MARKET PULSE: DBS, LMIRT, Roxy, CapLand (06 Aug 2012)

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 15.94

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.45

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.50

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.32

MARKET PULSE: DBS, LMIRT, Roxy, CapLand

06 Aug 2012

KEY IDEA DBS: 2Q earnings were in line with expectations Summary: DBS Group Holdings Ltd posted 2Q12 net earnings of S$810m or 1H net earnings of S$1743m. This was in line with consensus expectation. Net Interest Margin (NIM) fell from 1.80% in 2Q11 and 1.77% in 1Q12 to 1.72% in 2Q12. It declared an unchanged interim dividend of 28 cents. Margin pressure is likely to remain for the rest of the year, but management expects to mitigate this by undertaking a few measures like increasing cross-sell, raising productivity, bringing down its cost-to-income ratio, focusing on further growing several of its key businesses (including SME and Wealth), managing its funding, etc. We have raised our FY12 earnings estimates from S$3138m to S$3252m. Based on the same unchanged 1.3x book, we increased our fair value estimate from S$15.40 to S$15.94. Retain BUY. (Carmen Lee) MORE REPORTS Lippo Malls Indo Retail Trust: Potential asset injection in the near term Summary: Lippo Malls Indonesia Retail Trust's (LMIRT) 1H12 DPU of 1.48 S cents was slightly below our expectations due to larger-than-expect impact from unfavourable forex movement. However, the portfolio operating metrics and outlook remain buoyant. As at 30 Jun, LMIRT's overall occupancy rate remained steady at 94.7% vs. 94.5 in prior quarter. This is significantly higher than Indonesia's retail industry average of 86.7%. We also understand that LMIRT launched two bonds in early Jul. This leads us to believe that another round of acquisitions may be imminent, given that its financial position was already very strong. This may potentially boost LMIRT's DPU going forward. We maintain our BUYrating on LMIRT with revised fair value of S$0.45 (S$0.43 previously) as we tweak our rental assumptions in FY13-14 to reflect better growth outlook. (Kevin Tan) Roxy-Pacific Holdings: Sharp execution on land-banking Summary: Roxy-Pacific announced 2Q12 PATMI of S$17.7m - up 8% YoY. This is in line with expectations and 1H12 PATMI now forms 49% of our FY12 forecast. Management also declared an interim dividend of 0.67 S-cents, which we expect to be recurring due to the strong cash-flow ahead from S$817.2m of progress billings currently. We note sharp execution on land-banking with four en-bloc sites acquired over the last quarter, leading to S$238m of capital being re-deployed into residential land. Previously launched projects are showing strong sales conversion rates, with the exception of Wis@Changi for which management has stopped active marketing with a view to potentially retain the office units for investment income. Maintain BUY rating with an increased fair value estimate of S$0.50 (30% RNAV disc.), versus S$0.45 previously, due to accretion from land acquisitions. (Eli Lee) CapitaLand: An addition to the London hospitality portfolio Summary: The serviced residence business unit of CapitaLand (CAPL), the Ascott Limited, has agreed to acquire a hotel in London, the 230-unit Cavendish London, for GBP158.8m (S$311m). The group expects to convert the asset into a serviced residence under the Ascott brand and rename it the Ascott St James London. The development is located on Jermyn St, in the St. James area of Mayfair, and would increase Ascott's portfolio to seven properties in Central London. At a price of S$1.35m per room, we believe that the price paid is fair and see little accretion to CAPL's RNAV at this juncture. In addition, we also note that CAPL has announced last Friday the establishment of a S$5b Euro Medium Term Note Programme, further increasing its accessibility to the capital markets and enhancing its balance sheet flexibility. Maintain BUYwith an unchanged fair value estimate of S$3.32 (25% discount to RNAV). (Eli Lee)

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NEWS HEADLINES - US stocks jumped on Friday with better-than-expected July jobs data and optimism that the ECB may restart its bond purchasing programme. The Dow rose 1.7% to 13,096.17. The S&P 500 index climbed or 1.9% to 1,390.99. - LionGold Corp Ltd has, as at 2 Aug, received valid acceptances of ~59% of the issued and paid-up capital of Castlemaine Goldfields Limited, which is listed on the Australian Stock Exchange. - United Industrial Corporation posted 2Q12 revenue of S$139m, down 41% YoY. PATMI declined 46% to S$82m. - Global Invacom Group has acquired a 100% stake in The Waveguide Solution Limited, a UK microwave waveguide transmission specialist, for £4.75m (~S$9.27m). - Oakwell Engineering Limited has agreed to dispose its 51% stake in the issued share capital of Oakwell-Breen Pte Ltd for a consideration of S$2.3m.