MARKET PULSE: CMA, Tiger, SingPost, Sakari (31 Jul 2012)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.85

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.83

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

MARKET PULSE: CMA, Tiger, SingPost, Sakari

31 Jul 2012

KEY IDEA CapitaMalls Asia: Appetite for acquisitions stay strong Summary: CMA would acquire Olinas Mall in Tokyo, close to JR Kinshicho Station, for S$367.3m (JPY 22.8b). The freehold-lease mall has an NLA of 381k sq ft and the acquisition price translates to a psf cost of S$964 per sq ft, with a NPI yield of 6%. In addition, management expects to acquire, from Vanke Real Estate Group, a shopping mall site in Qingdao, China. The mall is expected to have a GFA of 89.7k sqm, with a total development cost of S$294.9m (RMB1,457m). Both acquisitions appear to be fairly priced, in our view, and we see limited RNAV accretion at this juncture. We believe CMA's active acquisition stance, after recent divestments to a new private fund, points to an unabated appetite for portfolio expansion and capital recycling despite current macro uncertainties. Maintain BUY with an unchanged fair value estimate of S$1.85. (Eli Lee) MORE REPORTS Tiger Airways: Recovery gaining traction Summary: Tiger Airways' revenue in 1QFY13 edged 1% higher to S$181m while its net loss narrowed to S$14m, from S$21m a year ago. The increase in revenue was primarily driven by higher passenger yields, while lower average jet fuel prices (JETKSIFC Index) also provided some cost relief. In segmental terms, Tiger Singapore returned to profit for the first time since TGR's flying restrictions in Australia were imposed last year. On the other hand, Tiger Australia's operating losses narrowed to S$21m, from S$23m in 1QFY12, despite having a much smaller operations than a year ago. Furthermore, Tiger Australia is looking good with the ramping up of its operations to 60 sectors/day and the expected peak travel season later this year. Factoring in the improved operations of TGR, we increase its P/B multiple to 3x and our fair value estimate to S$0.83/share, from S$0.76/share previously, and maintain our BUY rating on TGR. (Eric Teo) Singapore Post: Good 1QFY13 showing Summary: Singapore Post (SingPost) reported a 6.5% YoY rise in revenue to S$151.6m but saw a 2.9% fall in net profit to S$38.1m in 1QFY13. Results were in line with our expectations, with net profit accounting for 26.5% of our full year estimates vs 28.1% of the street's estimate. SingPost remained in a net cash position of S$161.4m pending the use of funds raised earlier for investment opportunities. Amidst the uncertain environment for investors, we believe that the defensiveness of SingPost's businesses and its consistently decent dividends translates to a favourable risk-reward ratio for equity investors. In line with its usual practice, SingPost has declared an interim dividend of 1.25 S cents per share, which will be paid on 31 Aug 2012. Maintain BUYwith S$1.14 fair value estimate. (Low Pei Han) Sakari Resources: Shows 2Q12 improvement Summary: Sakari Resources Limited (SRL) reported a decent set of 2Q12 results, with revenue rebounding 5.4% YoY and 26.1% QoQ to US$238.0m. Revenue was boosted by higher sales volumes and steady ASPs of its thermal coal. While net profit tumbled 38.5% YoY to US$23.9m, it jumped 65.6% QoQ. The higher net profit was aided by lower costs, as a result of improved production efficiency, and gross margin also improved to 23.1% from 20.2% in 1Q12. Earnings were boosted by a fair value gain of US$8.3m, which was somewhat offset by an additional US$4.2m assessment for prior years' taxes. For 1H12, revenue fell 8% to US$426.8m, meeting 48.7% of our FY12 forecast, while net profit declined 57% to US$38.4m, or 63.5% of our full-year estimate. SRL declared an interim dividend of US$0.02/share (retaining its 60% payout ratio), though down from US$0.0424 a year ago. SRL will be hosting an analyst teleconference later in the evening. Until then, we place our HOLD rating and S$1.45 DCF-based fair value under review. (Carey Wong)

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NEWS HEADLINES - Two critical central bank meetings (US Fed and ECB) and an unusually heavy load of economic data will be released this week. - Trading in shares of Luye Pharma have been suspended due to low public float. - Tuan Sing Holdings posted 2Q12 net profit of S$11.6m, up more than two-fold from 2Q11. - Cambridge Industrial Trust reported a 13.9% YoY rise in DPU to 1.18 S cents in 2Q12. - Riverstone Holdings delivered a 7.2% YoY increase in net profit to RM11m in 2Q12. Turnover rose due to higher demand for healthcare gloves and recovery in demand for cleanroom gloves. - Trek 2000 International expects to report a loss for 2Q12, mainly due to a one-time write-off of ASIC chips because of a design flaw.