MARKET PULSE: FCT, Sheng Siong, Biosensors, Tiger Airways, CSE Global (2 Oct 2012)

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.97

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

Research House: OCBC

Price Call: BUY

Target Price: 0.49

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: OCBC

Price Call: BUY

Target Price: 1.81

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.81

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.09

MARKET PULSE: FCT, Sheng Siong, Biosensors, Tiger Airways, CSE Global

2 Oct 2012

KEY IDEA Frasers Centrepoint Trust: Excellent growth profile Frasers Centrepoint Trust (FCT) announced last Friday that it had increased its interest in Hektar REIT from 99.4m units to 124.9m units. The rise in unitholding was pursuant to the provisional allotment of rights units to FCT under the one-for-four rights issue and allocation of excess rights units by Hektar REIT. We are positive of this development as it presents FCT with greater opportunity to participate in the burgeoning retail market in Malaysia. Both malls are strategically located in areas with strong traffic catchment and offer good growth potential. Hence, while the acquisitions are not expected to have any immediate material effect on FCT's distributable income, we expect FCT to benefit from Hektar REIT's repositioning and upgrading plans and in turn an improvement in DPU going forward. We now factor in FCT's increased interest in Hektar REIT and roll over our valuations to FY13, hence raising our fair value from S$1.89 to S$1.97. Maintain BUY. (Kevin Tan) MORE REPORTS Sheng Siong Group: Quietly adding stores Since our last update on 27 Jul 2012, Sheng Siong Group (SSG) has increased the total number of stores to 31, up from 27 at the end of 2Q12. Although its corresponding retail space has grown by 12.4% on a YTD basis, exceeding its full-year 10% target, management is showing no signs of letting up. With a minimum target of 33 stores by year-end, there are plans to further increase SSG presence in locations with lower representations such as Ghim Moh and Clementi. In addition to the growth in stores, SSG has also introduced a new warehouse system to enhance inventory monitoring and improve worker productivity, which is especially vital in a time where labour costs have crept upwards. Coupled with an increase in direct purchases, management is confident in its ability to improve operating margins at least by year-end and we concur with this assessment. Maintain BUY at an unchanged fair value estimate of S$0.49 ahead of its results release of its traditionally strongest quarter (3Q12). (Lim Siyi) Biosensors International Group: Extends licensing agreement with Terumo Biosensors International Group (BIG) announced that it has extended its licensing agreement with Terumo Corporation (Terumo), such that the latter may continue to incorporate BIG's BioMatrix™ drug-eluting stent (DES) technology in its own DES systems outside of the US. We believe that this agreement was due to expire in Feb 2013 (five years after the initial launch of Terumo's Nobori™ DES), but has now been extended until Dec 2014. Terumo also has a licensing agreement with BIG for the exclusive rights to manufacture, market and sell DES systems incorporating the BioMatrix™ technology in Japan (for five years beginning May 2011). We are positive on this development as the licensing revenue provides an additional source of income streams to BIG, and also carries a gross margin of 100%. We leave our estimates unchanged as we had already previously assumed an extension to the licensing agreement between BIG and Terumo in our forecast. This is premised on the strong working relationship between the two parties and a win-win situation for this licensing agreement, in our view. Reiterate our BUY rating on BIG and S$1.81 fair value estimate. BIG also remains as our top pick within the healthcare sector. (Wong Teck Ching Andy) Tiger Airways: Partnership with Scoot In a widely expected move, Tiger Airways (TGR) announced the signing of a Memorandum of Understanding with Scoot to market joint itineraries from 2 Oct 2012. Customers will now be able to travel from Australia (Sydney and Gold Coast by Scoot) to TGR's destinations (Phuket, Ho Chi Minh City and Kuala Lumpur via Singapore by Tiger) using a single itinerary. TGR currently only offers flights from Perth to Singapore (vice versa) with the bulk of its Australian operations catering to mainly domestic travel. In the later phases, the two airlines will have joint itineraries originating from South East Asia. While this partnership leverages off TGR's recent move to Terminal 2 following the closure of the Budget Terminal and could potentially provide valuable lead-in customers in later stages, TGR's immediate recovery still hinges on Tiger Australia, which is currently facing operational challenges. As such, we deem the impact of this partnership to be muted. Maintain HOLD with an unchanged fair value of S$0.81. (Lim Siyi) CSE Global: Wins S$33m worth of new projects Last evening, CSE Global (CSE) announced that it has won (i) an EPC contract for a Telecommunications Systems for a LNG facility in Darwin, Australia, and (ii) two Mental Health projects from the U.K. The total value of these projects amounts to S$33m. As these new orders already form part of our 2H12F estimates, we will be keeping our projections and valuation unchanged. Adjusting for the work performed in the last quarter and other new order wins, we estimate CSE's latest order-book to be around S$350m and should last till 2Q13. Maintain BUYwith S$1.09 fair value estimate. (Chia Jiunyang)

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NEWS HEADLINES - Data showing an unexpected expansion in September US factory activity led the Dow up 0.6% to 13,515.11. The S&P 500 Index gained 0.3% to 1,444.49. - Metro Holdings has acquired a mixed development site in the new CBD area of Nanchang, Jiangxi province, China, for RMB1.92b (S$375m), together with HK-listed Top Spring International. - Perennial China Retail Trust is developing a mixed-used project in Beijing's Tongzhou district as part of a consortium (including BreadTalk) that will hold a 70% stake in the S$1.3b project. - STATS ChipPAC has reached a US$26.7m property damage insurance settlement with its insurers, as compensation for damage to plant and equipment from the flooding of its Thai facility.