MARKET PULSE: CMA, OSIM, Sheng Siong, Lian Beng, CDLHT (27 Jul 2012)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.85

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.82

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.49

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

Research House: OCBC

Price Call: BUY

Target Price: 0.47

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.04

MARKET PULSE: CMA, OSIM, Sheng Siong, Lian Beng, CDLHT

27 Jul 2012

KEY IDEA CapitaMalls Asia: Chinese retail conditions remain healthy CMA announced 2Q12 PATMI of S$232.0m - up 40.7% YoY mostly due to a S$64.6m divestment gain (net-tax), offset partially by lower revaluation gains. Accounting for one-time items, we estimate 2Q12 core PATMI at S$39.0m which is somewhat below view due to a slower than expected rental income ramp-up in China. Management also declared an interim dividend of 1.625 S-cents, and a formal dividend policy to pay out at least 20% of annual PATMI. 1H12 shopper traffic and tenant sales (psf) in CMA's Chinese malls were up 10.7% and 11.6% YoY respectively, underscoring still healthy retail conditions. We pare our FY12 core PATMI estimate, however, by 16% to account for softer income growth from China. Despite this, our fair value estimate rises to S$1.85 (10% RNAV discount) versus S$1.79 previously, mostly due to stronger valuations for listed holdings. We believe CMA's valuation appears undemanding at this juncture. Maintain BUY. (Eli Lee) MORE REPORTS OSIM International: Special dividend surprise OSIM International Ltd's (OSIM) 2Q12 revenue of S$154.7m (+11.6% YoY) was similar to our forecast, but PATMI of S$22.5m (+20.1% YoY) exceeded our projection by 9.1% due to better-than-expected margins. Another positive surprise came from a special declared DPS of 1 S cent (on top of a 1 S cent/share interim dividend). The stronger bottomline growth was driven by a favourable product mix, better productivity and continued rationalisation of stores. We raise our FY12 and FY13 PATMI estimates by 3.6% and 2.9%, respectively. Despite ongoing concerns over China's slowing economy, we believe OSIM could be a laggard play as it continues to execute well on driving its productivity gains and product innovation. Our new FY12 PATMI estimate implies a robust 26.8% growth over FY11. Reiterate BUY with a revised fair value estimate of S$1.82 (previously S$1.61) as we roll forward our valuations to 14.3x blended FY12/13F EPS.(Wong Teck Ching Andy) Sheng Siong Group: Interim dividend declared There were no surprises in Sheng Siong Group's (SSG) reported 2Q12 results. Revenue grew 5.2% YoY to S$146.9m while net profit inched lower by 2% YoY to S$7m. In terms of SSG's 1H performance, revenue grew 4.6% YoY to S$306.7m and net profit increased 41.5% YoY to S$23.9m to form 47.3% and 54.2% of our FY12 top and bottom-line projections respectively. SSG also declared an interim dividend of 1 cent per share. Going forward, with the increased possibility of Singapore's growth falling below 1% this year, consumer spending as a whole is poised to decline further as consumers tighten up. This scenario should bode well with SSG as consumers transition from F&B spending to eating-in more. As such, we expect revenue growth to hold firm and offset the upward cost pressures from staff wages and rent. Leaving our FY12/FY13 projections unchanged, we maintain our fair value estimate of S$0.49 and BUYrating. (Lim Siyi) Lian Beng Group: Decent performance in 4QFY12 Lian Beng Group (LBG) reported that its 4QFY12 revenue fell 13% YoY to S$111.4m while PATMI remained flat at S$11.5m. LBG's operating margin climbed an impressive 3.6ppt to 14%, but the impact of one-off items resulted in no growth in its PATMI. Management also recommended final and special dividends totalling S$0.02/share. In full-year comparison, LBG's revenue in FY12 fell 12% to S$445.0m but PATMI rose 8% to S$52.1m. Revenue growth in ready-mixed concrete was particularly strong, jumping 83% in FY2012. LBG's order book contracted to S$652m at end-FY12. However, the order book is still robust since it is twice the size of its construction revenue in FY12. We maintain our fair value estimate of S$0.47/share and BUY rating on LBG. (Eric Teo) CDL Hospitality Trusts: 2Q12 roughly in line with expectations CDLHT announced this morning 2Q12 income available for distribution of S$29.8m, which was 17.7% higher YoY. 2Q12 DPU is 2.92 S-cents per share. The results were roughly in line with expectations and YTD DPU of 5.70 S-cents now makes up 47% of our current full-year forecast. 2Q12 revenue rose 6.0% YoY to 38.4m, versus +19.0% for 1Q12. The growth in 2Q12 revenue for CDLHT was due to a 5.9% growth in RevPAR for the Singapore hotels (excluding Studio M Hotel) and the recognition of a full quarter's revenue contribution (91 days) from Studio M Hotel as compared to only 59 days in 2Q 2011. On the other hand, contribution for 2Q 2012 from the Australia hotels was lower by S$0.16m as compared to the year-ago period due to weaker Australian dollar translation for the quarter. We are meeting management later today and, in the meantime, put our Buy rating with a fair value estimate of S$2.04 UNDER REVIEW. (Sarah Ong)

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NEWS HEADLINES - US stocks jumped with optimism following comments by ECB President Mario Draghi that the organization is ready to do whatever it takes to preserve the common-currency union. The Dow climbed 1.67% and the S&P 500 Index rose 1.65%. - Parkson Retail Asia (PRA) has agreed to acquire 41.8% stake in Sri Lanka's leading fashion retailer, Odel PLC, for S$13.6m. The proposed acquisition will trigger a general offer which will result in PRA being the largest shareholder. - GUL Technologies Singapore has reported a 63% YoY increase in PATMI to US$7.45m for 2Q12. Revenue climbed 20% to US$74.24m. - STATS ChipPAC's second quarter net profit plunged to US$8.9m, versus US$19.2m for the year-ago period. Falling revenue was exacerbated by higher labor costs due to currency movements.