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)

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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.