MARKET PULSE: Venture Corp, Roxy-Pacific, Hyflux, CapitaMall Trust, Lian Beng (4 May 2012)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 9.41

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.45

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: SELL

Target Price: 2.02

Stock Name: Lian Beng
Company Name: LIAN BENG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.47

MARKET PULSE: Venture Corp, Roxy-Pacific, Hyflux, CapitaMall Trust, Lian Beng

4 May 2012

KEY IDEA Venture Corp: Optimism on 2H12 Venture Corp (VMS) reported a 13.7% YoY decline in its 1Q12 PATMI to S$35.5m on the back of a 2.3% drop in revenue to S$574.3m. This was within our expectations, although topline and bottomline formed only 22.3% and 20.6% of our full-year forecasts, respectively. We expect progressive improvement in VMS's business momentum, with FY12 likely to be a back-end loaded year. Management guided that sentiment from its customers remains encouraging, with an anticipated pickup in orders, especially in 2H12. We maintain our projections, BUY rating and S$9.41 fair value estimate. Key risks to our estimates include a sharp deterioration in the macro economy and depreciation of the USD versus the SGD. (Wong Teck Ching Andy) MORE REPORTS Roxy-Pacific Holdings: Marred by lumpy revenue recognition ROXY reported 1Q12 PATMI of S$9.0m, down 10% YoY mostly due to lower development numbers as we await revenue recognition from projects yet to begin construction. With this in mind, we judge 1Q12 results, marred by lumpy recognition, to be broadly on track for our FY12 forecast. 1Q12 topline came in at S$38.1m, similarly down 24% YoY due to the impact from the construction gap. ROXY recently acquired Jade Towers in the Upper Serangoon area, via an en-bloc process, for S$106.27m. We estimate a breakeven cost at around S$1,250 psf and anticipate ASPs of S$1,450 psf. We continue to favor the company for its spot-on execution and note torrid sales conversion at recently launched projects, Eon@Shenton, Natura@Hillview and the Millage. We raise our fair value estimate to S$0.45 (S$0.62 pre-bonus-shares), mostly due to accretion from Jade Towers and a lower RNAV discount of 25%. Maintain BUY. (Eli Lee) Hyflux: 1Q12 earnings below expectations Hyflux Ltd posted its 1Q12 results last evening, with revenue growing 60% YoY to S$138.9m, meeting 23.5% of our full-year estimate; but due to lower gross margin, net profit only grew 4% to S$7.7m, or just 10.3% of our FY12 forecast. By segments, Hyflux continues to derive 92% of its revenue from the municipal sector, up further from the 81% in 1Q11. We believe that the Tuaspring project contributed around S$90.6m (+387%), although slightly shy of the S$112m that we had been expecting. Due to lower margin assumptions, we are paring our FY12 earnings forecast by 14% and FY13 by 11%; this in turn reduces our fair value from S$1.55 to S$1.35 (still based 18x FY12 EPS). Maintain HOLD. (Carey Wong) CapitaMall Trust: Sale of Hougang Plaza for S$84m gain CapitaMall Trust (CMT) announced it has agreed to sell Hougang Plaza to Oxley Bloom Pte. Ltd. for S$119.1m. CMT expects to realize a net gain of S$83.8m, based on the latest book valuation of S$34m as of end-FY11. Hougang Plaza is a 99-year leasehold three-storey shopping mall (NLA 73,353 sq ft) with an occupancy rate of 100% currently and make up about 0.5% of CMT's net property income in 1Q12. At the sale price, we estimate a divestment yield at ~2.0% and expect the new owners to actively explore options for redevelopment. In addition, with S$1.2b of cash already on CMT's balance sheet and its share price trading at a relatively tight yield of 5.5%, we think its deployment of the sales proceeds could shed further light on the odds of making a bid for CMA's stake in the ION ahead. We would speak with management further regarding the sale and, in the meantime, maintain BUY with our fair value estimate of S$2.02 under review. (Eli Lee) Lian Beng Group: Redevelopment JV and acquisition Lian Beng Group (LBG) announced it is forming a joint-venture, Oxley Bloom Pte. Ltd., with Oxley Holdings Limited. Oxley Bloom has received the acceptance of its tender to purchase Hougang Plaza at 1189 Upper Serangoon Road at the purchase price of S$119.1m. Oxley Bloom intends to redevelop Hougang Plaza, which is a 99-year leasehold three-storey neighbourhood shopping mall with a land area of ~57,047 square feet. LBG will finance its share of this investment by internal resources and/or bank borrowings. Separately, LBG also disclosed it has on 30 Apr 2012 completed the acquisition of Sim Hup Co Pte Ltd at a purchase consideration of S$5.38m and Sim Hup is now a wholly-owned subsidiary of the group. Management said both transactions are not expected to have any material impact on its financial performance for the current financial year ending 31 May 2012. We maintain our fair value estimate to S$0.47/share and BUY rating on LBG. (Eric Teo)

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NEWS HEADLINES - US stocks fell as growth in the retail sector was slower-than-expected, with several chains like Target Corp and Gap Inc. missing April sales estimates. The S&P 500 Index dropped 0.8%. - Great Eastern recorded 1Q12 PATMI of S$262.5m, up 65% YoY. Profit from insurance operations had climbed 45% to S$226.4m. - Cerebos posted 1Q12 PATMI of S$25.3m, down 13% YoY. Revenue had climbed 4% to S$241.2m. - Cityspring Infrastructure Trust registered 4Q12 PATMI of S$7.3m, versus a loss of S$7.0m a year ago. Revenue was up 17% YoY to S$129m. - Creative trimmed its 3Q12 loss from US$13m a year ago to US$1.5m. Revenue had decreased by 21% YoY to US$44.9m. - Paper manufacturer UPP Holdings plans to restructure and it may enter infrastructure-related businesses. The focus would be on emerging markets in SEA, especially Myanmar.