MARKET PULSE: CRCT, SPH (15 Oct 2012)

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.70

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 3.90

MARKET PULSE: CRCT, SPH

15 Oct 2012

KEY IDEA CapitaRetail China Trust: China retail is growing alright Summary: According to Cushman & Wakefield, among major Chinese cities, Beijing has the most retail space on a per capita basis. However, even with the projected growth from ~0.58 sqm to ~0.73 sqm by 2013, Beijing's retail space per capita will still be half that of HK's, which is at 1.4 sqm. As explored in our report dated 28 Jun, we believe that CRCT's malls in Beijing, where four of its nine malls are located, have good locations and will do well despite the overall growth in retail space supply. Recent news reports regarding increased inventory pile-ups for certain retailers have caused some people to doubts official retail sales figures. Our analysis shows that while more companies are facing revenue contractions, revenues are climbing overall. Companies should be able to support continued rental increases. We maintain our BUYrating on CRCT and our fair value of S$1.70. (Sarah Ong) MORE REPORTS Singapore Press Holdings: Shrinking print margins a concern Summary: Singapore Press Holding (SPH) reported FY12 PATMI of S$365.5m (EPS: 23 S-cents), which fell 5.9%, mostly due to lower print and investment income, offset by contributions from the Clementi Mall. This is mostly in line with our forecast (2.4% below) but somewhat below consensus (by 5.1%). Management recommended a final dividend of 17 S-cents, cumulating to 24 S-cents (or S$387m) for FY12 - which was above FY12 PATMI and our expectations - though below FY12 recurring EBITDA. We note that pretax margins for the print segment fell further to 33.3% in FY12 from 35.9% in FY11, due to higher staff costs and distribution costs from subscription drives. We believe shrinking margins highlight increasing uncertainties for the core print business, though an attractive dividend yield of 5.9% likely points to limited price downside here. Maintain HOLD with an unchanged fair value estimate of S$4.05. We would turn buyer around S$3.90. (Eli Lee)

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

NEWS HEADLINES - The S&P 500 Index fell 0.30% to 1,428.59 on Friday as worries over the Eurozone outweighed an unexpected rise in US consumer confidence. The Dow finished gained only 0.02% to close at 13,328.85. - Guocoland posted 1Q13 PATMI of S$9.0m, versus a loss attributable to owners of S$12.8m a year ago. Revenue climbed 67% to S$181.6m. - Synear Food Holdings has proposed to voluntarily delist the company with an exit offer of S$0.186 cash per share. - AVIC International Investments has entered into a conditional sale and purchase agreement dated to acquire the entire issued share capital of Deltamarin Oy, for an aggregate consideration of €32.1m (~S$50.8m). - Nam Cheong Limited and its wholly-owned subsidiary have established a S$200m Multicurrency Medium Term Note Programme.