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)

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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.