MARKET PULSE: Suntec REIT, Wilmar (19 Jun 2012)

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.23

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.87

MARKET PULSE: Suntec REIT, Wilmar

19 Jun 2012

KEY IDEA Suntec REIT: Higher DPU from tax transparency status Summary: Suntec REIT announced last Friday that BFC Development Pte Ltd, which owns MBFC Properties, had been successfully converted from a private limited company to a limited liability partnership. As a limited liability partnership is tax transparent for Singapore tax purposes, Suntec REIT will enjoy tax transparency on its share of income from MBFC Properties going forward. This is positive for unitholders as the distributable income is likely to be higher now that the income generated will no longer be subject to corporate tax. We now factor in the DPU uplift from higher contribution from MBFC Properties following the conversion. This in turn raises our DDM-based fair value to S$1.23 from S$1.20 previously. However, as Suntec REIT appears to be fairly priced at current level, we retain our HOLD rating. (Kevin Tan) MORE REPORTS Wilmar: Inexpensive valuations but no catalyst Summary: Wilmar International Limited (WIL) recently saw its share price hit a new 52-week low of S$3.41 on 14 Jun 2012, down 32% from 30 Dec 2011. At its 52-week low, the stock is down 27% since the release of its disappointing 1Q12 results on 10 May; it is also 43% off its 52-week high of S$5.99. while WIL may have been a tad oversold after its 1Q12 results, with current valuations looking pretty inexpensive, we do not see any immediate price catalyst. This as crush margins are likely to remain depressed for the next few quarters. As such, we continue to maintain our HOLD rating and S$3.87 fair value. (Carey Wong)

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NEWS HEADLINES - US stocks ended mixed on Monday after Spanish borrowing costs rose to a record high and Greek political leaders sought to form a pro-bailout coalition following Sunday's election. The S&P 500 Index rose 0.1% while the Dow lost 0.2%. - Genting Hong Kong has bought a 2.8% stake in Echo, an Australian-listed casino company, for A$82.56m (S$106m). This may increase the likelihood of a battle for control of the US$3b company with billionaire James Packer, who holds a 10% stake. - China South City Holdings' has successfully bid for the land use rights of a 263k sqm site in Harbin for ~S$47.8m. The land will be used for develop properties, some of which will be sold and others will be retained for rent. - Sunpower Group has won a RMB39.9m (S$8m) contract to supply high efficiency heat exchangers to one of China's largest utilisation projects of propane and mixed C4. This brings the value of total contracts signed in a month to RMB112m. - ST Engineering has injected ~S$3.1m into Lee Boy India Construction Pte Ltd, in which it has a 97.9% stake that remains unchanged. The cash injection is for capital expenditure purposes.