MARKET PULSE: Starhill Global, SingPost, Tiger Airways, CDL Hospitality, Sakari Resources

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.84

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.20

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.81

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 2.06

MARKET PULSE: Starhill Global, SingPost, Tiger Airways, CDL Hospitality, Sakari Resources

30 Oct 2012

KEY IDEA Starhill Global REIT: AEI activity came to fruition Starhill Global REIT (SGREIT) turned in an encouraging set of 3Q12 results yesterday. While we have expected Wisma Atria retail mall to put on a good showing following the completion of asset redevelopment works, the 24.3% increase in NPI for the segment came in stronger than expected, thanks to positive rental reversions and full committed occupancy at the mall. Wisma Atria office segment, we note, also performed well, raking up 15.2% growth in NPI. In addition, overall portfolio occupancy remained very healthy at 99.4%, with a weighted average lease term (by NLA) of 7.3 years. As mentioned in our Sep report, SGREIT had secured the refinancing for its existing A$63m term loan which matures in Jan 2013. With that, SGREIT has no debt refinancing requirement until Sep 2013. We are tweaking our forecasts to factor in stronger rentals at Wisma Atria. This lifts our fair value from S$0.79 to S$0.84. Maintain BUY. (Kevin Tan) MORE REPORTS Singapore Post: 2QFY13 results in line Singapore Post (SingPost) reported a set of in-line results with revenue rising 9.1% YoY to S$153.7m and net profit increasing 7.3% to S$32.9m in 2QFY13, such that 1HFY13 net profit accounted for 49.3% and 52.5% of ours and the street's full year estimates, respectively. Revenue grew in all three business segments of mail, logistics and retail. Rental and property-related income, however, declined by 7.0%. As expected, margins are slightly lower; we expect margins to be weighed down by cost pressures and higher revenue contribution from the lower-margin logistics business. This may be offset by cost management initiatives undertaken by SingPost. In line with its usual practice, the group has declared an interim dividend of 1.25 S cents per share for the quarter. At current price levels, we expect a dividend yield of 5.4% in FY13F. We currently have a BUY rating on the stock, but put our fair value estimate of S$1.20 under review. (Low Pei Han) Tiger Airways: Divestment of Tiger Australia Tiger Airways (TGR) released its 2Q13 financial results this morning, which came in below expectations as we were anticipating a small net profit over another loss-making - albeit narrowing - quarter. TGR's 2Q13 revenue rose by 78.9% YoY to S$196.7m while its net loss narrowed to S$18.3m, from S$49.9m a year ago as Tiger Australia continues to ramp up services to pre-suspension levels. In terms of segments, Tiger Singapore's revenue grew 32.9% YoY to S$133m, outpacing increases in operating costs following higher passenger yield and traffic to record an operating profit of S$4.8m for 2Q13. On the other hand, Tiger Australia registered a lower operating loss of $20.0m for 2Q13 versus S$27.2m a year ago. In a separate announcement, TGR announced the proposed divestment of 60% of Tiger Australia to Virgin Australia and the entering of a joint venture between both parties to manage Tiger Australia. The move will allow TGR to dispose a substantial chunk of the loss making entity whilst allowing it to retain a presence in Australia. In a related move, SIA - the parent company of TGR - will invest a 10% stake in Virgin Australia. We will be attending the 2Q13 results briefing later this morning and will provide more updates subsequently. In the meantime, we place our fair value estimate of S$0.81 and HOLD rating on TGR UNDER REVIEW. (Lim Siyi) CDL Hospitality Trusts: 3Q12 below our expectations CDL Hospitality Trusts reported 3Q12 gross revenue of S$36.1m which was 0.8% lower YoY. Net property income contracted 1.1% YoY to S$33.6m. CDLHT's Singapore hotels saw a slowdown due to the weak global economic environment and the fixed rent contribution from the Australia hotels was slightly lower YoY due to translation loss arising from the weakening AUD. Income available for distribution per stapled security, after deducting income retained for working capital, declined by 1.8% YoY to 2.72 S cents. 3Q12 average room rates for the Singapore hotels stayed flat at S$236 but occupancy fell from 89.5% in 3Q11 to 88.6%. RevPAR declined 0.9% YoY to S$209. 9M12 income available for distribution per stapled security, after deducting income retained for working capital, is 8.42 S cents, 71% of our prior FY12 estimate of 11.9 S cents (which we will be lowering as we expect 4Q12 to be weak too). While we had expected 3Q12 to be poor for the hospitality sector, the results are below our expectations. We maintain our HOLD rating on CDLHT and will be adjusting our fair value of S$2.06. (Sarah Ong) Sakari Resources: PTT has 90.2% stake Sakari Resources posted 3Q12 revenue of US$270.4m, +21% YoY and 14% QoQ, aided by higher production at both its mines at Sebuku and Jembayan. Despite the lower coal ASPs, better efficiency led to an improvement in operating margins; but it was a tax credit of US$31m which led to its net profit jumping 52% YoY and 135% QoQ to US$56.3m. However, if we strip out the tax credit, we estimate that core earnings would have come in at around US$25.3m, or down 32% YoY (+6% QoQ). Separately, PTT has increased its stake to 90.2% by the end of the offer on 22 Oct. In view of the reduced liquidity, we are suspending coverage on the counter. (Carey Wong)

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

NEWS HEADLINES - US consumer spending rose a seasonally adjusted 0.8% MoM in Sep, faster than the 0.5% rise in Aug. US stock markets were shut because of Hurricane Sandy. - Eu Yan Sang International's 1Q13 PATMI fell 92% YoY to S$341,000 despite a 16% YoY rise in revenue to S$70.6m, largely due to higher operating expenses in Australia and higher rentals in its core markets. - First Ship Lease Trust reported a 3Q12 loss of US$186,000 compared to a profit of US$152,000 a year earlier as revenue declined 6.5% YoY to US$26.7m, due mainly to payment defaults and lower rentals on vessel leases. - Sing Investments & Finance's 3Q12 PATMI fell 66% YoY to S$3.3m as net interest income and hiring charges slid 8.6% to S$7.4m. The profit decline was mainly due to the absence of S$8m in write-backs for loan losses compared to a year ago. - Foreland Fabrictech expects to report a loss for 3Q12 due to a slowdown in the textile industry and sluggish demand for high-grade textile products.