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)

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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.