MARKET PULSE: Fortune REIT, Roxy-Pacific Holdings (4 June 2012)

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 5.22

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

Research House: OCBC

Price Call: BUY

Target Price: 0.45

MARKET PULSE: Fortune REIT, Roxy-Pacific Holdings

4 June 2012

KEY IDEA Fortune Real Estate Investment Trust: Rents in New Territories grow the fastest HK retail sales grew at 11.4% YoY for April to reach HK$35.7b. While this is slower than the 17.1% YoY increase for March (revised figure), the moderated pace could be partially attributed to the inaugural nationwide Consumption Promotion Month on the Mainland for most of April, which could have reduced average spending by Mainlander tourists in HK. Private retail rents and prices set new highs in March. New Territories, where the majority of Fortune's suburban malls are located, outperformed both HK Island and Kowloon with rents climbing 31% MoM and 24% YoY. We maintain our BUY rating and fair value of HK$5.22. (Sarah Ong) MORE REPORTS Roxy-Pacific Holdings: Progress billings to underpin earnings ahead Despite increasing market uncertainty from European macro concerns, we believe that ROXY's earnings continue to be underpinned by significant progress billings of about S$780m and highlight this is more than five times of FY11 development revenue (S$132.6m). We also note that ROXY's recently launched projects, such as Eon Shenton, The Millage and Natura@Hillview, are converting well into sales, and also expect the MKZ to launch later this year. We continue to like ROXY for its ability to seek accretive land acquisitions, quick turnaround time for projects and efficient sales conversion at recent launches. Execution at Jade Towers would likely be an important catalyst for ROXY's share price ahead. We maintain our BUY rating at an unchanged fair value estimate of S$0.45 with a RNAV discount of 25%. (Eli Lee)

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

NEWS HEADLINES - US stocks started June with more than 2% losses on Friday after a US jobs report showed poor growth in May. The unemployment rate had its first increase in 11 months, climbing from 8.1% to 8.2%. - Gold futures rallied as investors looked for a safe haven and the USD fell on speculation that the weak data could trigger more quantitative easing from the Fed. - SMOE Pte Ltd (a unit of Sembcorp Marine), in consortium with Swiber's JV company, has secured a US$175m contract for offshore engineering and construction work in Indonesia. SMOE's share of work is US$63m out of the entire contract. - GuocoLeisure has established a S$300m Multicurrency Medium Term Note Programme. - LionGold has entered an agreement to acquire a 100% stake in Amayapampa Gold Project in Bolivia for US$7.0m.