversified automotive group Jardine Cycle & Carriage reported a net profit of US$265.6m, or 74.67 US cents per share, in 1Q12, up 6% YoY. - OSV operators and owners are wary of an overcrowding in the sector, which may derail a recovery in charter rates that is expected to come about in two to three years' time. - CVC Capital Partners Ltd had added Morgan Stanley and UBS AG to help with the IPO of Formula One, which could raise as much as US$3b in Singapore. - Savills Singapore's analysis shows that resale volumes for Mar have recovered to levels seen before the additional buyer's stamp duty (ABSD) kicked in. - The UK economy shrank in 1Q12 as construction output slumped, pushing Britain into its first double-dip recession since the 1970s. GDP contracted 0.2% from the 4Q11, when it shrank 0.3%.

SG: Sheng Siong Group- Pickup in revenues as expected

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.49

SHENG SIONG GROUP 26 Apr 2012

PICKUP IN REVENUE AS EXPECTED - Strong pickup in revenue to continue in FY12 - Risk of Big 3 price competition remains but SSG to hold firm - Dividend and defensive play intact Sheng Siong Group's (SSG) 1Q12 results came in within expectations, with a 3.9% YoY (+15.1% QoQ) increase in revenue to S$159.8m while net profit rose 73.7% YoY (+348.9% QoQ) to S$16.8m. Excluding a one-time gain of S$10.5m from the sale of its old Marsiling warehouse and a S$1.6m prior-year tax provision, SSG's net profit actually fell 18.1% YoY (+111.6% QoQ) to S$7.9m. Going forward, with its retail space now exceeding 2010 levels, we expect SSG's revenue to continue growing. However, SSG could face some margin pressures from continued priced competition with other members of the Big 3 local supermarket chains although we expect SSG to hold firm given its strong consumer base, brand prominence and strategic store locations. Maintain HOLD with an unchanged fair value estimate of S$0.49.

IEV Holdings rated 'buy' by UOB Kay Hian

Stock Name: IEV
Company Name: IEV HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.23

UOB Kay Hian in an Apr 25 research report says: "IEV has received a letter of award for a two-year contract from PT Unilever TBK to supply compressed natural gas (CNG) to its manufacturing plant in West Java, Indonesia. Pursuant to the award, PT Unilever will purchase more than 350,000 mmbtu of CNG over a two-year period.

"We expect this agreement will contribute US$5.0 million (RM15.0 million) in revenue and US$1.4 million (RM4.2 million) in gross profit from April 12 to March 14, assuming 28.0% gross profit margin.

"We maintain our earnings forecast as we have already factored-in an increase in CNG processing volume. Target price of $1.23 (unchanged), implying 80.9% upside from the current price. MAINTAIN BUY."

Marco Polo Marine rated 'buy' by AmFraser

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: AmFraser

Price Call: BUY

Target Price: 0.53

AmFraser Research in an Apr 24 research report says: "MPM just entered into a JV with Marine Tankers Holdings Pte Ltd (MTH) to own and operate two double-hulled bunkering vessels in Singapore waters.

"The vessels will be delivered in July 2012, meaning that income contribution should begin soon. While the hard numbers are currently unavailable, we like the big-picture dynamics—growing demand, shrinking supply.

"MPM is very attractively priced at 6.2x forward P/E, and its forward P/B of 0.9x is unjustified given that we are expecting a 25% ROE this year. Its shipyard just opened its third and largest drydock, now currently contributing to the bottom line, and its offshore division is also growing rapidly. Fair value of 53 cents. MAINTAIN BUY."

CIMB cuts Sheng Siong to neutral

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: CIMB

Price Call: HOLD

Target Price: 0.49

CIMB Research downgraded supermarket chain operator Sheng Siong Group to neutral from outperform and cut its target price to $0.49 from $0.51, citing intense competition that could further hurt its profits.

Sheng Siong’s shares were down 1% at $0.48, but have gained 9% so far this year, underperforming the FT ST Small Caps Index’s 16% rise.

Sheng Siong reported a 74% rise in quarterly net profit to $16.8 million, but CIMB said its core earnings per share was below its expectations, due to lower-than-expected gross margins.

CIMB cut its 2012-2014 earnings per share estimates for Sheng Siong by 3-8% and said the company’s cost savings from bulk handling and higher-margin fresh foods were eroded by higher promotions and discounts.

Out of 5 analysts tracking Sheng Siong, 2 have a buy rating while 3 have a hold recommendation.

Maybank downgrades SIA to hold

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: Maybank Kim Eng

Price Call: HOLD

Target Price: 11.05

Maybank Kim Eng cut its rating on Singapore Airlines to hold from buy and expects the airline to report a weak quarterly results due to rising fuel prices.

The brokerage reduced SIA’s target price to $11.05 from $14.40. The airline’s shares were 0.3% lower at S$10.67, and have gained 5% so far this year versus a 12% rise in the main market.

SIA reports January-March results on May 9. Out of 23 analysts tracking SIA, only 6 have a buy rating, 13 have a hold and 4 have a sell recommendation.

“Concerns over jet fuel prices, together with lingering uncertainties in the global economy, in particular Europe, pose strong headwinds to SIA and the aviation sector as a whole,” Kim Eng said in a report.

It said although SIA’s passenger yields seem to be steadying, falling cargo yields could hurt its profitability.

EMS Energy rated 'invest' by SIAS

Stock Name: EMS Ener
Company Name: EMS ENERGY LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.053

SIAS Research in an Apr 25 research report says: "Since its reverse takeover in 2007, EMS Energy Ltd (EMS) had repeatedly proven its capabilities with the completion of various O&G structures like modular workover units and offshore cranes.

"The company also specializes in high precision down-hole tools and is backed by the American Petroleum Institute (API) certifications. EMS is unremittingly improving its build capabilities and looking to expand into new markets following its entry into Vietnam, India and Australia.

"We project top line to grow at a CAGR of about 10% between FY12F and FY15F. We also conservatively maintain the profit margin at about 4.6% despite possibility of margin accretion owing to effective cost control and EoS. Intrinsic value of 5.3 cents. INVEST."

Suntec Reit rated 'buy' by DBS

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.45

DBS Vickers Securities in an Apr 25 research report says: "1Q12 gross revenue and NPI rose by 20.1% and 5.0% y-o-y to $73 million and $49 million respectively, largely due to the consolidation of revenue from Suntec Singapore. Additional contribution from Marina Bay Financial Centre (MBFC) Phase 1 also helped to lift distributable income by 3.8% to $54.9 million.

"DPU was 2.453 cents representing 28% of our FY2012 forecast. Approximately 193,000 sq ft, or 23% of the Suntec City retail space is expected to undergo AEI works from June 2012. While we expect some downtime in occupancy, the management will mitigate this by carrying out the works in phases.

"Suntec offers FY2012-2013F DPU yields of 6.7% and is trading at an undemanding 0.7 x P/BV. Gearing is at a healthy 37.4%. There is also minimum refinancing this year (7% of total debt). Our unchanged DCF-backed target price of $1.45 offers a total return of close to 20%. MAINTAIN BUY."

United Envirotech rated 'buy' by OCBC

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.52

OCBC Investment Research in an Apr 24 research report says: "United Envirotech Ltd (UEL) has just secured two more projects in China. The first is a large RMB216 million ($43 million) EPC project to build a 100k m3/day drinking water plant in Yantai City, Shadong Province.

"Earlier, UEL won the tender for a Transfer-Operate-Transfer (TOT) project in Shangzhi, Harbin city, Heilongjiang Province, which UEL is investing RMB70 million ($14 million) for a 30-year concession to operate the 40k m3/day treatment plant. Going forward, UEL says it will continue to actively explore investment opportunities in China’s north-eastern region, especially around the Song Hua River.

"With its latest TOT win, we bump up our FY2013 revenue and earnings estimate by 2% and 3% respectively. As such, our DCF-based fair value inches up slightly from 50 cents to 52 cents. MAINTAIN BUY."

MARKET PULSE: FCT, Suntec REIT, CMA (25 Apr 2012)

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.20

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.74

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.79

MARKET PULSE: FCT, Suntec REIT, CMA

25 April 2012

KEY IDEA Frasers Centrepoint Trust: Laudable set of 2Q results Frasers Centrepoint Trust (FCT) delivered a strong set of 2QFY12 results that exceeded our expectations. While the portfolio occupancy dipped 4.0ppt QoQ to 93.5% during the quarter, the fall was temporary and is expected to improve going forward. For 2HFY12, FCT anticipates its positive performance to be sustained, as it continues to benefit from positive rental reversions and stronger performance at its malls. Management also reveals that the injection of Changi City Point may not happen in the near future, but it is exploring other ways to optimize yields, such as AEIs and joint developments with its sponsor. We note that FCT's aggregate leverage is at a strong 30.9%. This positions the REIT well to pursue its growth plans. Maintain BUY with a revised fair value of S$1.74 (S$1.68 previously) after factoring in the 2Q results. (Kevin Tan) MORE REPORTS Suntec REIT: Holding up well Suntec REIT reported 1Q12 DPU of 2.453 S cents, forming 26.8% of our full-year projection. For 2012, management guided that only 7.5% of its office leases are due to expire and that the renewals achieved to-date were strong. As such, it is confident that its office portfolio would surpass its performance in previous year. Suntec also shed more light on Suntec City's impending asset enhancement initiative in Jun, saying that ~193,000 sqft of retail NLA will be closed progressively in phases for Phase 1 works. Upon completion in 2Q13, the NLA is likely to increase to 380,000 sqft. According to management, the projected rental enhancement of 25% and ROI of 10.1% also appear to be on track. We now revise our NLA and rental assumptions for FY12-15. This raises our fair value from S$1.10 to S$1.20. Maintain HOLD. (Kevin Tan) CapitaMalls Asia: Mall acquisition in South Beijing CapitaMalls Asia (CMA) reported 1Q12 PATMI of S$66.8m (1.7 S-cents per share) which is 36.1% higher YoY mainly due to revaluation gains (S$30.7m) from three malls in Japan and contributions from Queensbay Mall, partially offset by the absence of contributions from The Orchard Residences and retail bonds issuance costs. Accounting for revaluation gains, we judge 1Q12 results to be somewhat below consensus and our expectations, making up only 16% of our FY12 forecast. 1Q12 topline came in at S$70.9m - 41.2% higher YoY and more broadly in line with expectations. Management also announced that it would acquire from Poly Xing Real Estate Development a site for a shopping mall in Daxing District in the south of Beijing. The total development cost is expected to be RMB2,343m (S$469.2m) or ~RMB19,190 psm GFA. We will discuss these developments further with management this morning and, in the meantime, put our BUY rating and fair value of S$1.79 UNDER REVIEW. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks climbed as new home sales exceeded forecasts and 3M and AT&T Inc. recorded better-than-expected earnings. Apple's 2Q12 earnings jumped 94% YoY. - Construction contractor Ryobi Kiso Holdings and its partner have secured a ~S$10.2m contract in Ho Chih Minh, Vietnam. Ryobi Kiso now has S$79.7m worth of contracts secured YTD. - Liang Huat Aluminium expects to report a loss for 1Q12 due to a drop in revenue, cost overrun in certain aluminium projects and seasonal factors in the vehicle traction system segment. - First Ship Lease posted a 1Q12 net loss of US$4.17m, more than the US$2m loss last year. DPU was cut to 10 US-cents from 95 US-cents a year ago. - Offshore oil and gas contractor IEV Holdings has won a two-year, US$5m contract from PT Unilever Indonesia.

IEV Holdings up after contract win

Stock Name: IEV
Company Name: IEV HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.23

Shares of IEV Holdings jumped as much as 10.3% after the engineering company secured a two-year compressed natural gas supply contract from PT Unilever Indonesia Tbk.

IEV shares were up 8.1% at $0.735, having surged 56% so far this year.

PT Unilever, which manufactures home, personal care and food products, will buy more than 350,000 million metric British thermal units of CNG.

The revenue of more than US$5 million ($6.23 million) from the contract is expected to boost the net tangible assets or earnings per share of IEV for the current financial year ending December 2012, the company said in a statement.

UOB Kay Hian expects IEV to increase CNG processing capacity to 1.5 million mmbtu per annum this year from 1 million. It also forecast production to rise to 1.4 million mmbtu by the end of 2013 from 1 million in 2011.    

“We see further earnings upside as we have not factored in gas volume growth and margin expansion arising from IEV's upstream expansion and gas concession,” UOB Kay Hian said, maintaining its buy rating and $1.23 target price on the stock.

CIMB ups Suntec REIT target price

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: CIMB

Price Call: BUY

Target Price: 1.47

CIMB Research raised its target price on Suntec Real Estate Investment Trust (REIT) (SUNT.SI), which owns malls and offices in Singapore, to $1.47 from $1.45 and maintained its outperform rating.

Suntec REIT was up 0.4% at $1.29, having gained 20% so far this year.

Suntec REIT has seen better rental reversions and stronger occupancy from its Suntec City offices, CIMB said. It also expects the firm to get goods and services tax rebates for the One Raffles Quay office building complex.

Suntec REIT’s management also said it is on track to hit its return on investment target of 10.1% from the improvement of its Suntec City mall, in view of secured pre-commitments of more than 45%, CIMB said.

“With limited distribution per unit downside and at 0.65 times price-to-book value, we reckon its risk-reward remains in favour of a positioning for a bottom and successful remake of Suntec City Mall,” CIMB said.

Singapore office rents have come under pressure in recent quarters as the weaker global economic outlook led firms to hold back expansion.

UOB starts Cordlife at buy

Stock Name: Cordlife
Company Name: CORDLIFE GROUP LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 0.66

UOB Kay Hian has initiated coverage of Cordlife Group, a cord blood and tissue banking service provider, rating the company a buy with a target price of $0.66 and citing its growth potential in Asia.

Shares of Cordlife were up 0.9% atS$0.565, but have fallen 17% since its market debut in March. Its shares are still above its IPO price of $0.495.

Cordlife has the right-of-first-refusal to acquire business assets in high-growth developing markets such as India, the Philippines and Indonesia, which have one of the lowest penetration rates for cord blood banking services in Asia, UOB said.

It added that the company also has a 10% indirect stake in Guangzhou Tianhe Nuoya Biology Engineering, which holds the sole licence to operate a blood bank in Guangdong, China.   

An increase in healthcare spending in China and an expanding middle class will help to drive Cordlife’s growth in the country, UOB said.

The broker expects Cordlife’s earnings per share to grow at an average 13.6% a year over the next two years.

Stamford Land Corporation rated 'buy' by DMG

Stock Name: StamfordLd
Company Name: STAMFORD LAND CORPORATION LTD

Research House: DMG

Price Call: BUY

Target Price: 0.73

DMG & Partners Research in an Apr 23 research report says: "The group’s Australian hotels continue to benefit from strong domestic demand with occupancies hovering above 80%, while room rates have inched up in tandem.

"Management allowed the MOU for the sale-and-leaseback of three of its hotels to lapse recently as it wanted to maintain flexibility to pursue other monetisation options. Revenue of its 87%-sold development project in Sydney was booked upon completion in 3QFY12, bringing in $195 million of proceeds.

"Property investment continthues to perform well, underpinned by lease income in excess of A$9 million p.a. for its Perth office property. We revise our FY12-13 earnings by -24% and +6% respectively. Target price of $73 cents, pegged to 35% discount to RNAV. MAINTAIN BUY."

AIMS AMP Capital Industrial Reit rated 'invest' by SIAS

Stock Name: AIMSAMPI Reit
Company Name: AIMS AMP CAP INDUSTRIAL REIT

Research House: SIAS

Price Call: BUY

Target Price: 1.30

SIAS Research in an Apr 23 research report says: "Gross revenue grew by 14.7% to $84 million due to (1) first full year contribution from 27 Penjuru Lane and North Tech and (2) built-in rental escalation of 2% p.a. from master leases.

"Borrowing costs also fell from $18.3 million in FY2011 to $11 million this year, which helped boost net income (excluding revaluation gains) by 34.9% to $40.3 million. Distribution per unit (DPU) grew by 5.3% to 10.45 cents in FY2012. Upon the completion of 20 Gul Way, the management expects DPU to increase by another 1.465 cents.

"We expect AA REIT to maintain a stable dividend payout of 10 cents over the next two years, with the potential to increase to 11.5 cents in FY2015. We increase our intrinsic value to $1.30 as we raise our dividend payout forecast for FY2013-2015. MAINTAIN INVEST."

CNMC Goldmine Holdings rated 'increase exposure' by SIAS

Stock Name: CNMC
Company Name: CNMC GOLDMINE HOLDINGS LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.80

SIAS Research in an Apr 23 research report says: "CNMC reported a 4.6x increase in gold production from 553.8oz in 2010 to 3,097.4oz in 2011, following a 174% increase in reported gold resources from Jun 2010 to Dec 2011.

"FY11 Revenue grew by 8.7x partly due to higher gold prices. Reported attributable losses were US$5.1 million, of which US$3.3 million were due to IPO expenses and ex-gratia payment to key mining staff. We adjusted our forecasts to reflect higher than expected operating costs and higher prices for gold, silver, lead and zinc.

"In all, we expect CNMC to report revenue of US$48.1 million and PATMI of US$12.0 million in 2012. Our intrinsic value of the company remains unchanged at 80 cents per share (56.9% value-to-price gap from 51 cents). MAINTAIN INCREASE EXPOSURE."

China Fishery Group rated 'buy' by DBS

Stock Name: China Fish
Company Name: CHINA FISHERY GROUP LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.32

DBS Vickers Securities in an Apr 23 research report says: "We turn from neutral to positive, as we are now projecting a sustained earnings growth in FY2012F, after a disappointing FY2011.

"We expect earnings growth in 1Q12 to continue and project 2Q12 net profit to grow c.5-10% y-o-y to c.US$48-50 million due to a stronger contribution from its fishmeal operations, as well as interest savings from an earlier refinancing of its senior notes.

"The counter is now trading at 6.5x/6.1x on FY2012F/2013F earnings, near -1 std deviation below its average of c.9.8x. We have raised our FY2012F/2013F net profit forecasts by 5.6%/8% respectively to reflect lower interest costs.

"We believe the share price should be supported by a healthy yield of c.5% for FY12F. Target price is raised to $1.32, based on 8x FY12/13F PE (-0.5 std dev), equating to a total return of c.33%. UPGRADE TO BUY."

UOB ups Super Group target price

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.

Research House: UOB KayHian

Price Call: BUY

Target Price: 2.24

UOB Kay Hian raised  its share price target for instant beverage maker Super Group to $2.24 from $1.87 and maintained its buy rating, saying falling commodity prices could translate into higher margins.

Super Group shares were flat at $1.88 and have gained about 43% since the start of the year.

The brokerage said it saw margins improving as prices of coffee and sugar have fallen more than 30% from their peak in the first half of 2011.

UOB said Super Group was a proxy for Myanmar, as about 16% of last year’s revenue came from the re-emerging Southeast Asian country of 54 million  people, adding that growing consumerism indicated good long-term prospects.

Super Group also offers a proxy to rising coffee consumption in Indonesia, the brokerage said, adding that its joint venture with Petra Foods gives it access to a strong distribution network across the country.

“Other than a good potential in the branded consumer goods segment in Indonesia, we think that Super’s ingredient sales division will also get a strong boost from its joint venture, which has raised its visibility,” UOB said.

SG: United Envirotech - S$250m of project headroom available

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.52

UNITED ENVIROTECH 23 Apr 2012

S$250M OF PROJECT HEADROOM AVAILABLE - RMB216m EPC project - RMB70m TOT project - More opportunities in Song Hua River region United Envirotech Limited (UEL) has just secured two more projects in China. The first is a large RMB216m (S$43m) EPC project to build a 100k m3/day drinking water plant in Yantai City, Shadong Province. UEL also won the tender for a Transfer-Operate-Transfer (TOT) project in Shangzhi, Harbin city, Heilongjiang Province, which UEL is investing RMB70m (S$14m) for a 30-year concession to operate the 40k m3/day treatment plant. Going forward, UEL says it will continue to actively explore investment opportunities in China's north-eastern region, especially around the Song Hua River. Based on the usual 40% equity funding ratio, we estimate that the remaining S$100m proceeds from its CB issue can finance up to another S$250m worth of projects. With its latest TOT win, we bump up our FY13 revenue and earnings estimate by 2% and 3% respectively. As such, our DCF-based fair value inches up slightly from $0.50 to S$0.52. Maintain BUY.

SG: COSCO (S'pore)- Growing up pains

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.98

COSCO CORP (S'PORE) 24 Apr 2012

GROWING UP PAINS - Strong headwinds from shipbuilding - Nascent offshore engineering segment - Margin pressure expected over near-term horizon COSCO Corporation (Singapore) Limited (COSCO) is one of the largest ship repair and shipbuilding yards in China. In recent years, it has made significant efforts to build up its offshore marine engineering capabilities such that the offshore segment accounts for >50% of new orders in FY2011. However, as it is relatively inexperienced in building drilling rigs and production facilities, the offshore segment could take a substantial period of time before it sees any significant productivity improvements. Besides, the group also faces strong headwinds in the shipping and shipbuilding industries. We apply an industry-average P/B multiple of 1.6x to COSCO and obtain a fair value estimate of S$0.98. Initiate with HOLD.

CIMB ups Frasers Centrepoint target price

CIMB Research raised its target price for Frasers Centrepoint Trust, which owns shopping malls, to $1.75 from $1.65 and kept its outperform rating.

Units of Frasers Centrepoint were 0.3% lower at $1.555, and have gained 8% since the start of the year.

Frasers Centrepoint on Monday said its distribution per unit for the second quarter rose 20.8% to a record high of 2.50 cents from a year ago, boosted by higher revenue and net property income.

The broker increased its distribution per unit estimates for Frasers Centrepoint to reflect stronger rentals and margins, and positive management guidance on second half earnings.

A favourable retail outlook and results from upgrading its Singapore mall Causeway Point will also help Frasers Centrepoint, CIMB said. 

CIMB raises Mapletree Logistics target price

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: CIMB

Price Call: BUY

Target Price: 1.07

CIMB Research increased its target price for Mapletree Logistics Trust, which owns warehouses and logistic assets across Asia, to $1.07 fromS$1.00 and kept its outperform rating, citing its acquisition growth potential.   

Units of Mapletree were 0.5% lower at $0.97, and have gained 15% so far this year.

CIMB said the trust sees more opportunities for acquisitions in existing markets such as South Korea, China and Malaysia, as well as in new markets including Australia, Indonesia and Thailand. The broker expects an increase in rents, with most leases due this year from Singapore and Hong Kong.

It said Mapletree was silent on Australia’s Stockland Group’s reported potential sale of part of its industrial property portfolio in Australia to sponsor, Mapletree Investments.

Out of 15 brokers tracking Mapletree Logistics, 13 have a buy or strong buy and two have a hold rating.

DMG cuts Stamford Land target price

Stock Name: StamfordLd
Company Name: STAMFORD LAND CORPORATION LTD

Research House: DMG

Price Call: BUY

Target Price: 0.73

DMG & Partners Research lowered its target price on luxury hotel operator Stamford Land Corp to $0.73 from $0.78 but maintained its buy rating.   

Stamford shares were flat at $0.555 and have remained steady so far this year.

The broker cut its earnings estimate for Stamford’s 2012 fiscal year by 24% due to slower residential sales as the remaining units in the firm’s Sydney project are larger units priced at around A$10 million ($12.5 million) each.   

But it said Stamford’s hotels had seen better occupancies and rates on the back of a buoyant Australian economy and stronger demand from the domestic corporate segment.   

DMG said the lapse of a memorandum of understanding for the sale-and-leaseback of Stamford’s three hotels in Melbourne, Sydney and Adelaide was a near-term setback to the company’s efforts to unlock value from its hotel assets.

Maybank Kim Eng downgrades CapitaCommercial

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: Maybank Kim Eng

Price Call: HOLD

Target Price: 1.06

Maybank Kim Eng Research cut its rating on CapitaCommercial Trust (CCT) (CACT.SI) to sell from hold and lowered its target price to $1.06 from $1.25.

CCT's units were flat at $1.25, having risen about 18% so far this year.

Kim Eng said CCT's average office portfolio rent fell to $7.45 per square foot (psf) in March from $7.66 psf in December 2011 and said a quick upturn in office demand is unlikely due to ample supply and the prospect of tepid gross domestic product growth. 

“As we do not foresee an imminent upturn in office rents, current valuations appear rich and the 2012 fiscal year yield of 5.9% is insufficient to offset sectoral headwinds.”   

However, UOB Kay Hian raised its target price on CCT to $1.20 from $1.15 and kept its hold rating. The broker raised CCT's 2012-2014 distribution per unit forecast by 1-3% due to interest savings from debt refinancing.

   

MARKET PULSE: MLT, First REIT, CCT (23 Apr 2012)

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.20

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.935

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.14

MARKET PULSE: MLT, First REIT, CCT

23 Apr 2012

KEY IDEA Mapletree Logistics Trust: Closing on a positive note Summary: Mapletree Logistics Trust (MLT) posted a 12.3% YoY increase in NPI to S$61.4m and a 10.1% YoY increase in distributable amount to S$41.3m for the financial quarter ended 31 Mar 2012, in line with our projections. The strong performance, we note, came on the back of contribution from acquisitions and a 5.6% organic growth from its existing portfolio. In the coming year, we understand that about 15% of MLT's leases will be up for renewal, of which ~19% has been renewed ahead of expiry. Amidst the ongoing economic uncertainties, management guided that the organic growth and positive rental reversions are likely to moderate going forward. However, MLT added that attractive investment opportunities have resurfaced, and that acquisitions in overseas markets like Korea, China and Australia may materialize in the coming months. MLT's financial position is now fortified, following the recent issuance of perpetual securities and an asset revaluation gain. This provides MLT with ample financial flexibility to pursue its investment opportunities. Maintain BUY with unchanged fair value of S$1.20. (Kevin Tan) MORE REPORTS First REIT: Healthy fundamentals likely priced in Summary: First REIT (FREIT) reported its 1Q12 results which were within our expectations. Gross revenue rose 6.3% YoY to S$14.0m, meeting 24.6% of our FY12 forecast. Distributable income and DPU jumped 22.7% and 22.2% YoY to S$12.1m and 1.93 S cents, respectively. This constituted 24.5% and 24.8% of our full-year forecasts, respectively, if we exclude a special distribution of S$2.2m. We see both organic and inorganic growth as drivers for FREIT in FY12. Although conditions in the healthcare sector remain buoyant, we ease our revenue growth assumptions for some of FREIT's hospitals. But as we also update our WACC assumptions by incorporating a lower equity risk premium, our RNAV-derived fair value estimate is lifted from S$0.89 to S$0.935. Given the 21.7% YTD appreciation in FREIT's share price, we downgrade the stock from Buy to HOLD on valuation grounds. (Wong Teck Ching Andy) CapitaCommercial Trust (CCT): 1Q12 results mostly in line Summary. CapitaCommercial Trust (CCT) reported a 1Q12 distributable income of S$53.9m, up 3.4% YoY. This is mostly in line with consensus and our expectations, making up 27% of our full year forecast. DPU for the quarter is 1.90 S-cents. Top-line came in at S$87.4m - 3.9% lower YoY and tracking well to our S$362.9m FY12 forecast. The top-line dip was mainly due to negative rental reversions and lower portfolio occupancy, particularly at 6 Battery Rd (6BR). Despite this, we saw a lift in distributable income due to lower property expenses, higher interest income and a decline in trust/interest expenses. Management reports that CapitaGreen remains on track for completion in 4Q14, and extensive enhancement works at 6BR would be carried out in phases till end-2013. We currently see key risks for the share price stemming from further softening of the domestic office sector, though any downside is likely capped by a currently undemanding valuation (0.8x PB) and a fairly attractive yield (5.6%) for high quality Grade A office exposure. Maintain HOLD with an unchanged fair value estimate of S$1.14. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US markets closed flat on Friday, with early gains lost later in the session. The S&P 500 Index gain 0.12%. - Dyna-Mac Holdings posted revenue of S$23.5m for 1Q12, down 39% YoY. PATMI was S$3.3m, down 51% YoY. - GMG Global, a vertically integrated producer of natural rubber, registered 1Q12 revenue of S$283m, flat from the previous year. PATMI was S$11.7m, less 24.5% YoY. - China New Town Development Co. has signed a strategic cooperation agreement with a fund jointly initiated by the Beijing Municipal Development and Reform Commission. - Changjiang Fertilizer Holdings warns that it expects to report a significant lower profit for 1Q12, mainly due to lower sales and higher cost of sales.

OIR BITES: Dyna-mac's 1Q net profit fell 51% YoY

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: SELL

Target Price: 0.34

OIR BITES: DYNA-MAC'S 1Q NET PROFIT FELL 51% YOY 23 Apr 2012

For internal circulation only Dyna-mac announced its results last Friday with 1Q12 revenue and net profit falling by 39% and 51% YoY to S$23.5m and $3.3m respectively (1Q11: revenue of S$38.6m and net profit of S$6.8m). The group explained that revenue recognition was slower this quarter because most of its projects are in early stages of fabrication. In addition, gross profit margin was also lower (1Q12: 28.8%; 1Q11: 36.9%) due to fewer variation orders and projects completions. In terms of orderflow, the group also announced new fabrication contracts with FPSO operators Bumi Armada and SBM worth a provisional sum of USD31.6m, bringing its net orderbook to S$201m as of 20 Apr 2012. The majority of the projects are expected to be completed in 2012. We currently do not have a rating on Dyna-mac. According to Bloomberg, there is one SELL with a fair value estimate of S$0.34

DBS Vickers upgrades China Fishery to buy

Stock Name: China Fish
Company Name: CHINA FISHERY GROUP LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.32

DBS Vickers upgraded its rating to buy from hold and raised its share price target for Singapore-listed China Fishery Group to $1.32 from $0.95, citing attractive valuations and a stable operating outlook.

Shares of China Fishery were up nearly 2% at $1.05 and have gained 15% so far this year.

DBS said it expects China Fishery's second quarter net profit to grow 5 to 10% year-on-year to US$48-$50 million ($60- $62 million), driven by a stronger contribution from its fishmeal operations and interest savings on an earlier refinancing of senior notes.   

“While fishmeal prices have softened since reaching a high of about US$2,000/metric ton in 2010, the higher quantities should offset any price declines,” DBS said.

 China Fishery has an attractive dividend yield of about 5% at current prices, it added.

SG: First REIT - Healthy fundamentals likely priced in

FIRST REIT 23 Apr 2012

HEALTHY FUNDAMENTALS LIKELY PRICED IN - 1Q12 DPU of 1.93 S cents - Organic and inorganic growth likely in FY12 - Higher S$0.935 FV, but downgrade to HOLD First REIT (FREIT) reported its 1Q12 results which were within our expectations. Gross revenue rose 6.3% YoY to S$14.0m, meeting 24.6% of our FY12 forecast. Distributable income and DPU jumped 22.7% and 22.2% YoY to S$12.1m and 1.93 S cents, respectively. This constituted 24.5% and 24.8% of our full-year forecasts, respectively, if we exclude a special distribution of S$2.2m. We see both organic and inorganic growth as drivers for FREIT in FY12. Although conditions in the healthcare sector remain buoyant, we ease our revenue growth assumptions for some of FREIT's hospitals. But as we also update our WACC assumptions by incorporating a lower equity risk premium, our RNAV-derived fair value estimate is lifted from S$0.89 to S$0.935. Given the 21.7% YTD appreciation in FREIT's share price, we downgrade the stock from Buy to HOLD on valuation grounds.

Mapletree Logistics Trust - Busy quarter

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: CIMB

Price Call: BUY

Target Price: 1.00

Target S$1.00

5QFY12 was boosted by positive rental reversions and completed acquisitions. Resilience should stem from Asian logistics demand, its long WALE and geographical diversification.

Source: CIMB Daybreak - 20 April 2012, Full PDF Report

Frasers Commercial Trust - Catalysts in sight

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: CIMB

Price Call: BUY

Target Price: 0.96

Target S$0.96

2Q12's performance was boosted by profit-sharing from China Square Central (CSC), higher rents from Central Park and lower interest costs. Further upside from CSC can be expected with direct management from 3Q, while refinancing catalysts appear to be in sight. 2Q12/1H12 DPUs were slightly above street and our estimates at 28%/52% of our full-year on profit-sharing from CSC and lower interest costs. We raise DPUs to incorporate these but keep DDM-based target price (discount rate: 9.4%) unchanged. Maintain Outperform.

Source: CIMB Daybreak - 20 April 2012, Full PDF Report

Keppel Corporation - Reflections on a good quarter

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 14.80

Target S$14.80

For once, Property outshone O&M as profits were bumped up by the sale of the Reflections units under DPS. This year, lower margins in O&M should be more than compensated by a record order book, providing catalysts. 1Q12 exceeded consensus and our numbers (53% of FY12) due to higher Property contributions. We revise our FY12-14 EPS by -3.5% to +19% to reflect the strong quarter and longer delivery gaps for O&M. Our SOP target price is slightly reduced. Maintain Outperform.

Source: CIMB Daybreak - 20 April 2012, Full PDF Report

Cosco Corporation - Testing waters

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD

Research House: CIMB

Price Call: SELL

Target Price: 0.92

Target S$0.92

Cosco adds two orders of tender barge to its offshore order book. However, we are not thrilled as bullet-payment terms plus speculative-building may add to risks of patchy execution. Maintain Underperform and target price (1.5x CY13 P/BV, 10% above its trough of 1.4x). No change to our EPS as the order falls within our US$2bn target for 2012. We continue to see execution and cost-overrun risks for the stock.

Source: CIMB Daybreak - 20 April 2012, Full PDF Report

Maybank Kim Eng ups target price on StarHub

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: Maybank Kim Eng

Price Call: BUY

Target Price: 3.50

Maybank Kim Eng increased the target price of Singapore’s second biggest telecom firm StarHub to $3.50 from $3.20, highlighting its strong dividend yield.

“Given its rather lazy balance sheet currently, we will be on the lookout for indications of a dividend hike in coming quarters, but even without any, the current yield is still attractive at 6.3%,” the broker said in a report and kept its buy rating.

Kim Eng pegged StarHub’s first-quarter net profit at $85 million, up 8% from the previous quarter’s adjusted $79 million. It expects StarHub’s mobile business to outperform, with data revenue boosted by smartphones and tablets.

StarHub’s shares were up 0.3% at $3.21 in a flat market, and have gained 10% so far this year, underperforming the market. StarHub reports quarterly results on May 4. 

  

SG: Frasers Commercial Trust - Positive surprise on DPU

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.97

FRASERS COMMERCIAL TRUST 20 Apr 2012

POSITIVE SURPRISE ON DPU - Better results from lower interest costs - Stable operational performance - Expecting positive income growth Frasers Commercial Trust's (FCOT) 1HFY12 DPU was up 13.2% YoY to 3.2423 S cents, forming 48.5% of our DPU forecast. This is slightly ahead of our expectations, considering that FCOT may likely benefit from future earnings uplift following its recent acquisition of the remaining 50% stake in Caroline Chisholm Centre (CTL). While average portfolio occupancy eased marginally to 96.1% due partially to a 1.3ppt QoQ decline in CSC's occupancy, management revealed that it is mainly due to timing of the tenancy leases, and that fundamentals are still healthy. In the coming quarters, FCOT expects positive income growth to its portfolio, supported by the acquisition and positive rental reversions/ escalations. We maintain our BUY rating on FCOT with a revised fair value of S$0.97, as we incorporate the results into our forecasts.

SG: Keppel Corporation - Strong 1Q12 results; expecting more orders ahead

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.38

KEPPEL CORPORATION 20 April 2012

STRONG 1Q12 RESULTS; EXPECTING MORE ORDERS AHEAD -Strong 1Q12 results -Lumpy performance from Property -Rig enquiries remain healthy

Keppel Corporation (KEP) reported a 86.4% YoY rise in revenue to S$4.3b and a 141.0% increase in net profit to S$750.8m in 1Q12, such that net profit accounted for 48% and 49% of ours and the street's full year estimates, respectively. Excluding lumpy contributions from the property arm, 1Q12 net profit was still above our expectations. KEP's operating margin in the quarter was 22.2%, with O&M turning in EBIT margin of 15.1% vs our expectation of 14%. Meanwhile, enquiries for rigs remain healthy and we expect more newbuilds and upgrading work ahead. Maintain BUY with unchanged S$13.38 fair value estimate.

MARKET PULSE: CMT, KepLand, Cache Log, NOL, United Envirotech (19 Apr 2012)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.02

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.32

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.11

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.38

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.50

MARKET PULSE: CMT, KepLand, Cache Log, NOL, United Envirotech

19 April 2012

KEY IDEA CapitaMall Trust: Enhancement works coming along smoothly CapitaMall Trust (CMT) reported 1Q12 distributable income of S$76.6m (DPU: 2.30 S-cents) which is 4.6% higher YoY. This is broadly in line with our expectations and make up 23% of our FY12 forecast. Topline came in at S$155.2m, up 0.4% YoY. 1Q performances across CMT's portfolio stayed firm; occupancy improved to 96% with pressure coming mostly from the Atrium due to enhancement works. Management also reported that JCube opened on 2 Apr 12, with 99% of NLA committed, and would contribute to earnings from 2Q12 onwards. We continue to like CMT for its AEI execution and believe that valuations remain attractive at current levels. Maintain BUY with an unchanged S$2.02 fair value estimate. (Eli Lee) MORE REPORTS Keppel Land: Chinese residential market still difficult Keppel Land (KPLD) reported 1Q12 PATMI of S$141.9m, up 70% YoY, mostly due to a bumper contribution from Reflections at Keppel after the handover of DPS units. 1Q12 topline was S$170m, down 52% YoY as property trading revenues fell. We judge 1Q12 PATMI (making up 38% of our annual forecast) to be mostly within expectations, given "lumpier" earnings post adoption of INT FRS 115. Grade A office rents fell 3.6% to S$10.60 in 1Q12. Given residual macro risks, we believe it is too early to call a bottom for the domestic office sector - a key driver for KPLD's share price. This risk is balanced out, however, by potential RNAV accretion given ample capital (16% net gearing) and sufficiently attractive valuations. Maintain HOLD with an unchanged fair value estimate of S$3.32 (35% discount to RNAV). (Eli Lee) Cache Logistics Trust: Positive start to FY12 Cache Logistics Trust's (CACHE) 1Q12 DPU of 2.086 S cents was in line with our expectations, forming 25.0% of our full-year estimate. As at 31 Mar, CACHE's portfolio properties remained 100% occupied with a combination of triple-net master leases and multi-tenanted lease structures. Management reiterated that there will be no lease renewal in 2012. This provides a significant amount of earnings visibility and stability. Following the recent private placement, we note that CACHE's aggregate leverage improved from 29.6% as at 31 Dec 2011 to 27.7%. This gives the REIT an estimated S$110m of additional debt headroom for future investment opportunities. Going forward, we believe CACHE will actively seek growth avenues to improve its DPU payout now that it is well capitalized. In the meantime, we understand that the acquisition of Pan Asia Logistics Centre at 21 Changi North Way is due to complete by end Apr. This is likely to provide marginal lift to its income. We make no changes to our forecasts as results were in line. Maintain BUY and S$1.11 fair value. (Kevin Tan) Neptune Orient Lines: Prices 5-year MTN issue at 4.25% Subsequent to Neptune Orient Lines' (NOL) announcement to issue S$-denominated senior notes under its US$1.5b Euro medium term note (MTN) programme, NOL has successfully priced S$400m worth of senior notes at an interest rate of 4.25% per annum. The notes are expected to be issued on 26 Apr 2012 and mature on 26 Apr 2017. NOL said proceeds from this issue will be used for general corporate funding purposes and investments. We maintain our fair value estimate of S$1.38/share and HOLDrating on NOL. (Eric Teo) United Envirotech: Bags two more China projects United Envirotech Ltd (UEL) has won two new projects in China. The first is a Transfer-Operate-Transfer (TOT) project in Shangzhi, Harbin city, Heilongjiang Province; UEL is investing RMB70m (S$14m) for the 30-year concession to operate the 40k m3/day treatment plant, which is expected to operate at full capacity in Jul 2012. UEL plans to fund the investment using proceeds from the KKR convertible bond issue as well as project financing. Separately, UEL won a RMB216m (S$43m) EPC contract to build a 100k m3/day drinking water plant in Yantai City, Shandong Province; the project will commence immediately and is expected to be done by end 2013. We will be speaking with management to get more details. For now, we maintain our BUY rating and we remain positive on UEL winning more contracts; we are placing our S$0.50 fair value under review. (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks fell as Intel and IBM reported slow sales growth and bad loans surged in Spain. The DJIA fell 0.6% and the S&P 500 Index fell 0.4%. Treasuries gained while oil dropped. - Qian Hu registered 1Q12 net profit of S$523k, down 48% YoY due to an oversupply of fish in Malaysia. At S$20.6m, revenue was ~15% lower than the previous year. - Renewable Energy Asia Group has secured approval from the Gansu government for the construction of a 9 MW solar farm. - China Auto Corp's associate, Neftech Pte Ltd, has secured a deal to install a fuel-saving system in the fleet of Pacific International Lines, the 19th largest container ship operator worldwide. - Qingmei Group Holdings expects to post lower 3Q12 sales due to a slowdown in domestic market demand. While 3Q12 profitability may be affected, it is likely to stay in the black for FY12.

Perennial China Retail Trust - Change in major shareholder

Stock Name: PerennialCRT
Company Name: PERENNIAL CHINA RETAIL TRUST

Research House: CIMB

Price Call: BUY

Target Price: 0.65

Target S$0.65

Change of shareholding saw PCRT's local partner offloading his stake in PCRT. Mr Kuok now holds a 17% stake. New additional earn-out amount negotiated with Summit Group buffers this negative news. We take comfort in greater certainty of higher dividend yields till 2014.

Source: CIMB Daybreak - 19 April 2012, Full PDF Report

Keppel Land - Front-end loaded

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 3.43

Target S$3.43

Core net profit was ahead of expectations mainly due to the bumper recognition of proceeds from Reflections, for units sold under DPS. Development bookings should normalise as project completions drop. Meanwhile, new home sales in China have been poor. 1Q12 core EPS forms 35% of our FY12 forecast (above, front-end loaded) and consensus. We make no changes to our estimates. Maintain Neutral with an unchanged target price set at a 25% discount to RNAV.

Source: CIMB Daybreak - 19 April 2012, Full PDF Report

CapitaMall Trust - Back-end loaded year

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: CIMB

Price Call: BUY

Target Price: 1.93

Target S$1.93

No major surprises in 1Q12 with key highlights being sustained positive rental reversions and further colour on completing AEIs this year. We expect a fairly stable 2012, with upside marked by positive rental reversions and AEI completions. 1Q12 DPU was in-line with consensus and our estimates, forming 23% of our full-year estimates. Management retained S$5.4m (1Q11: S$9.5m) in 1Q12. We keep DPUs and DDM-based target price. Maintain Outperform on exposure to resilient suburban retail.

Source: CIMB Daybreak - 19 April 2012, Full PDF Report

SG: CapitaMall Trust - Enhancement works coming along smoothly

CAPITAMALL TRUST 19 Apr 2012

ENHANCEMENT WORKS COMING ALONG SMOOTHLY - 1Q12 distributable income of S$76.6m - Expect reversions to ease ahead - AEIs to drive distribution upside CapitaMall Trust (CMT) reported 1Q12 distributable income of S$76.6m (DPU: 2.30 S-cents) which is 4.6% higher YoY. This is broadly in line with our expectations and make up 23% of our FY12 forecast. Topline came in at S$155.2m, up 0.4% YoY. 1Q performances across CMT's portfolio stayed firm; occupancy improved to 96% with pressure coming mostly from the Atrium due to enhancement works. Management also reported that JCube opened on 2 Apr 12, with 99% of NLA committed, and would contribute to earnings from 2Q12 onwards. We continue to like CMT for its AEI execution and believe that valuations remain attractive at current levels. Maintain BUY with an unchanged S$2.02 fair value estimate.

SG: Keppel Land - Chinese residential market still difficult

KEPPEL LAND 19 Apr 2012

CHINESE RESIDENTIAL MARKET STILL DIFFICULT - Results were broadly in line - Subdued Chinese residential sales - Too early to call office bottom Keppel Land (KPLD) reported 1Q12 PATMI of S$141.9m, up 70% YoY, mostly due to a bumper contribution from Reflections at Keppel after the handover of DPS units. 1Q12 topline was S$170m, down 52% YoY as property trading revenues fell. We judge 1Q12 PATMI (making up 38% of our annual forecast) to be mostly within expectations, given "lumpier" earnings post adoption of INT FRS 115. Grade A office rents fell 3.6% to S$10.60 in 1Q12. Given residual macro risks, we believe it is too early to call a bottom for the domestic office sector - a key driver for KPLD's share price. This risk is balanced out, however, by potential RNAV accretion given ample capital (16% net gearing) and sufficiently attractive valuations. Maintain HOLD with an unchanged fair value estimate of S$3.32 (35% discount to RNAV).