MARKET PULSE: Swiber, Suntec REIT (18 Jun 2012)

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.20

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.63

MARKET PULSE: Swiber, Suntec REIT

18 Jun 2012

KEY IDEA Swiber Holdings: Likely contract win of US$200m Summary: According to Upstream, Swiber's Indonesian unit, PT Rajawali Swiber Cakrawala (PTRSC), has won a contract worth close to US$200m linked to ConocoPhillips' South Belut subsea development in Indonesia. However, we estimate the parent's share of the contract to be much lower, as Swiber recently divested a 23% stake in PTRSC. The group has been successful in clinching contracts, which have generally provided short-term support on the share price but have yet to reverse its longer-term decline. However, we estimate Swiber's order book has exceeded US$1.7b which provides greater earnings visibility. We have tweaked our estimates to incorporate our contract wins target of US$950m for this year, bumping up our fair value estimate to S$0.63 (prev. S$0.61). Maintain HOLD. (Low Pei Han) MORE REPORTS Suntec REIT: MBFC Properties obtains tax transparency Summary: Suntec REIT announced last Friday that BFC Development Pte Ltd (BFCD PL), which holds MBFC Properties, has been successfully converted from a private limited company to a limited liability partnership with the name BFC Development LLP (BFCD LLP). This is positive news as unitholders will now enjoy tax transparency on Suntec's share of income from MBFC Properties. This means that the distributable income may be higher as the income generated from MBFC Properties will not be subject to corporate income tax at BFCD LLP level. We understand that Suntec REIT, which held one-third interest in BFCD PL, will continue to hold one-third interest in BFCD LLP as a partner after the conversion. We will be speaking to management to get more details on the impact of the conversion. For now, we put our Hold rating and S$1.20 fair value under review. (Kevin Tan)

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