MARKET PULSE: Fortune REIT, SIA Engineering (31 Oct 2012)

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.14

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 6.63

MARKET PULSE: Fortune REIT, SIA Engineering

31 Oct 2012

KEY IDEA Fortune REIT: 9M12 DPU up 23% YoY 9M12 DPU grew 23.1% YoY, representing the highest rate of growth in the REIT's nine-year history. The results are in line with our expectations, with 9M12 DPU of 23.98 HK cents forming 74% of our prior FY12 DPU estimate. 9M12 revenue increased by 21.1% to HK$822.1m. The 20.7% increase in 9M12 NPI to HK$581.4m can be broken down into an 11.6% increase from the two new properties acquired in mid-Feb and a 9.1% increase from the original portfolio due to strong reversion and AEI. The average rental reversion clocked was impressive at 20.1%, among the highest level in years. At an NAV per unit of HK$8.32, FRT is trading at 0.7x NAV, significantly below the retail S-REITs average of ~1.1x. Gearing remains fairly low at 24.6%. Rolling forward our DDM model to FY13, we raise our fair value from HK$6.49 to HK$6.63 and maintain our BUY rating on FRT. We believe that the FY13F DPU yield is attractive at 5.6%. (Sarah Ong) MORE REPORTS SIA Engineering: 1HFY13 results in line SIA Engineering Co Ltd's (SIAEC) 1HFY13 financial results were generally in line with our expectations. Diluted EPS for 1HFY13 was 12.37 S cents, 48% of our FY13F estimate of 25.6 S cents. Revenue climbed by 6.4% YoY to S$585m, attributable mainly to revenue from materials, fleet management program and line maintenance. Operating margin declined 1.4ppt from 1HFY12 to 11.1% in 1HFY13 because of higher material cost, exchange loss, and increase in subcontract and staff costs. 1HFY13 PATMI declined 1.5% YoY to S$137.2m chiefly because profit for the period a year ago included a S$3.1m write-back of tax provision. Rolling our valuation forward, we increase our fair value estimate from S$4.04 to S$4.14 and maintain our HOLD rating on SIAEC. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stock markets were shut for a second day due to Hurricane Sandy. Separately, US home prices rose 2% in Aug, the fastest growth since Jul 2010, according to the S&P/Case-Shiller index. - Indofood Agri Resources' 3Q12 PATMI rose 22% YoY to IDR258b, on the back of an 8% increase in revenue to IDR3.54t, due to higher palm products sales and contribution from its sugar operations. - Rickmers Maritime's 3Q12 net profit fell 26% YoY to US$8.2m, as revenue slid 5% to US$36.3m, mainly due to a lower charter rate for one of its vessels. It maintained its DPU at 0.6 US cents, unchanged from a year ago. - Mun Siong Engineering's 3Q12 PATMI fell 35% YoY to S$1.2m, despite an 18% rise in revenue to S$22.4m, due mainly to higher staff and raw material costs. - Creative Technology reported a 1Q13 net loss of US$4.5m, smaller than the US$29.6m loss a year ago, despite a 29% YoY slide in sales to US$35.7m, as it benefited from foreign-exchange gains.

MARKET PULSE: Starhill Global, SingPost, Tiger Airways, CDL Hospitality, Sakari Resources

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.84

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.20

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.81

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 2.06

MARKET PULSE: Starhill Global, SingPost, Tiger Airways, CDL Hospitality, Sakari Resources

30 Oct 2012

KEY IDEA Starhill Global REIT: AEI activity came to fruition Starhill Global REIT (SGREIT) turned in an encouraging set of 3Q12 results yesterday. While we have expected Wisma Atria retail mall to put on a good showing following the completion of asset redevelopment works, the 24.3% increase in NPI for the segment came in stronger than expected, thanks to positive rental reversions and full committed occupancy at the mall. Wisma Atria office segment, we note, also performed well, raking up 15.2% growth in NPI. In addition, overall portfolio occupancy remained very healthy at 99.4%, with a weighted average lease term (by NLA) of 7.3 years. As mentioned in our Sep report, SGREIT had secured the refinancing for its existing A$63m term loan which matures in Jan 2013. With that, SGREIT has no debt refinancing requirement until Sep 2013. We are tweaking our forecasts to factor in stronger rentals at Wisma Atria. This lifts our fair value from S$0.79 to S$0.84. Maintain BUY. (Kevin Tan) MORE REPORTS Singapore Post: 2QFY13 results in line Singapore Post (SingPost) reported a set of in-line results with revenue rising 9.1% YoY to S$153.7m and net profit increasing 7.3% to S$32.9m in 2QFY13, such that 1HFY13 net profit accounted for 49.3% and 52.5% of ours and the street's full year estimates, respectively. Revenue grew in all three business segments of mail, logistics and retail. Rental and property-related income, however, declined by 7.0%. As expected, margins are slightly lower; we expect margins to be weighed down by cost pressures and higher revenue contribution from the lower-margin logistics business. This may be offset by cost management initiatives undertaken by SingPost. In line with its usual practice, the group has declared an interim dividend of 1.25 S cents per share for the quarter. At current price levels, we expect a dividend yield of 5.4% in FY13F. We currently have a BUY rating on the stock, but put our fair value estimate of S$1.20 under review. (Low Pei Han) Tiger Airways: Divestment of Tiger Australia Tiger Airways (TGR) released its 2Q13 financial results this morning, which came in below expectations as we were anticipating a small net profit over another loss-making - albeit narrowing - quarter. TGR's 2Q13 revenue rose by 78.9% YoY to S$196.7m while its net loss narrowed to S$18.3m, from S$49.9m a year ago as Tiger Australia continues to ramp up services to pre-suspension levels. In terms of segments, Tiger Singapore's revenue grew 32.9% YoY to S$133m, outpacing increases in operating costs following higher passenger yield and traffic to record an operating profit of S$4.8m for 2Q13. On the other hand, Tiger Australia registered a lower operating loss of $20.0m for 2Q13 versus S$27.2m a year ago. In a separate announcement, TGR announced the proposed divestment of 60% of Tiger Australia to Virgin Australia and the entering of a joint venture between both parties to manage Tiger Australia. The move will allow TGR to dispose a substantial chunk of the loss making entity whilst allowing it to retain a presence in Australia. In a related move, SIA - the parent company of TGR - will invest a 10% stake in Virgin Australia. We will be attending the 2Q13 results briefing later this morning and will provide more updates subsequently. In the meantime, we place our fair value estimate of S$0.81 and HOLD rating on TGR UNDER REVIEW. (Lim Siyi) CDL Hospitality Trusts: 3Q12 below our expectations CDL Hospitality Trusts reported 3Q12 gross revenue of S$36.1m which was 0.8% lower YoY. Net property income contracted 1.1% YoY to S$33.6m. CDLHT's Singapore hotels saw a slowdown due to the weak global economic environment and the fixed rent contribution from the Australia hotels was slightly lower YoY due to translation loss arising from the weakening AUD. Income available for distribution per stapled security, after deducting income retained for working capital, declined by 1.8% YoY to 2.72 S cents. 3Q12 average room rates for the Singapore hotels stayed flat at S$236 but occupancy fell from 89.5% in 3Q11 to 88.6%. RevPAR declined 0.9% YoY to S$209. 9M12 income available for distribution per stapled security, after deducting income retained for working capital, is 8.42 S cents, 71% of our prior FY12 estimate of 11.9 S cents (which we will be lowering as we expect 4Q12 to be weak too). While we had expected 3Q12 to be poor for the hospitality sector, the results are below our expectations. We maintain our HOLD rating on CDLHT and will be adjusting our fair value of S$2.06. (Sarah Ong) Sakari Resources: PTT has 90.2% stake Sakari Resources posted 3Q12 revenue of US$270.4m, +21% YoY and 14% QoQ, aided by higher production at both its mines at Sebuku and Jembayan. Despite the lower coal ASPs, better efficiency led to an improvement in operating margins; but it was a tax credit of US$31m which led to its net profit jumping 52% YoY and 135% QoQ to US$56.3m. However, if we strip out the tax credit, we estimate that core earnings would have come in at around US$25.3m, or down 32% YoY (+6% QoQ). Separately, PTT has increased its stake to 90.2% by the end of the offer on 22 Oct. In view of the reduced liquidity, we are suspending coverage on the counter. (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US consumer spending rose a seasonally adjusted 0.8% MoM in Sep, faster than the 0.5% rise in Aug. US stock markets were shut because of Hurricane Sandy. - Eu Yan Sang International's 1Q13 PATMI fell 92% YoY to S$341,000 despite a 16% YoY rise in revenue to S$70.6m, largely due to higher operating expenses in Australia and higher rentals in its core markets. - First Ship Lease Trust reported a 3Q12 loss of US$186,000 compared to a profit of US$152,000 a year earlier as revenue declined 6.5% YoY to US$26.7m, due mainly to payment defaults and lower rentals on vessel leases. - Sing Investments & Finance's 3Q12 PATMI fell 66% YoY to S$3.3m as net interest income and hiring charges slid 8.6% to S$7.4m. The profit decline was mainly due to the absence of S$8m in write-backs for loan losses compared to a year ago. - Foreland Fabrictech expects to report a loss for 3Q12 due to a slowdown in the textile industry and sluggish demand for high-grade textile products.

MARKET PULSE: CMA, NOL, CCT, Ezra, FCOT, Suntec REIT, MMH (29 Oct 2012)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.16

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.62

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.30

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.31

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

Research House: OCBC

Price Call: BUY

Target Price: 1.70

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

MARKET PULSE: CMA, NOL, CCT, Ezra, FCOT, Suntec REIT, MMH

29 Oct 2012

KEY IDEA CapitaMalls Asia: 3Q12 results above view Summary: CMA reported 3Q12 PATMI of S$63.4m - up 70.8% YoY mostly due to Minhang and Hongkou contributions and increased management fees. We judge this set of results to be above consensus and our expectations, and 9M12 core PATMI, excluding extraordinary items, now make up 83% of our FY12 forecast, driven by faster than expected revenue growth at Minhang and Hongkou and a S$7.3m QoQ dip in admin expenses as mall-opening costs eased. We expect increased visibility of recurring earnings, as a larger component of CMA's portfolio becomes operational, and relatively firm retail outlooks in China and Singapore to be positive drivers of its share price ahead. Maintain BUY with an increased fair value estimate of S$2.16 from S$1.85 previously as we update for valuations of REIT holdings and reduce the RNAV discount to par (from 10% previously). (Eli Lee) MORE REPORTS Neptune Orient Lines: Outlook promising Summary: Neptune Orient Lines (NOL) finally reported a profitable 3Q12 after six consecutive quarterly losses. Its revenue grew 4.0% YoY to US$2.3b (vs. +6% forecast) on higher volumes while its core EBIT improved to US$74m - a much better showing versus-US$72m in 3Q11 and marginal gains of US$16m in the previous quarter. The better performance came largely on the back of significant cost savings from its Efficiency Leadership Programme (ELP) as freight rates remained lacklustre despite the peak season impact. With this improved result, we narrow our net loss projections for FY12 as we anticipate 4Q12 rates to hold up well, capacity management efforts by the industry to continue, and bunker fuel rates to remain capped at current levels. Maintain BUY with an unchanged fair value estimate of S$1.38. (Lim Siyi) CapitaCommercial Trust: Average portfolio rentals up Summary: CapitaCommercial Trust (CCT) reported 3Q12 distributable income of S$57.9m - up 11.9% YoY mostly due to contributions from Twenty Anson, higher revenues from portfolio assets and yield protection income from One George Street (OGS). This is mostly in line with expectations and we note 9M12 distributable income now makes up 75% of our FY12 forecast. As indicated in our last two reports, we have been expecting an uptick in office fundamentals and believe this was mostly validated by CCT's 3Q portfolio data-points: 1) occupancy edged up QoQ to 97.1% in 3Q12 from 96.2% in 2Q, and 2) average portfolio rent increased to S$7.53 psf - the first increase seen after seven consecutive quarters of decline from 4Q10. Maintain BUY with an increased fair value estimate of S$1.70, versus S$1.62 previously, as we update our model for firmer rental numbers and cap rates. (Eli Lee) Ezra Holdings: Monitoring operating costs Summary: Ezra Holdings reported a 49% YoY rise in revenue to US$326.3m but saw a 41% decrease in net profit to US$7.3m in 4QFY12, such that full year net profit of US$65m was ~15% below our full year estimate. Core net profit of US$15.7m accounted for 90% of our estimate. This was partly due to higher administrative expenses and a higher tax rate. We expect admin expenses to remain elevated going forward. On a more positive note, management expects an increase in margins in FY13 as offshore support and subsea vessel utilisation rises, along with higher margins for new contracts. The group has a total bid book of US$4.4b, in which a significant portion is expected to be awarded in FY13. After adjusting our estimates and accounting for the listing of Triyards, our fair value estimate for Ezra drops to S$1.30. Maintain BUY. (Low Pei Han) Frasers Commercial Trust: A brand new start Summary: Frasers Commercial Trust (FCOT) reported a strong set of 4QFY12 results that were within our expectations. FCOT also announced the completion of divestment of its Japan properties, after months of market anticipation. We view the transaction positively because the divestment would improve its portfolio occupancy and weighted average lease to expiry. More importantly, gearing ratio is expected to drop from 36.8% to 28.6%, with no debt maturing until FY15. This will significantly strengthen its financial position and flexibility, and aid FCOT in seeking the release of two properties from its securitized pool. Regarding the space vacated by MMC at China Square Central (CSC), FCOT also updated that 76% of the space has been re-leased, including 49,000 sqft by GroupM starting Apr 2013. Going forward, FCOT intends to embark on Phase 2 of refurbishment works at CSC by end-2012, which should further enhance its positioning. We are positive on FCOT's transformation, strong execution and growth potential in FY13. Maintain BUY on FCOT with an unchanged fair value of S$1.31. (Kevin Tan) Suntec REIT: Strong execution paid off Summary: Suntec REIT delivered a good set of 3Q12 results, in our view. Despite the partial closure of Suntec Singapore and Suntec City Mall for Phase 1 of the asset enhancement works (AEI) and divestment of Chijmes, DPU only showed a 7.2% YoY dip to 2.35 S cents. For 9M12, DPU totalled 7.164 S cents (-3.9%), forming 78%/77% of our/consensus full-year DPU forecasts. We note that office segment continued to be the star performer in 3Q, registering a 10.3% YoY growth in revenue to S$31.4m amid positive rental reversions. In particular, Suntec City Office achieved its second consecutive quarter of full occupancy. Leasing demand had also been strong, as evidenced by the average contracted rent of S$8.96 psf pm secured for the quarter (vs. S$8.71 in 2Q). On its Suntec City AEI, Suntec REIT reiterated that the Phase 1 works is on schedule for completion by 2Q13. We understand that pre-commitment for Phase 1 NLA improved to 71.2% from 58.5% in 2Q, and projected ROI of 10.1% remains on track. We are upgrading Suntec REIT to BUY with a revised fair value of S$1.70 (S$1.45 previously). (Kevin Tan) Micro-Mechanics: 1QFY13 results below expectations Summary: Micro-Mechanics Holdings (MMH) reported 1QFY13 results which fell short of our expectations. Revenue declined 4.6% YoY to S$9.9m, or 8.0% lower than our forecast. This was MMH's sixth consecutive quarter of YoY sales decline. Net profit slid 5.6% to S$1.2m and was 12.4% short of our projection due to weaker-than-estimated revenue and higher effective tax rate, although this was partially offset by better-than-expected gross margin. Sequentially, revenue and net profit fell 4.3% and 13.4%, respectively. Both of MMH's core segments registered YoY decline in revenue, with its Custom Machining & Assembly (CMA) division causing a bigger drag once again. Sales for this division dipped 18.4% YoY to S$1.3m, but what surprised us was the -2.4% gross margin recorded during the quarter (1QFY12: 4.8%). We would likely reduce our forecasts, and will provide more details after speaking with management. However, we believe that MMH would still report growth in both its topline and bottomline for FY13 given the low base in 2Q and 3Q FY12. For now we have a HOLDrating and S$0.325 fair value estimate on the stock. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks ended Friday with weekly losses after weak earnings reports and bleak forecasts added to worries about the world economy. The Dow inched up 0.03% on Friday to close at 13,107.21, while the S&P 500 Index slid 0.07% to 1,411.94 and the Nasdaq finished 0.06% higher at 2,987.95. - Mermaid Maritime won a US$530m subsea services contract through a joint venture, with its revenue share estimated at 60%-70% of the contract value. Separately, Mermaid associate Asia Offshore Drilling won a US$236.5m drilling contract. - Koh Brothers Group agreed to buy a 41% stake in Metax Engineering for S$8.2m as it sees growth potential in Metax's business and possible synergies with its own. Metax said the investment would strengthen its financial position and help it bid for more capital-intensive projects.

UOBKH - Ho Bee on trading halt - Potential divestment of Hotel Windsor.

Stock Name: Ho Bee
Company Name: HO BEE INVESTMENT LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.86

Ho Bee has announced a trading halt. We believe it could be linked to potential sale of the Hotel Windsor in Macpherson Area (Nobel design one of the party hinted at buying the asset is also on halt).

Hotel Windsor is a mix of retail/hotel space with first 9 storey comprising of a retail podium and 225 hotel rooms on the upper floor levels with a total GFA of about 156,638 sqft. In our model we are conservatively valuing the asset at S$64m which accounts to ~3% of its RNAV(S$1.9b) and 4% of its book value(S$1.7b). Media sources has reported the selling prices of about S$163m, which if goes through will result in an accretion of 14 S cents or a 5% accretion to our current RNAV of S$2.67/share. We don't expect any special dividends from the sale(despite low gearing of 0.26x) considering volatile macro environment and expect funds to be pumped back into acquisition of Singapore commercial or overseas properties(mainly China).

Maintain BUY with a target price of S$1.86/share pegged at 30% discount to RNAV of S$2.67/share. Ho Bee is trading at a deep discount of 0.65x P/B and 45% discount to its RNAV and it's one of our top pick in the property sector.


Warm Regards,

Brokers raise NOL target after first profit in 7 quarters

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.46

Several brokers raised their target prices on Neptune Orient Lines after the container shipping firm swung to a net profit for its third quarter, breaking six consecutive quarters of losses.

NOL posted a net profit of US$50 million ($61 million) for the three months ended September, compared to a net loss of US$91 million a year earlier, helped by cost cuts as well as improvements in its liner and logistics businesses.

NOL shares were down 0.9% at $1.16 on Monday. The stock has risen 3% so far this year, underperforming the 15% gain in the broader Straits Times Index.

“We take NOL’s first net profit in seven quarters as a firm sign of a turnaround in the sector. 2014 will provide the plump rewards for shipping lines able to endure a potentially challenging 2013 supply situation,” Maybank Kim Eng said.

The broker raised its target price to $1.46 from $1.35 and maintained its ‘buy’ rating.

UOB Kay Hian said carriers are likely to push through Asia-Europe rate increase of US$500 per twenty-foot equivalent unit from Nov. 1. Carriers’ capacity discipline remains intact, which will help sustain the rate hike, UOB said.

NOL has agreed to sell its office building to Fragrance Group for $380 million and will book a one-off gain of $246 million, the broker noted. UOB upgraded NOL to ‘buy’ from ‘hold’ and raised its target to $1.54 from $1.26.

DBS Vickers increased its target to $1.26 from $1.23 andmaintained its ‘hold’ rating. It warned that NOL’s profitability may not be sustained in the following quarters, citing high fuel prices and disappointing trade data from Europe.

DBS expects NOL to report a core net loss of US$217 million in 2012 fiscal year, while lowering its 2013 net profit estimate by 10% to US$178 million.

HPHT down 3.05%; 3Q12 results disappoint: Barclays

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: Barclays

Price Call: HOLD

Target Price: 0.73

Hutchison Port Holdings Trust is down 3.05% at US$0.795 after reporting 3Q12 net profit fell 15.1% on-year to HK$601.7 million, with results around 13% below HPHT’s prospectus projection amid weak US and Europe trade demand.

Barclays says the results were disappointing, hurt by rising cost pressures and modest revenue growth amid falling average tariffs even as overall volumes rose; it notes 9M12 net profit lags at only 68% of its FY12 estimate. Barclays expects flat on-year average tariffs, but sees increasing downside risks; it finds the cost inflation concerning as HPHT has a relatively fixed asset base and slow container-volume growth is expected for the next 1-2 years.

“We see increasing risk to 2013 DPU as management highlighted in the call that delaying capex to fund the DPU will likely not to be an option in 2013.” It adds, “while we expect HPHT’s profitability to remain resilient, given the strong pricing power at Yantian, we see better value in other Chinese port names at current levels.”

It notes HPHT has outperformed peers Cosco Pacific and China Merchants year-to-date. It rates HPHT Equalweight with US$0.73 target. The stock remains up 28.2% year-to-date; the US$0.73-US$0.75 zone, where several moving averages lie, may offer near-term support.

MARKET PULSE: Cache, First REIT, LMIRT, Sheng Siong, SIA, CRCT (25 Oct 2012)

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.30

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.98

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.47

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

Research House: OCBC

Price Call: BUY

Target Price: 0.49

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.85

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.71

MARKET PULSE: Cache, First REIT, LMIRT, Sheng Siong, SIA, CRCT

25 Oct 2012

KEY IDEA Cache Logistics Trust: Strong predictable showing Cache Logistics Trust (CACHE) turned in a good set of 3Q12 results that were consistent with our expectations. DPU for the quarter edged up 2.3% to 2.144 S cents, notwithstanding an enlarged unit base from private placement done in end-Mar. As at 30 Sep, portfolio occupancy remained at 100%, while weighted average lease to expiry stood sturdy at 4.1 years. CACHE's financial position has also remained healthy. While aggregate leverage increased from 27.5% in 2Q to 32.6%, all-in financing costs improved from 4.38% to 3.57%, thanks to refinancing exercise at the end of 2Q. In addition, this has also improved its debt maturity profile and increased the amount of committed line of funding, thereby strengthening its financial flexibility significantly. We are leaving our forecasts intact as the results had panned out according to our estimates. However, we raise our fair value slightly from S$1.26 to S$1.30 on firmer cap rate assumptions. Maintain BUY. (Kevin Tan) MORE REPORTS First REIT: Another quarter of steady execution First REIT (FREIT) reported 3Q12 results which were in line with our expectations. Gross revenue increased 3.7% YoY to S$14.2m due to higher contribution from all its properties. Distributable amount to unitholders and DPU slipped 12.1% and 12.5%YoY to S$10.6m and 1.68 S cents respectively, but this was due to the absence of a special distribution which occurred in 3Q11. Looking ahead, FREIT continues to see ample growth opportunities in Indonesia's underserved healthcare market. The group would seek approval from its unitholders during an EGM for its proposed acquisition of two Indonesian properties from its sponsor Lippo Karawaci. While we like FREIT for its visible and defensive income streams which would provide stability to unitholders, we believe that this has been factored in its share price, as reflected by its FY13F P/B ratio of 1.3x. Maintain HOLD with an unchanged fair value estimate of S$0.98. (Wong Teck Ching Andy) Lippo Malls Indonesia Retail Trust: Proposal for two more acquisitions LMIRT has announced the proposed acquisitions of two retail properties, Pejaten Village, located in Jakarta, and Binjai Supermall, located in Binjai, North Sumatra. The purchase consideration for Pejaten Village is IDR748.0b (~S$96.0m). The purchase consideration for Binjai Supermall is IDR237.5b (~S$30.5m). Apart from the financing the acquisitions from the proceeds raised from the issuance of S$250m worth of notes in early Jul, LMIRT will need to raise additional funds. These two proposed acquisitions come shortly after the announcement of the proposed acquisitions of four properties on 10 Oct. The completion of the acquisitions of Palembang Square Extension and KJI took place on 15 Oct, half a month earlier than what we expected. Adjusting our model, we raise our fair value from S$0.45 to S$0.47, and maintain our HOLD rating on LMIRT. (Sarah Ong) Sheng Siong Group: The ascension continues Sheng Siong Group (SSG) registered a stellar set of 3Q12 results that came in well within our expectations. 3Q12 revenue grew 16.0% YoY to S$169.7m on the back of higher comparable same store sales and increased number of stores while net profit jumped 48.1% YoY to S$9.8m on operational efficiencies with the new Mandai Link Distribution Centre. SSG also recorded a third consecutive quarter of gross profit margin recovery (3Q12: 22.9% vs. 2Q12: 21.9%). Entering the seasonally weaker 4Q12, SSG will add an additional two stores in Ghim Moh and Clementi - locales with minimal competition and sizeable resident populations - and will end the year with 33 stores. With favourable responses to its store openings, we expect SSG to close out the year on a strong note. Maintain BUY with an unchanged fair value estimate of S$0.49. (Lim Siyi) Singapore Airlines: Spends US$7.5b to increase fleet As part of its efforts to maintain a young and modern fleet, SIA announced yesterday that it will spend US$7.5b on five Airbus A380s and 20 A350s (delivery of the new planes to begin in 2017), which will bring its total firm purchases and lease orders in place with Airbus and Boeing to 68 new wide-body aircraft. However, as part of this new order, Airbus will acquire SIA's five A340s. These planes are currently deployed in the non-stop, long-haul flight sectors between Singapore and the United States (Newark, New Jersey and Los Angeles, California respectively), and their impending removal will mark the cessation of these services in 4QCY2013 although services to the US will still be available via Tokyo and Frankfurt. On a related note, SIA also announced that it will transfer 20 B787 planes on firm order (due for delivery from 2014) to its low-cost subsidiary, Scoot, to aid in its expansion growth and to replace its existing B777 fleet. While the order is a sizable one, we are neutral on its impact given the delivery timeframe of the planes. Pending its 2QFY13 results release on 2 Nov, we maintain our HOLD rating with an unchanged fair value estimate of S$10.85. (Lim Siyi) CapitaRetail China Trust: Private placement of 57m units CRCT has announced the private placement of 57m new units, raising gross proceeds of ~S$86.1m. The private placement was upsized from the original offer of S$75.0m, due to strong demand from over 30 existing and new investors from Asia, the United States and Europe. In connection with the private placement, the manager of CRCT intends to declare an advanced distribution of CRCT's distributable income for the period from 1 Jul to 1 Nov 2012, the day immediately prior to the date on which the new units will be issued, to existing unitholders of CRCT. The new units will not be entitled to the advanced distribution. The issue price of S$1.51 per new unit represents a discount of ~5.8% to CRCT's adjusted volume weighted average price of S$1.603 per unit on the full market day on 24 Oct 2012 and subtracting the advanced distribution of approximately 3.22 S cents per unit. The manager of CRCT says that the private placement strengthens the balance sheet and provides greater capacity for potential growth opportunities. We place our fair value of S$1.71 and Buy rating UNDER REVIEW. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks extended their losses on Wednesday, with the Dow falling 0.2%, while the S&P500 Index and the Nasdaq both ended 0.3% lower. The Fed is concerned that economic growth remains weak and will maintain its QE3 asset-purchase programme until the labour market improves substantially. - Triyards Holdings' PATMI for the year ended 31 Aug rose 421% to US$44.1m, as revenue rose 223% to US$366.9m. The strong performance was driven by the completion of existing vessel construction projects as well as the start of new landmark projects. - Hwa Hong Corp's 3Q12 PATMI fell 16.1% YoY to S$2.0m despite a 3.1% rise in revenue to S$9.5m, due mainly to higher general and administrative costs. - Pertama Holdings expects to report a loss for 1Q13 due to start-up expenses of new stores in Malaysia and lower consumer electronics prices. - Boustead Singapore will invest S$20.1m in a joint venture with a consortium of investors to develop an integrated real estate project in Tongzhou, Beijing.

Frasers Centrepoint at record high; Brokers up target price

Frasers Centrepoint Trust rose as much as 1.8% to a record high after brokerages raised their target prices for the shopping mall owner, citing better-than-expected fourth-quarter results.

By 12:25 p.m., units of Frasers Centrepoint were at $1.945, with a volume of 1.2 million, compared with its full day average trading volume of 1.4 million over the last five sessions.

Frasers Centrepoint said its fourth-quarter distribution per unit was 2.71 cents, 15.3% higher than a
year ago, helped by higher gross revenue and net property income.

Citigroup raised its target price for the trust to $2.08 from $2.00, to factor in stronger contribution from its shopping mall Causeway Point, where full occupancy is expected at the end of the year.

Citi increased its 2013 and 2014 DPU estimates by 2-3%, and noted that Frasers Centrepoint’s gearing fell to 30.1%, giving it comfortable room to raise debt to support any potential acquisitions.

OCBC Investment Research also raised its target price on Frasers Centrepoint to $2.13 from $1.97 and maintained a ‘buy’ rating, on expectations of better operating performance.

The brokerage expects Frasers Centrepoint to acquire a property, Changi City Point, in 2013, which it said should provide further growth.

Osim rises on earnings, OCBC ups target price

Shares of Osim International rose as much as 2.7% to a 15-month high after it posted strong quarterly earnings and OCBC Investment Research raised its target price for the massage chair maker.

By 11:25 a.m., Osim shares were up 1.7% at $1.51. The shares have jumped 30.7% since the start of the year, compared with an 18% decline in the FTSE ST Consumer Goods Index. Nearly 3 million Osim shares were traded, 4.3 times their average daily volume over the last 5 sessions.

Osim said its third-quarter net profit surged 49% to $20 million, making it the 15th straight quarter of growth in profitability.

OCBC raised its target price for Osim to $1.87 from $1.79 and kept its ‘buy’ rating, citing higher expected dividend payouts, supported by strong cashflow generation. The brokerage expects Osim’s 2012 dividend per share to be 4.5 cents to 5 cents.

“Osim’s growth would be underpinned by its strong product innovation, a focus on middle-to-high income consumers and continued efforts to improve its productivity per man and per store,” said OCBC.

CIMB raises Mapletree Industrial target price

CIMB Research raised its target price for Mapletree Industrial Trust, which owns factories and other industrial assets, to $1.51 from $1.31 and kept its ’neutral’ rating, citing higher margins.

By 10:53 a.m., units of Mapletree Industrial were flat at $1.395, and have surged 30% since the start of the year, compared with the FTSE ST Real Estate Investment Trust’s 34% rise.

Mapletree Industrial said its distribution per unit for the second quarter was 2.29 cents, 11.7% higher than the year-ago period, due to contributions from acquisitions, higher rents and improving margins.

CIMB said the trust has stronger capital management, as it issued a $45 million 10-year fixed rate note that lengthened average debt tenure to 3.2 years from 2.7 years, yet borrowing cost fell to 2.3% from 2.5%.

However, CIMB noted that its current price to book value of 1.4 times is among the highest in the sector, and has likely priced in growth potential.

MARKET PULSE: OSIM, ART, FCT, LMIR, OKP (24 Oct 2012)

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.87

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.37

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.13

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.45

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.53

MARKET PULSE: OSIM, ART, FCT, LMIR, OKP

24 Oct 2012

KEY IDEA OSIM International: Another step towards a record year OSIM International reported 3Q12 results which were within our expectations, with revenue and PATMI growing by 15.1% and 49.3% YoY to S$142.3m and S$19.6m, respectively. An interim dividend of 1 S cent/share was also declared, bringing YTD DPS to 4 S cents. Looking ahead, management remains confident of extracting more value from China's huge consumer market. We expect this to be driven by its strong product innovation, focus on middle-to-high income consumers and continued efforts to improve its productivity per man and per store. We make some minor downward adjustments to our forecasts. But as we roll forward our valuations to 14.3x FY13F EPS, we lift our fair value estimate from S$1.79 to S$1.87. Maintain BUY. (Wong Teck Ching Andy) MORE REPORTS Ascott Residence Trust: Results in-line, upping FV to S$1.37 Ascott Residence Trust's (ART) 3Q12 revenue increased by 6% YoY to S$77.4m, chiefly due to the contribution of Citadines Shinjuku and Citadines Kyoto, and better performance in the UK and China. Gross profit rose by 2% YoY to S$40.7m. 3Q12 DPU inched up 0.4% to 2.24 S cents. YTD 2012 DPU of 6.76 S cents is in-line with our expectations, forming 77% of our prior FY12 estimate of 8.8 S cents, which we now raise to 8.9 S cents. We find it encouraging that significant fractions of YTD apartment rental income are contributed by stays of <1 month and >12 months. This indicates that ART's properties are able to compete with hotels and apartments (excluding serviced residences). Updating our model, we raise our fair value from S$1.30 to S$1.37 and maintain our BUY rating on ART. (Sarah Ong) Frasers Centrepoint Trust: Ready for next growth phase Frasers Centrepoint Trust (FCT) reported a strong set of 4QFY12 results yesterday. Expectedly, the performance was driven by Causeway Point (CWP) following the substantial completion of the mall's refurbishment and full-year contribution from Bedok Point. Positive rental reversion of 8.9% was also achieved during the quarter. As at 30 Sep, FCT's portfolio occupancy was largely unchanged at 93.6% (93.7% in 3Q), but looks set to improve the asset enhancement works at CWP complete in Dec. We continue to like FCT for its pure suburban mall exposure and growth potential. Based on our understanding, the business park at One@Changi City may possibly obtain TOP by end-2012, while its retail mall occupancy may have already stabilized above 90%. Hence, we believe the injection of Changi City Point may likely happen in FY13, which should provide FCT with next level of growth. Maintain BUY with higher fair value of $2.13 (S$1.97 previously) as we update our model to incorporate firmer cap rates. (Kevin Tan) Lippo Malls Indonesia Retail Trust: Proposes two more acquisitions LMIRT has announced the proposed acquisitions of two retail properties, Pejaten Village, located in Jakarta, and Binjai Supermall, located in Binjai, North Sumatra. As at 30 Jun, the occupancy rates are 95.2% and 91.4% respectively. The purchase consideration for Pejaten Village is IDR748.0b (~S$96.0m), a 12.6% discount to the average of its independent valuations. The purchase consideration for Binjai Supermall is IDR237.5b (~S$30.5m), 5.2% less than the average of its independent valuations. Management is proposing to finance the acquisitions from the proceeds raised from the issuance of S$250 worth of notes in early Jul. These two proposed acquisitions come shortly after the announcement of the proposed acquisitions of four properties - Palembang Square, Palembang Square Extension, Tamini Square and Kramat Jati Indah Plaza (KJI) - on 10 Oct. The completion of the acquisitions of Palembang Square Extension and KJI took place on 15 Oct. We put our fair value of S$0.45 and our Hold rating on LMIRT UNDER REVIEW pending our speaking with management. (Sarah Ong) OKP Holdings Limited: 3Q12 PATMI down 50% from slower recognition OKP Holdings Limited (OKP) reported 3Q12 PATMI of S$2.4m, which was 50% lower YoY, but mostly in line with our expectations. 9M12 PATMI now cumulates to S$8.6m, decreasing 50% YoY mostly due to a slower pace of revenue recognition from construction projects, and lower gross profit margins (from 32.5% in 9M11 to 22.6% in 9M12) from current projects and cost overruns from a sewer project. Top-line for the quarter came in at S$28.5m - up 12% YoY - again mostly within expectations. We would speak with management further regarding these results and, in the meantime, maintain our HOLD rating but our S$0.53 fair value estimate is under review. (Research team)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks slumped on Tuesday, hurt by weak earnings from chemical maker DuPont and bleak outlook statements from 3M and United Technologies Corp. The Dow fell 1.8%, the biggest drop since 21 Jun, while the S&P500 Index slid 1.4% and the Nasdaq ended 0.9% lower. - Singapore inflation accelerated to 4.7% in Sep from 3.9% in Aug, driven by a sharp rise in housing and transportation costs. - Mapletree Industrial Trust's 2Q13 distributable income rose 18.4% YoY to S$37.5m, driven by contributions from acquisitions, positive rental revisions and stable occupancies across key property segments. DPU for 2Q13 increased 11.7% to 2.29 cents. - Travelite Holdings expects to report a net loss for the six months to 30 Sep due to lower demand for its products and pressure on its profit margins from rising costs.

CapitaRetail China's 3Q12 results in line: OCBC

CapitaRetail China Trust’s 3Q12 results are in line with expectations, OCBC says, noting 3Q12 DPU rose 14.2% on-year to 2.42 cents, with the 7.24-cent year-to-date DPU at 76% of its original FY12 forecast.

“Higher revenue was registered across the portfolio except for Minzhongleyuan, which is undergoing asset enhancement.” It notes net property income rose 10.3% on-year to CNY126.5 million ($24.7 million), while excluding Minzhongleyuan, it was up 12.7% on-year; it adds, rental reversions were good across the six multi-tenanted malls, rising 18.2%.

The house raises its FY12 DPU estimate to 9.7 cents, and nudges its fair value up to $1.71 from $1.70. It keeps a Buy call, saying the FY12 dividend yield of 6.0% is attractive. The stock is down 0.6% at $1.625.

F&N property assets complementary to OUE: StanChart

Stock Name: F & N
Company Name: FRASER AND NEAVE, LIMITED

Research House: StanChart

Price Call: BUY

Target Price: 3.58

F&N’s property assets and platform are complementary to OUE, Standard Chartered says, noting a successful bid would more than double OUE’s portfolio to $13 billion. It notes F&N is the largest listed residential developer by market share and manages two S-REITs with $4 billion of commercial assets, while OUE currently lacks this expertise, with its strength lying in its Singapore prime-office portfolio.

“By acquiring F&N’s property portfolio, OUE could become Singapore’s largest listed landlord and residential developer. With Singapore assets making up 73% of its enlarged portfolio, investors may see OUE as the key proxy for Singapore property. Potentially, the discount to RNAV could narrow from the current 45%,” StanChart says, noting City Developments’ and CapitaLand’s 15%-20% RNAV discounts.

StanChart puts its Outperform call and $3.58 target under review, pending more clarity on OUE’s proposal, citing key risks from the pricing and funding structure. While OUE would have about $2 billion to invest in F&N after a potential sale of Mandarin Orchard and Orchard gallery and taking on some debt, it would be insufficient, the house notes. “OUE’s low free float and steep discount to NAV makes equity issuance a challenge.” The stock is up 1.1% at $2.74.

DMG upgrades CapitaMall Trust to 'buy'

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.36

DMG & Partners upgraded CapitaMall Trust to ‘buy’ from ‘hold’ and raised its target price to $2.36 from $2.03, citing higher contributions from new shopping malls.

By 10:32 a.m., units of CapitaMall Trust rose 1.4% to $2.16. They have surged 27% since the start of the year, compared with the FTSE ST Real Estate Investment Trust Index’s 35% rise.

CapitaMall Trust’s third-quarter distribution per unit was flat at 2.42 cents compared with a year earlier.

However, DMG expects CapitaMall Trust to post strong earnings going forward, helped by higher contributions from its shopping malls JCube and Bugis+, which opened in April and August respectively.

The trust should also see additional income after renovationat its Orchard Atrium mall in Singapore is completed in the fourth quarter.

“As the hunt for dividend yield plays continues on the back of high liquidity, prolonged low interest rate environment and a strong Singapore currency, we believe CMT has room for further upside,” said DMG in a report.

DBS trims target prices for UOB, OCBC

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP

Research House: DBS Vickers

Price Call: BUY

Target Price: 10.70

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 19.70

DBS Vickers has trimmed its earnings estimates for Singapore banks for the next two years due to a weaker economic outlook, and cut its target prices for United Overseas Bank and Oversea-Chinese Banking Corp.

Shares of UOB were down 0.2% at $18.57, but have surged 21.6% since the start of the year, outperforming the benchmark Straits Times Index’s 15% gain. OCBC fell 0.1% to $9.23, but have risen 17.9% year-to-date.

The brokerage has lowered OCBC’s target price to $10.70 from $11 and UOB’s to $19.70 from $21, but prefers OCBC for its fee income from its private bank unit Bank of Singapore andinsurer Great Eastern. It maintains a ‘buy’ rating on OCBC and has a ’hold’ on UOB.

DBS Vickers expects Singapore banks to see slower loan growth due to weaker economic growth and the recent property cooling measures introduced by the government. It trimmed its 2013-2014 loan growth rate to 8% from 10% and cut its earnings estimates by 4-7% over the same period.

Pressure on net interest margins are likely to continue, with a hike in Singapore interbank offer rates unlikely until 2015, DBS said.

“Earnings momentum is likely to soften as we go into 2013. As such, we expect banks to trade range-bound and remain well supported by decent dividend yields of 3-4%,” DBS said.

DBS raises Yoma target price

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.65

DBS Vickers raised its target price for Myanmar property firm Yoma Strategic Holdings to $0.65 from $0.60, and kept its ‘buy’ rating, citing higher selling prices from a development project and better margins.

By 10:36 a.m., Yoma shares were flat at S$0.575, and have more than tripled in value so far this year, compared to the FTSE ST Industrials Index’s 24.8% gain.

Yoma posted a net loss of $4.12 million in July-September, compared to a net profit of $1.39 million a year earlier. Its core profits were below DBS’ expectations, but its margins, property sales and prices continue to rise, DBS said.

Although only 9% of the earnings from Yoma’s residential and commercial development in Myanmar, Star City, has been recognised, DBS expects this to rise going forward, helped by improved bookings and higher estimated average selling price.

“We believe as reforms in Myanmar progress and when financing is made available, the group should be able to raise ASPs in future,” said DBS, which estimates a 10% increase in ASP a year from 2014 onwards.

MARKET PULSE: Raffles Medical, Yoma, FCT, CRCT (23 Oct 2012)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.82

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.51

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.97

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.70

MARKET PULSE: Raffles Medical, Yoma, FCT, CRCT

23 Oct 2012

KEY IDEA Raffles Medical Group: Minor setback but outlook still positive Raffles Medical Group (RMG) reported 3Q12 PATMI of S$12.6m (+6.6% YoY) on the back of a 13.9% YoY increase in revenue to S$78.7m, such that 9M12 PATMI and revenue formed 68.0% and 73.3% of our FY12 forecasts, respectively. Revenue met our expectations but PATMI was a tad below due to higher-than-expected operating expenses. Regarding the unsuccessful application for the change of use of its commercial podium for medical clinics, we understand that concerns over traffic congestion in the area were one of the reasons for the rejection. RMG would continue to work closely with the relevant authorities on this. We trim our FY12F PATMI estimates by 2.5% on lower margin assumptions but retain our FY13F forecasts as RMG's staff cost pressures were driven largely by headcount expansion in anticipation of its enlarged operations, which have yet to fully contribute to its topline. Maintain BUY and S$2.82 fair value estimate (24x FY13F EPS). (Wong Teck Ching Andy) MORE REPORTS Yoma Strategic Holdings: Hit by one-time charges Yoma Strategic Holdings (Yoma) reported a negative 2QFY13 PATMI of S$4.2m, mostly due to a S$5.4m one-time non-cash share based payment to the CEO, partially offset by increased sales of residences and land development rights. Accounting for non-operating expenses, net operating profit attributable to equity holders would have been S$1.7m - up 22% YoY - which we judge to be mostly in line with expectations. 2QFY13 gross margins were somewhat higher than forecasted as management took a one-time reversal of construction costs of ~S$1m during the quarter, though this was offset by higher admin costs than expected. 1HFY13 PATMI, ex-non-operating expenses, now constitutes 61% of our annual FY13 forecast, which we keep intact. We continue to be positive on the long term outlook of Yoma as the Myanmar economy continues to open up, but view Yoma's shares to be fairly priced at current levels based on its fundamental valuation. Maintain HOLD with an unchanged fair value estimate of S$0.51. (Eli Lee) Frasers Centrepoint Trust: Strong end to FY12 Frasers Centrepoint Trust (FCT) released its 4QFY12 results this morning. NPI grew by 13.7% YoY to S$28.7m, while distributable amount rose 21.8% to S$22.3m. DPU also reached its record high at 2.71 S cents (+15.3% YoY) and was spot on with our 4Q DPU forecast. This brings the FY12 DPU to 10.01 S cents, up 20.3%. Expectedly, the strong performance was driven by Causeway Point following the substantial completion of the mall's refurbishment and full-year contribution from Bedok Point. Positive rental reversion of 8.9% on leases renewed was also achieved during the quarter. As at 30 Sep, FCT's portfolio occupancy was maintained at 93.6% (93.7% in 3Q). NAV increased 8.5% YoY to S$1.53 per unit, driven mainly by an enlarged asset base and revaluation gain of S$100.7m. This translates to a P/NAV of 1.23x. We will be attending the analyst briefing to get more details on its outlook. For now, we place our Buy rating and fair value of $1.97 UNDER REVIEW. (Kevin Tan) CapitaRetail China Trust: Solid 3Q12 results in line with expectations CapitaRetail China Trust (CRCT) reported 3Q12 DPU of 2.42 S cents, up 14.2% YoY, and in-line with our expectations. YTD 2012 DPU of 7.24 S cents forms 76% of our 2012 DPU estimate. Based on the closing unit price of S$1.635 on 22 Oct, 3Q12 DPU implies an annualized distribution yield of 5.9%. 3Q12 gross revenue increased by 8.5% YoY to RMB194.2m, underpinned by increased tenants' sales of 15.6% at its six multi-tenanted malls. Higher revenue was registered across the portfolio except for CapitaMall Minzhongleyuan, which is undergoing an asset enhancement initiative. Net property income increased by 10.3% YoY to RMB126.5m. Excluding CapitaMall Minzhongleyuan, NPI grew 12.7% YoY. We are in the process of reviewing our estimates and for now, we put our fair value of S$1.70 on CRCT and Buy rating UNDER REVIEW. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The DJIA and S&P 500 Index ended flat, as concerns over slower global growth were offset by earnings which exceeded expectations. - A Singapore Index of Inflation Expectations report revealed that consumers expect a higher rate of inflation than they did a quarter ago. - Aircraft Capital Trust, a business trust backed by General Electric Co, could be seeking about US$700m in a Singapore IPO. - Religare Health Trust said that it has put in place forward contracts to hedge against its foreign currency risk.

MARKET PULSE: CMT, MLT, Dyna-Mac, Raffles Med, Yoma (22 Oct 2012)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.38

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.24

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

Research House: OCBC

Price Call: BUY

Target Price: 0.57

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.82

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.51

MARKET PULSE: CMT, MLT, Dyna-Mac, Raffles Med, Yoma

22 Oct 2012

KEY IDEA CapitaMall Trust: Value emerging from strong execution Summary: CapitaMall Trust's (CMT) 3QFY12 results exceeded our expectations. NPI was up 4.0% to S$332.3m whereas DPU was up 0.4% to 7.10 S cents. This forms 77.6% and 76.1% of full-year NPI and DPU projections respectively. CMT's occupancy remained largely stable at 98.4% (98.6% in 2Q), despite a 4.6ppt drop QoQ at IMM building as a result of repositioning of the mall. For YTD, 6.1% positive rental reversions were achieved, largely unchanged from 6.4% seen in 1H. Looking ahead, we believe CMT is likely to sustain its growth profile, given the smooth execution of its AEIs and strong leasing activities. The development of Westgate, of which CMT has 30% stake, is also expected to start contributing to its income by end-2013. We now revise our assumptions to incorporate the better-than-expected results and rental uplift resulting from its AEIs. Rolling our valuations to FY13, our fair value is raised from S$2.04 to S$2.38. Upgrade CMT to BUY from Hold as we see an attractive upside potential. (Kevin Tan) MORE REPORTS Mapletree Logistics Trust: Pursuing growth on all fronts Summary: Mapletree Logistics Trust (MLT) reported 2QFY13 DPU of 1.71 S cents, up 1.2% YoY. This brings the 1HFY13 DPU to 3.41 S cents, forming 48.3%/48.7% of our/consensus full-year DPU projections. Operationally, we note that MLT's portfolio occupancy improved 0.2ppt QoQ to 99.2%, driven by stronger take-up rates in China, Hong Kong and Singapore. Leases renewed/replaced also achieved positive rental reversions of 8% on average. Looking ahead, management expects the overall acquisition activity to moderate, citing competitive cap rates in Singapore and relatively muted growth in Japan. Hence, it intends to turn more aggressive on capital recycling and asset enhancement initiatives (AEIs)/ asset redevelopment. We are currently keeping our forecasts unchanged. However, our fair value is raised to S$1.24 from S$1.19 as we lower MLT's cost of equity to 8.5% from 9.3% to align with the current low interest rate environment. Maintain BUY. (Kevin Tan) Dyna-Mac Holdings: Looking for more projects Summary: Dyna-Mac Holdings Ltd (DMHL) recently completed a placement of up to 139.5m ordinary shares, consisting of (i) 93m new shares issued and (ii) 46.5m vendor shares owned by current CEO Mr. Desmond Lim, at S$0.50 per share. This enlarges DMHL's existing share capital would by about 10%. Mr. Desmond Lim is still the largest shareholder with a 40.8% stake (previously: 49.9%). The net proceeds of S$45.7m from issuance of new shares will be used for working capital purposes. We continue to like DMHL for its prudent management style and its exposure to the FPSO topside market. After adjusting for the new shares, our fair value drops to S$0.57 (previously S$0.62). Maintain BUY. (Chia Jiunyang) Raffles Medical Group: 3Q12 PATMI slightly below expectations Summary: Raffles Medical Group (RMG) reported its 3Q12 results this morning with revenue meeting our expectations but PATMI was slightly below due to higher-than-expected operating expenses. Revenue rose 13.9% YoY and 2.4% QoQ to S$78.7m. PATMI increased 6.6% YoY and 1.2% QoQ to S$12.6m. Growth during the quarter was driven by a higher patient load as RMG continued to expand the depth and breadth of its specialist services. Both RMG's core divisions contributed positively to its topline increase, with its Hospital Services and Healthcare Services segments growing 14.5% and 14.8% YoY, respectively. For 9M12, revenue jumped 14.0% YoY to S$228.6m, forming 73.3% of our full-year estimates; while PATMI increased 8.0% to S$36.6m, or 68.0% of our FY12 forecast. We note that the fourth quarter is typically RMG's strongest quarter and we expect this trend to continue in FY12. RMG also maintained its strong financial position, improving its net cash position from S$63.9m in 2Q12 to S$68.7m in 3Q12. We will provide more details after the analyst briefing later. For now, we place our Buy rating and S$2.82 fair value estimate under review. (Wong Teck Ching Andy) Yoma Strategic Holdings: Hit by one-time charges Summary: Yoma Strategic Holdings (Yoma) reported a negative 2Q13 PATMI of -S$4.2m, mostly due to a S$5.4m one-time non-cash share-based payment to the CEO, partially offset by increased sales of residences and land development rights. Accounting for one-time non-operating expenses, net operating profit would have been S$1.8m - up 33% YoY - which we judge to be mostly in line with expectations. 2Q13 revenue was S$11.6m, increasing 59% YoY mainly due to stronger sales at Pun Hlaing Golf Estate and Star City. Management reports that, since Star City's acquisition, 249 units out of a total of 528 units in building 3 & 4 have been sold as of 30 Sep 2012. We would speak with management further regarding these results and, in the meantime, maintain HOLDwith an unchanged fair value estimate of S$0.51. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Technology stocks led the fall in the US market on Friday. The Dow fell 1.5%, the S&P 500 Index declined 1.7%, and the Nasdaq dropped 2.2%. Microsoft, Google, IBM and Intel all posted poor quarterly results earlier in the week. - UPP Holdings, in collaboration with Myan Shwe Pyi Tractors Limited, has signed a memorandum of understanding with the Department of Electric Power of Myanmar, for the establishment of the 50 megawatt class new gas generating power plant project in Yangon. - Hi-P International expects lower revenue and profit for FY2012 as compared with FY2011. - Berger International posted 1H13 PATMI of S$1.636m, up 93% YoY. Revenue climbed 6% YoY to S$59.3m.

Mapletree Logistics' positives priced in: CIMB

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: CIMB

Price Call: HOLD

Target Price: 1.25

CIMB downgrades Mapletree Logistics Trust to Neutral from Outperform on valuations, viewing the positives as priced in. it notes fiscal-2Q12 DPU met its estimates, coming it at 24% of its FY13 forecast.

“2Q displayed sustained stability, a hallmark of MLT’s long-tenured logistics portfolio. But we believe the current environment of elevated asset values could throw a spanner in the works for MLT’s asset hunt, a key source of growth and share price outperformance.”

It notes MLT has outperformed the STI sharply this year, viewing its valuation at 1.3X P/BV and 6.0%-6.4% forward yields have priced in its portfolio stability. “While acquisitions will likely be accretive against cheap funding costs, competition and elevated asset values should make attractive finds difficult.”

It raises its target to $1.25 from $1.07 on a lower discount rate of 7.3% from 8.6% previously. The stock is down 0.9% at $1.165, but it remains up more than 37% year-to-date.

Keppel down 0.9%; Results lackluster: Religare

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Religare Capital

Price Call: BUY

Target Price: 12.80

Keppel is down 0.9% at $11.29 after reporting 3Q12 net profit fell 14.7% on-year to $346.4 million. The results were lackluster, says Vincent Fernando, an analyst at Religare Capital.

He notes the results showed further margin pressure; “While the company has been guiding for margins to come down for some time, we’re seeing this play out,” he says, noting Keppel is guiding for lower steady-state margins ahead. He has cut his target price to $12.80 from $13.90. He keeps a Buy call, noting there’s still upside to the stock, but he expects continued margin pressure and sees a lack of major catalysts near-term.

Orderbook quotes suggest the stock is unlikely to retest its $11.24 intraday low.

{comments on}

O&M To drive Keppel growth ahead: Daiwa

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Daiwa

Price Call: BUY

Target Price: 12.45

Daiwa says Keppel’s 3Q12 results were slightly below its expectations, but it still expects a strong 2012. It says the results missed its forecast on weaker-than-expected property contribution and higher materials and subcontract costs, but the house remains optimistic; it notes O&M’s 3Q12 revenue was the strongest in the past three years, with margins above management’s guided range of 10%-12%.

It expects the key share price driver for the next year to be O&M order wins, noting $9.13 billion-worth landed year-to-date. It expects the property segment to be less of a factor ahead, with Keppel likely to adopt a more cautious stance on property development, leveraging growth more toward the offshore business. It raises its target to $12.45 from $12.25, keeping an Outperform call. The stock is down 0.9% at $11.29.

Market Pulse: KepCorp, SGX, MLT (19 Oct 2012)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.34

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 6.80

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.19

MARKET PULSE: KepCorp, SGX, MLT

19 Oct 2012

KEY IDEA Keppel Corporation: Continues to see good prospects Keppel Corporation (KEP) reported a 19.1% YoY rise in revenue to S$3.2b but saw a 14.7% drop in net profit to S$346.4m in 3Q12, such that 9M12 net profit accounted for 87% and 88% of ours and the street's full year estimates, respectively. This has been a front-end loaded year as lumpy earnings from the property division boosted net profit in 1H12. O&M margins continued to normalize to 12.9% in 3Q12 but this was still slightly above our expectations. Meanwhile KEP has started to improve the competencies and productivity of its regional satellite yards to meet heavier workload requirements, which we think is a good strategy. After securing S$8.8b of orders in 9M12 (5% higher than in 9M11), the group's net order book stood at S$13.1b as at end Sep with deliveries extending to 2019. Maintain BUY with S$13.34 fair value estimate. (Low Pei Han) MORE REPORTS Singapore Exchange: Continued muted market outlook Singapore Exchange (SGX) delivered 1QFY13 net earnings of S$74.3m which were fairly in line with market expectation. Securities Revenue accounted for 36% while Derivatives Revenue made up another 28% of group revenue. Base dividend payout per quarter of 4 cents will be paid on 5 Nov 2012. SGX continues to work on several new initiatives, but these are fairly long term in nature and we expect minimal financial impact for FY13. We are keeping our FY13 estimates despite it being below market as we see continued softness in the global market, and this will also limit share price upside for the near term. We are maintaining our fair value estimate of $6.80 and HOLD rating. (Carmen Lee) Mapletree Logistics Trust: No surprises in 2QFY13 Mapletree Logistics Trust (MLT) reported NPI of S$67.5m and distributable amount of S$41.4m for 2QFY13, representing a YoY growth of 14.6% and 1.2% respectively. Contributions from its past acquisitions and improved operating metrics were the key drivers for the performance. DPU similarly grew 1.2% YoY to 1.71 S cents. This brings the 1HFY13 DPU to 3.41 S cents, forming 48.3% of our full-year DPU projections. Operationally, we note that MLT's portfolio occupancy improved 0.2ppt QoQ to 99.2%, while leases renewed/replaced achieved positive rental reversions of 8% on average (albeit lower than 10% seen in previous quarter). For the rest of FY13, management expects its portfolio income to remain stable as only 4.2% of its leases by NLA are due for renewal. In addition, MLT introduced the Distribution Reinvestment Plan (DRP), which will be applied to the quarterly distribution. We will be attending the analyst briefing this afternoon to get more insight on MLT's outlook and strategy. For now, we place our Buy rating and S$1.19 fair value UNDER REVIEW. (Kevin Tan)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stock indexes fell on Thursday with a rise in jobless claims offsetting upbeat manufacturing data and Google Inc.'s earnings miss. The Dow fell less than 0.1% to end at 13,548.94. The S&P 500 index lost 0.2% to 1,457.34. - Indonesian coal-mining firm Geo Energy Resources' IPO of 289.26m shares at 32.5 S cents was 2.9 times subscribed. Geo Energy is expected to begin trading on the mainboard today. - Second Chance Properties posted net profit of S$30.47m for the 14 months to end-Aug 2012 (FY12) and proposed dividends translating to an annualized yield of ~8%. - Food Junction has issued a profit warning for 3Q12 and FY12. It cites higher pre-operating costs for losses in its restaurant operations. - Interra Resources has received in-principal approval from the Singapore Exchange to transfer its listing from Catalist to the mainboard.

MARKET PULSE: KepLand, A-REIT, Raffles Med, UE E&C

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.49

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 2.43

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.82

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.71

MARKET PULSE: KepLand, A-REIT, Raffles Med, UE E&C

18 Oct 2012

KEY IDEA Keppel Land: No surprises in 3Q12 numbers Keppel Land (KPLD) announced 3Q12 PATMI of S$74.5m, which was up 29% YoY mostly due to an increased contribution from Keppel REIT and a S$16.7m gain from a stake divestment in Saigon Centre Ph 2. This was mostly in line with our expectations, with 9MFY12 PATMI (S$311.1m) now constituting 83% of our annual forecast. KPLD sold ~120 Singapore homes in 3Q12 - keeping with the ~100 unit/quarter pace seen over 1H12 previously. In China, after a mild pickup last quarter (491 units sold), the pace of sales settled back in 3Q12 with ~290 units sold, mainly from the Springdale, Central Park City and The Botanica. We continue to see limited catalysts for the share price ahead given no major launches over the horizon and limited likelihood for the divestment of MBFC T3 in the near term. Maintain HOLD with a higher fair value estimate of S$3.49 (35% discount to RNAV), versus S$3.44 previously, mostly due to higher valuations of Keppel REIT. (Eli Lee) MORE REPORTS Ascendas REIT: Delivers good results again Ascendas REIT (A-REIT) achieved a 4.4% YoY gain in 2QFY13 DPU to 3.53 S cents, notwithstanding a 7.5% increase in units. For 1HFY13, DPU amounted to 7.06 S cents, up 7.3% YoY. This is slightly ahead of our expectations, as the half-year DPU already formed 51.0% of our FY13 forecast. Going forward, management revealed that positive reversions may possibly continue into FY13-14, as the passing rents are generally below the current market rates for the area due for renewal. While A-REIT expects the acquisition activity to remain 'quiet', it can focus on the consolidation of its properties. To this extent, A-REIT announced another two asset enhancement initiatives (AEIs) for 31 Ubi Road 1 and 1 Changi Business Park Ave 1 to upgrade the building specifications and enhance their marketability. We now incorporate the results and AEIs into our assumptions. This lifts our fair value from S$2.28 to S$2.43. However, as A-REIT appears fairly priced at current level, we maintain our HOLDrating. (Kevin Tan) Raffles Medical Group: Likely delay in new Specialist Centre commencement Raffles Medical Group (RMG) announced that its application for the change of use of its commercial podium at 30 Bideford Road for medical clinics has been unsuccessful. As a recap, RMG had announced on 21 Feb 2011 that it was purchasing a 7-storey commercial podium block of Thong Sia Building in the Orchard Road vicinity for S$92.08m, with the aim of establishing a new Specialist Centre there. The transaction has since been completed. RMG said that it intends to work with the relevant authorities to amend its plans in a bid to address their concerns. We see this as a minor setback given that this would likely result in some delay to the original commencement plan of operations (previously highlighted as 1H13). No further details were provided regarding the reason for the application rejection, but we remain optimistic that RMG would be able to work out a resolution with the authorities. We maintain our BUYrating and S$2.82 fair value estimate on RMG for now as the group is slated to release its 3Q12 results next Monday (22 Oct) before the market open, and we would provide more updates after the analyst briefing. (Wong Teck Ching Andy) UE E&C: Acqusition of APG Geo-Systems UE E&C has entered into a sale and purchase agreement with shareholders of APG Geo-Systems Sdn Bhd (APG) to acquire a 90% stake for RM12.3m (~S$4.9m) in cash. The selling shareholders are: (i) UED Developments Sdn Bhd (an indirectly wholly owned subsidiary of United Engineers Limited) - 60%, and (iii) three unrelated third party individuals - 30%. APG is a geo-technical foundation engineering company in Malaysia with more than 20 years of experience. APG recorded net profit of S$292k for FY11 and its net asset value is expected to be not less than RM15m (S$6m). As we are expecting UE E&C to announce its 3Q12 results in the coming weeks, we keep our BUY rating and S$0.71 fair value unchanged. (Chia Jiunyang)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks rose with a pair of good readings on the US housing sector, although a fall by IBM weighed on the Dow. The Dow rose 0.04% to 13,557.00. The S&P 500 Index climbed 0.41% to 1,460.91. - Qian Hu Corporation reported a net loss attributable to shareholders of S$10.1m for 3Q12 (versus a PATMI of S$574k a year ago) mainly due to the disposal of its Malaysia-based Dragon Fish subsidiary, which resulted in a loss on disposal of S$9.1m. - Religare Health Trust plans to revise its SGX debut from 9am on 22 Oct to 2pm on 19 Oct, subject to regulatory approval. - Gaylin Holdings, a Singapore-based rigging and lifting solutions provider to the offshore O&G industry, intends to raise net proceeds of S$35.4m through a mainboard listing on SGX.

CapitaMalls Asia down 1.7%; China focus eyed

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 2.08

CapitaMalls Asia is down 1.7% at $1.755, after an early jump to $1.795, its highest since April 2011. The stock is retracing a bit of Tuesday's 5.0% surge, with several analysts saying they are puzzled by the rise as there isn't company-specific news.

"Even when they do big deals, the stock price doesn't normally react significantly," one analyst says. A couple analysts note Citigroup initiated the stock at Buy with a $2.08 target Tuesday, calling it "a top-class retail-mall developer/operator." Another analyst notes Credit Suisse has upgraded its view on China, where much of CMA's portfolio is located; the house says China's "worst is probably over and investors should add some beta to their portfolio."

It cites signs of consumption growth picking up, with a retail-sales pickup during the recent holidays, and it tips China discretionary plays as better proxies to play the "economy bottom-up story" vs China staples. The April 2011 peak at S$1.90 may offer a near-term cap, while the $1.69 10-day moving average likely offers near-term support.