MARKET PULSE: KepLand, A-REIT, Raffles Med, UE E&C

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.49

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 2.43

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.82

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.71

MARKET PULSE: KepLand, A-REIT, Raffles Med, UE E&C

18 Oct 2012

KEY IDEA Keppel Land: No surprises in 3Q12 numbers Keppel Land (KPLD) announced 3Q12 PATMI of S$74.5m, which was up 29% YoY mostly due to an increased contribution from Keppel REIT and a S$16.7m gain from a stake divestment in Saigon Centre Ph 2. This was mostly in line with our expectations, with 9MFY12 PATMI (S$311.1m) now constituting 83% of our annual forecast. KPLD sold ~120 Singapore homes in 3Q12 - keeping with the ~100 unit/quarter pace seen over 1H12 previously. In China, after a mild pickup last quarter (491 units sold), the pace of sales settled back in 3Q12 with ~290 units sold, mainly from the Springdale, Central Park City and The Botanica. We continue to see limited catalysts for the share price ahead given no major launches over the horizon and limited likelihood for the divestment of MBFC T3 in the near term. Maintain HOLD with a higher fair value estimate of S$3.49 (35% discount to RNAV), versus S$3.44 previously, mostly due to higher valuations of Keppel REIT. (Eli Lee) MORE REPORTS Ascendas REIT: Delivers good results again Ascendas REIT (A-REIT) achieved a 4.4% YoY gain in 2QFY13 DPU to 3.53 S cents, notwithstanding a 7.5% increase in units. For 1HFY13, DPU amounted to 7.06 S cents, up 7.3% YoY. This is slightly ahead of our expectations, as the half-year DPU already formed 51.0% of our FY13 forecast. Going forward, management revealed that positive reversions may possibly continue into FY13-14, as the passing rents are generally below the current market rates for the area due for renewal. While A-REIT expects the acquisition activity to remain 'quiet', it can focus on the consolidation of its properties. To this extent, A-REIT announced another two asset enhancement initiatives (AEIs) for 31 Ubi Road 1 and 1 Changi Business Park Ave 1 to upgrade the building specifications and enhance their marketability. We now incorporate the results and AEIs into our assumptions. This lifts our fair value from S$2.28 to S$2.43. However, as A-REIT appears fairly priced at current level, we maintain our HOLDrating. (Kevin Tan) Raffles Medical Group: Likely delay in new Specialist Centre commencement Raffles Medical Group (RMG) announced that its application for the change of use of its commercial podium at 30 Bideford Road for medical clinics has been unsuccessful. As a recap, RMG had announced on 21 Feb 2011 that it was purchasing a 7-storey commercial podium block of Thong Sia Building in the Orchard Road vicinity for S$92.08m, with the aim of establishing a new Specialist Centre there. The transaction has since been completed. RMG said that it intends to work with the relevant authorities to amend its plans in a bid to address their concerns. We see this as a minor setback given that this would likely result in some delay to the original commencement plan of operations (previously highlighted as 1H13). No further details were provided regarding the reason for the application rejection, but we remain optimistic that RMG would be able to work out a resolution with the authorities. We maintain our BUYrating and S$2.82 fair value estimate on RMG for now as the group is slated to release its 3Q12 results next Monday (22 Oct) before the market open, and we would provide more updates after the analyst briefing. (Wong Teck Ching Andy) UE E&C: Acqusition of APG Geo-Systems UE E&C has entered into a sale and purchase agreement with shareholders of APG Geo-Systems Sdn Bhd (APG) to acquire a 90% stake for RM12.3m (~S$4.9m) in cash. The selling shareholders are: (i) UED Developments Sdn Bhd (an indirectly wholly owned subsidiary of United Engineers Limited) - 60%, and (iii) three unrelated third party individuals - 30%. APG is a geo-technical foundation engineering company in Malaysia with more than 20 years of experience. APG recorded net profit of S$292k for FY11 and its net asset value is expected to be not less than RM15m (S$6m). As we are expecting UE E&C to announce its 3Q12 results in the coming weeks, we keep our BUY rating and S$0.71 fair value unchanged. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks rose with a pair of good readings on the US housing sector, although a fall by IBM weighed on the Dow. The Dow rose 0.04% to 13,557.00. The S&P 500 Index climbed 0.41% to 1,460.91. - Qian Hu Corporation reported a net loss attributable to shareholders of S$10.1m for 3Q12 (versus a PATMI of S$574k a year ago) mainly due to the disposal of its Malaysia-based Dragon Fish subsidiary, which resulted in a loss on disposal of S$9.1m. - Religare Health Trust plans to revise its SGX debut from 9am on 22 Oct to 2pm on 19 Oct, subject to regulatory approval. - Gaylin Holdings, a Singapore-based rigging and lifting solutions provider to the offshore O&G industry, intends to raise net proceeds of S$35.4m through a mainboard listing on SGX.