MARKET PULSE: FCOT, Vix Branz, United Envirotech, Tee International

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.31

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.74

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.50

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.28

MARKET PULSE: FCOT, Vix Branz, United Envirotech

9 Oct 2012

KEY IDEA Frasers Commercial Trust: Strong value proposition Frasers Commercial Trust (FCOT) announced on 28 Sep that it had completed the sale of KeyPoint for S$360.0m. We are maintaining our view that FCOT will likely use the bulk of the sale proceeds to redeem half of its Series A Convertible Perpetual Preferred Units (CPPUs) and reduce its existing debt liabilities, as the funding costs of the CPPUs and its gearing ratio are relatively high. Going forward, we are staying positive on FCOT's financial performance. Apart from a positive impact from the likely redemption of the CPPUs, FCOT is also expected to gain from interest savings as a result of the early refinancing of its S$500m term loan facility at favourable borrowing margins. In addition, the acquisition of the balance 50% interest in Caroline Chisholm Centre and direct tenant leases at China Square Central earlier this year are likely to contribute positively to its rental income. Hence, we expect FCOT to meet our FY12-13 forecasts comfortably. We are holding our FY12-13 forecasts intact as the recent developments are in line with our expectations. However, as we roll our valuations to FY13, our fair value is now raised from S$1.23 to S$1.31. Maintain BUY. (Kevin Tan) MORE REPORTS Viz Branz Limited: New substantial shareholder Lam Soon Cannery Private Limited - more commonly known for its "Knife" brand cooking oil -has purchased a 20% stake in Viz Branz (VB) at a price of S$0.735/share. While this share purchase falls short of triggering a general offer, we view this development as a positive and an important first step for an eventual overall takeover. First, VB's instant beverage business complements Lam Soon's existing operational capabilities and is a natural fit in its wide range of products. Secondly, and more importantly, given the fractured relationship between VB's two substantial shareholders, a reduced stake for its current CEO clearly signifies his intent to leave the business eventually. Although future share sales are likely to be transacted at S$0.735/share, it is only 0.7% lower than our fair value estimate of S$0.74/share. Maintain HOLD. (Lim Siyi) United Envirotech: Gets another Shandong project United Envirotech Limited (UEL)has recently announced that its 70%-owned subsidiary has signed a deal to acquire, upgrade and expand an existing industrial waste-water treatment plant in Weifang City, Shandong Province, China; this making it the company's fourth such acquisition in Shandong. We maintain our BUY rating on the stock as we believe that UEL is well placed to capture more of China's growing waste-water treatment market. Although we are maintaining our estimates and S$0.50 fair value for now, we see room for upward revisions on more contract wins. (Carey Wong)

Tee International: Acquires RM31.2m site in Cyberjaya, Malaysia Tee International (TEE) announced yesterday that it has paid MYR31.2m (S$12.9m) to acquire a freehold commercial site in the Cyberjaya, Selangor Darul Ehsan, Malaysia. The site area is ~9.5 acres and has a plot ratio of 3.0, and the acquisition would be financed by internal funds and bank borrowings. TEE expects to develop the site into a mixed use project comprising of retail and SOFO (Small Office Flexible Office) units. The site is located in the heart of Cyberjaya - 26km away from Kuala Lumpur and a key part of the Multimedia Super Corridor in Malaysia - and is in close proximity to MNC offices and institutions such as Shell, IBM and Multimedia University (MMU). This transaction is expected to have no material impact on the FY13 (ending 31 May 2013) financials. We would speak with management further regarding this acquisition and put our Hold rating and fair value estimate of S$0.28 UNDER REVIEW. (Research Team) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks pulled back from near five-year highs in anticipation that the earnings season will be weak. The Dow fell 0.2% to 13,583.65. The S&P 500 Index retreated 0.4% to 1,455.88. - Fraser and Neave has announced that the revaluation of certain properties has revealed an aggregate revaluation surplus of ~S$498m. - Ossia International Limited has agreed to acquire the retail and distribution business of VGO Corporation Limited for a consideration of S$18.7m. - JES International Holdings, a PRC-based shipbuilding group, has expanded into the offshore space, securing a shipbuilding contract for a Platform Support Vessel. - FDS Networks Group has entered into a disposal agreement to dispose of the entire share capital of a wholly-owned subsidiary of the company for a consideration of US$550k.