MARKET PULSE: CACHE, CDLHT, CMA, STX-OSV, Dyna-Mac (02 Jul 2012)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.04

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.76

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.34

MARKET PULSE: CACHE, CDLHT, CMA, STX-OSV, Dyna-Mac

02 Jul 2012

KEY IDEA Cache Logistics Trust: Beefing up market position Summary: Cache Logistics Trust (CACHE) had received approval from unitholders pertaining to the proposed acquisition of Pandan Logistics Hub and the entry of a master lease agreement with CWT Limited. With the addition of this prime logistics property, CACHE will have 12 quality assets under management and an enlarged GFA of ~4.83m sq ft. CACHE also embarked on a capital management exercise to enhance its debt profile, consistent with our expectations. Notably, the effective interest rate for the new bank facility is 2.8% plus SOR, which is at 30bps below its existing rate of 3.1% plus SOR. Hence, CACHE is likely to gain from interest savings going forward. We are reiterating our BUYrating on CACHE. Our fair value is raised from S$1.11 to S$1.18, after we incorporate the acquisition of Pandan Logistics Hub and interest savings into our model. (Kevin Tan) MORE REPORTS CDL Hospitality Trusts: Garden of Supertrees Summary: Gardens by the Bay, officially opened last Thursday and the new Marina Bay Cruise Centre will solidify Marina Bay as a key tourist cluster to complement Sentosa. STB has a target of 17m visitor arrivals by 2015, implying a growth rate of 6.6% p.a. from 2011. Even with a "leakage" from the conversion of visitor arrivals into hotel rooms nights because cruise passengers are much less likely to book hotel rooms, we estimate that hotel room demand will grow by an enviable 6.4% p.a., easily outstripping the growth in hotel rooms, which we estimate at 3.7% p.a. The 6.4% estimate conservatively assumes no change in hotel room nights per hotel guest. We maintain a BUY rating on CDLHT and our fair value of S$2.04. (Sarah Ong) CapitaMalls Asia: Established USD1b China Development Fund III Summary: CapitaMalls Asia (CMA) announced today that it has established a USD1.0b CapitaMalls China Development Fund III (CMCDF III). CMCDF III would have a fund life of eight years, and would primarily invest in retail properties in China. CMA would hold a 50% stake amounting to USD500m; remaining stakes are held by institutional investors from Asia and North America. The fund would own three CMA shopping malls, currently under development, as seed assets. These are CapitaMall Tianfu (Chengdu), CapitaMall Meilicheng (Chengdu), and the Luwan integrated development (Shanghai). We would speak with management further on this development today, and in the meantime, maintain our BUY rating with an unchanged fair value estimate to S$1.76. (Eli Lee) STX OSV: Secured NOK 500m contract with Island Offshore Summary: STX OSV announced that it has secured new contracts with Island Offshore for the construction of two Platform Support Vessels (PSVs). The total contract value is approximately NOK500m (USD80m). Deliveries are scheduled from STX OSV Brevik in Norway in 4Q13 and 2Q14. Year-to-date, STX OSV has secured about NOK7.2b worth of contracts, forming about 65% of our full-year estimates (NOK11b). Maintain BUY with an unchanged S$2.00 fair value estimate. (Chia Jiunyang) Dyna-Mac Holdings: Acquisition of Chinese fabrication yard Summary: Dyna-Mac Holdings Ltd (DMH) announced that it has entered into an agreement to purchase 70% of the paid up capital of Paliy Marine Engineering Pte Ltd (PME) for S$3.8m. PME operates a fabrication yard of about 100,000 sqm in Guangzhou City and has been engaged in the fabrication of structural blocks for semi-submersibles over the past three years. In FY11, PME recorded a net profit of RMB5.4m (or S$1.1m) compared to DMH's S$5.6m (for seven months ended 31 Dec 2011*). We will speak with management to understand more about the acquisition. In the meantime, we put our Hold rating and S$0.34 fair value estimate UNDER REVIEW. (Chia Jiunyang)

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NEWS HEADLINES - US stocks jumped on Friday after Europe agreed on actions to boost the economies of its more troubled nations. The S&P 500 Index and the Dow climbed 2.5% and 2.2% respectively. - Popular Holdings' revenue for FY12 rose 8.6% to S$567.3m and PATMI jumped 92.5% to S$29.6m. - Creative Technology expects its revenue for 4Q12 to come in below target, at ~US$35m, primarily due to lower than expected demand in Europe. As previously announced, the company expects to report an operating loss for the quarter. - Catalist-listed EMS Energy is acquiring a 23.98% stake in Nosco-Vinalines Ships Repair Company, which is constructing the biggest ship repair yard in Vietnam. EMS will fund the stake through a rights issue and proposes to raise up to S$16.4m.