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%.