Tuesday, January 31, 2012

OCBC cuts Tiger Airways rating to sell



OCBC Investment Research downgraded its rating on Tiger Airways to sell from hold and trimmed its price target to $0.60 from $0.65.

By 10:30 a.m., the shares were down 2.1% at $0.695 after plunging more than 60% last year.

On Monday, Tiger Air reported its third consecutive quarterly loss and warned of a possible “significant” annual loss mainly due to problems with its Australian operation and soaring fuel prices.
OCBC said Tiger Air’s net loss was narrowing but not fast enough. High jet fuel prices had curtailed Tiger Air’s recovery, the brokerage said in a report.
It said consensus estimates of Tiger Air’s full-year losses were set to increase and put pressure on its shares.

MARKET PULSE: SingPost, Tiger Airways, Olam, Cache Log, NOL, Starhill Global (31 Jan 2012)

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 1.14

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED
Research House: OCBCPrice Call: SELLTarget Price: 0.60

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 2.63

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST
Research House: OCBCPrice Call: BUYTarget Price: 1.19

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED
Research House: OCBCPrice Call: SELLTarget Price: 1.02

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT
Research House: OCBCPrice Call: BUYTarget Price: 0.70




MARKET PULSE: SingPost, Tiger Airways, Olam, Cache Log, NOL, Starhill Global
31 Jan 2012
KEY IDEA

Singapore Post: Steady delivery in 3QFY12
Singapore Post (SingPost) reported a 0.6% YoY rise in revenue to S$149.4m but a 5.2% fall in net profit to S$41.6m in 3QFY12. 9MFY12 revenue and net profit were in line with our expectations, both accounting about 75% of our full-year estimates. However, 9MFY12 net profit made up 81.0% of the street's estimate. Logistics and retail posted improved revenues in 3QFY12, while mail saw lower contributions. Meanwhile, there is still room for additional increase in the group's net gearing ratio and the amount of share buyback that it can do. In line with its usual practice, SingPost has declared an interim dividend of 1.25 S cents/share. Maintain BUY with S$1.14 fair value estimate. (Low Pei Han)

MORE REPORTS

Tiger Airways: Still mired in losses
Tiger Airways (TGR) last night reported a 1% YoY decline in its 3QFY12 revenue to S$168.4m and a net loss of S$17.4m. Management attributed the net loss to high fuel prices and restrictions on its Australia operations imposed by the Australian aviation authorities. In QoQ comparison, revenue grew 53% while net loss narrowed by 65% - a marked improvement from the suspension ravaged 2QFY12. Both TGR's Australia and Singapore operations also reported improved numbers, albeit still incurring operating losses. Consensus' estimate of TGR's FY12 losses will likely have to increase, causing downward pressures on TGR's share price. We lower our fair value estimate of TGR to S$0.60/share, derived from a P/B multiple of 1.9x, and downgrade it to SELL. (Eric Teo)

Olam: Invests S$75m in RUSMOLCO
Olam International has just announced a partnership with the Russian Dairy Company (RUSMOLCO) for the large-scale development of dairy and grains farming in the Penza region in Russia. Olam will make an initial investment of up to US$75m for a 75% stake in RUSMOLCO, effectively pricing its enterprise value of up to US$130m. Olam will further invest up to US$400m over the next four to five years in a phased manner to expand the area under grains cultivation from 52k hectares (ha) currently to 106k ha; RUSMOLCO will also increase its milking cow population from the current 3.6k heads to 20k. We view the move positively as it marks an important step towards implementing Olam's dairy and grains strategy. As before, we believe that demand for soft commodities, especially the essential food items, will continue to be supported by population growth in China and other developing countries. However, in view of the recent share-price run-up, we maintain our HOLD rating and S$2.63 fair value; we would be buyers close to S$2.35 or better. (Carey Wong)

Cache Logistics Trust: Acquisition of Changi North warehouse
Cache Logistics Trust (CACHE) announced last evening that it is acquiring a warehouse facility in Changi North International LogisPark from Pan Asia Logistics Singapore Pte Ltd via an acquisition and leaseback arrangement for S$35.2m. The building is a purpose-built 4-storey ramp-up warehouse with ancillary office space which was completed in 2011 and measures 196,988 sq ft in GFA (making up 2.9% of its existing portfolio GFA of 4.3m sq ft). Management guided that the starting NPI yield of the property is ~7.7%, in line with its existing portfolio average. We expect the acquisition to be fully funded by debt, which is likely to raise CACHE's aggregate leverage to 32.6% from 29.6% previously. We are maintaining our BUY rating and S$1.19 fair value on CACHE. (Kevin Tan)

NOL: Dec 2011 operating performance
Neptune Orient Lines (NOL) last night announced its container shipping operating performance for Period 12, six weeks from 19 Nov 2011 to 30 Dec 2011. Period 12 volume fell 9% YoY to 357,909 forty-foot equivalent units while average revenue per FEU fell 14% YoY to US$2,265/FEU. Adjusting for the longer Period 12 in 2010, container shipping volumes actually increased 6% YoY. Separately, the freight rate increases in recent weeks have provided some optimism to the container shipping sector. This increase can be attributed to the surge in shipping demand before the factories in China close for the Chinese New Year holidays, especially after the Journal of Commerce reported on 26 Jan 2012 that average spot rates on the Asia-Europe trade lane fell 2.6% after five consecutive weeks of increases. Meanwhile, bunker fuel prices (BUNKSI38 Index) have been increasing. The BUNKSI38 Index increased by 2% QoQ in 4Q11. And thus far in 1Q12, it has increased another 8%. While it is still uncertain if freight rates can hold up post the Chinese New Year holidays, bunker fuel prices have already increased significantly. Thus, we maintain our SELL rating on NOL, with a fair value estimate of S$1.02/share. (Eric Teo)

Starhill Global REIT: Consistent set of 4QFY11 results
Starhill Global REIT (SGREIT) reported 4Q11 NPI of S$36.5m and distributable income of S$22.2m, down 0.6% and 4.7% YoY respectively. The slight decline in earnings was mainly due to lower contribution from Singapore properties and higher expenses at Chengdu and Japan properties. 4Q DPU came in at 1.01 S cents (-2.9% YoY), bringing the full-year DPU to 4.12 S cents. This is roughly in line with both our and consensus DPU forecast of 4.2 S cents. Management guided that the asset redevelopment at Wisma Atria is on track for completion by 3Q12, but vacancy periods till lease commencement may continue to impact the property's performance over the next two quarters. We note that SGREIT is in a comfortable financial position, with aggregate leverage at 30.8% and no major debt refinancing until 2013. We are placing our Buy rating and S$0.70 fair value UNDER REVIEW pending the analyst briefing later in the day. (Kevin Tan)

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


NEWS HEADLINES

- The euro weakened 0.7% as Greece's discussions with the EU for a second aid package could not be finalized yesterday. The S&P 500 fell 0.3% and copper retreated 1.6%, the most in three weeks.

- US stock losses were trimmed as the Fed said that demand for business loans increased in the forth quarter as economic growth accelerated. Demand from small US businesses for loans increased by the most in any quarter since 2005.

- Fortune REIT, which has a portfolio of 14 retail properties in HK, announced its FY11 results ended 31 Dec. Total revenue increased 6.5% and income available for distribution increased 9.0%.

- Cerebos Pacific announced that net profit fell 20% to S$34.1m for its 4Q11 as sales in its top market Thailand were hit by flooding. For the full year, Cerebos reported sales S$977m and a net profit of S$100.1m.

- Centurion Corporation announced today that it has successfully been awarded a bid to acquire an 85% equity interest in Dormitory Investments Pte Ltd, which owns a foreign workers' dormitory in Tuas.





Monday, January 30, 2012

DMG Morning Matters 30 Jan 2012 - Scoop: Singapore Press Holdings; Platter: Singapore Property, Metro, Singapore Press Holdings

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD
Research House: DMGPrice Call: HOLDTarget Price: 3.91

Stock Name: MetroHldg
Company Name: METRO HOLDINGS LIMITED
Research House: DMGPrice Call: BUYTarget Price: 0.86




IN TODAY'S EDITION

While You Were Sleeping

US markets: Mixed

The Day Ahead…

Scoop of the Day: Singapore Press Holdings

On the Platter

Singapore Developers: Watertown@Punggol - Robust CNY sales (NEUTRAL)

Metro Holdings: The Chinese Connection (BUY, S$0.68, TP S$0.86)

SPH: Sengkang site appears fairly valued (NEUTRAL, S$3.64, TP S$3.91)




Ascendas India Trust rated 'buy' by DBS

Stock Name: AscendasIndT
Company Name: ASCENDAS INDIA TRUST
Research House: DBS VickersPrice Call: BUYTarget Price: 0.87



DBS Vickers Securities in a Jan 27 research report says: "Ascendas India Trust's (a-itrust) reported revenue and net property income (NPI) of $30.6 million (+2% y-o-y) and $17.5 million (+3% y-o-y). In INR terms, underlying operational performance was robust, with topline/NPI each growing by 19% y-o-y to INR 1.23 billion/INR 0.7 billion.

"Progressive recognition of rental income from new buildings (Zenith, Park Square ad Voyager) was the major contributor. Distributable income was lower by 12%% y-o-y to $11.6 million (DPU of 1.5 cents), due to a stronger S$ and higher interest expenses incurred for its developments. Post acquisition, gearing is estimated to head towards 29%, still comfortable in our view.

"The recent strengthening of the INR-S$, if sustained, should be a bright spot for 4Q results. a-itrust offers attractive FY2012-2013F prospective yields of 9.5-9.8%. Target price of 87 cents based on DDM. MAINTAIN BUY."

Mapletree Industrial Trust rated 'outperform' by CIMB

Stock Name: MapletreeInd
Company Name: MAPLETREE INDUSTRIAL TRUST
Research House: CIMBPrice Call: BUYTarget Price: 1.24



CIMB in a Jan 27 research report says: "3Q/9M12 DPU meets consensus and our expectations, at 27%/ 78% of our estimates. 3Q DPU shrank 9.2% y-o-y due to new units issued in Aug 11.

"Q-o-q growth was a positive 5.4%, led by improved portfolio occupancy (95.1%; +0.6% pt) and positive rental reversions for Flatted Factories (+26.8%), Stack-Up/Ramp-Up Buildings (27.5%) and Warehouses (31.5%) over the last renewal period, typically three years ago. In contrast, reversions in Business Parks fell 9.6%. New leases contracted here averaged $3.92, 5.1% below renewal rates, hinting at more weakness to come.

"Management announced AEI plans for Toa Payoh North Cluster 1 and Woodlands Central Cluster. We keep our estimates and DDM-based target price of $1.24 (disc rate: 8.6%). MAINTAIN OUTPERFORM."

Keppel Corporation rated 'buy' by DMG

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED
Research House: DMGPrice Call: BUYTarget Price: 11.80



DMG & Partners Research in a Jan 27 research report says: "Keppel's 4Q11 net profit of $389 million (+10% y-o-y) was 12% ahead of our estimate of $346 million, driven by the completion of several property projects overseas and increase in Singapore trading projects. FY2011 net profit rose +14% y-o-y to $1.49 billion, a new record for Keppel.

"Proposed 26 cents final dividend lifted full-year dividend payment to 43 cents (+13% y-o-y) and was ahead of our estimate of 40 cents. We raise our FY2012-2013F EPS by 1-4% as we made minor changes to our revenue recognition forecasts and raise target price from $11.40 to $11.80.

"Oil & gas industry spending is expected to remain strong and we believe share price could continue to re-rate on Petrobras news. Stock is trading at 13x FY12F P/E, well below peak valuation of 25x in the last rig boom, and offers 4% dividend yield. MAINTAIN BUY."

Ezion Holdings rated 'buy' by DMG

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED
Research House: DMGPrice Call: BUYTarget Price: 1.00



DMG & Partners Research in a Jan 27 research report says: "Ezion announced that it has secured a US$93.5 million charter contract to deploy a service rig in North America. The value of the contract is estimated at US$93.5 million and the contract duration is for four and a half years.

'We view the latest contract win positively. Based on our preliminary estimates, assuming US$8 million net profit pa, the service rig contract could lift our FY2012-2013F EPS estimates by 3% and 9% respectively. We keep our FY2012-2013F EPS estimates unchanged pending an update with management.

"Target price of $1.00 based on 10x FY12F EPS. Ezion is our top pick in the small/mid-cap oil & gas sector given its strong EPS growth. We expect FY2012F core net profit to grow 44% y-o-y. MAINTAIN BUY. "

MARKET PULSE: First REIT, Ezion, Tiger Airways and Micro-Mechanics (30 Jan 2012)

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST
Research House: OCBCPrice Call: BUYTarget Price: 0.89

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.97

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD
Research House: OCBCPrice Call: HOLDTarget Price: 0.305

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 0.65




MARKET PULSE: First REIT, Ezion, Tiger Airways and Micro-Mechanics
30 Jan 2012
KEY IDEA

First REIT: Undaunted by volatile macroeconomic environment

Summary: First REIT (FREIT) reported its 4Q11 results which were within our expectations. For FY11, gross revenue increased 78.4% to S$54.0m and was just 0.2% higher than our full-year projection. Distributable income to unitholders rose 105.8% to S$43.9m, in line with our forecast of S$41.9m if we exclude a special S$2.2m distribution in 4Q11. DPU for FY11 was 7.01 S cents, versus 6.63 S cents in FY10, and translates into an attractive yield of 9.1%. We believe that FREIT could acquire new hospitals in FY12. This would likely be debt funded given its ample debt headroom. Maintain BUY with a revised RNAV-derived fair value estimate of S$0.89 (previously S$0.84) as we roll forward our valuations and update our terminal capitalisation rates and Indonesian asset discount rates assumptions. (Wong Teck Ching Andy)

MORE REPORTS

Ezion Holdings: Growing the service rig business

Summary: Ezion Holdings (Ezion) recently announced that it has clinched a charter contract worth about US$93.5m to provide a service rig for a period of 4.5 years. This is the third service rig contract that Ezion has clinched, and its ability to leverage on its network to clinch contracts from major oil companies has been impressive, along with the decent forecasted returns on equity. We are positive on this development due to the decent forecasted ROE, management's previous working relationship with the customer, as well as the project's ability to generate a steady stream of earnings within a short period of time, barring any hiccups. Maintain BUY with S$0.97 fair value estimate. (Low Pei Han)

Micro-Mechanics: Lacklustre 2QFY12 results

Summary: Micro-Mechanics (MMH) reported a lacklustre set of 2QFY12 results. Although we had already factored in the tepid industry conditions and impact from the suspension of its Thailand operations in our assumptions, MMH's performance still came in below our expectations. Net profit dipped 58.5% YoY and 39.9% QoQ to S$0.7m on the back of a 23.6% YoY and 15.9% QoQ decline in revenue to S$8.7m. For 1HFY12, revenue of S$19.1m (-17.3%) formed 46.9% of our full-year forecast while net profit of S$2.0m (-47.5%) constituted 42.2% of our FY12 estimates. Both MMH's Semiconductor Tooling (SET) and Custom Machining & Assembly (CMA) segments fared badly, with YoY declines in sales and gross margins. The increase in operating expenses as a percentage of revenue also culminated in a 7.2 ppt YoY fall in its net margin to 8.6% for 2QFY12. A cash dividend of 1 S cent was declared, in line with our expectations and payable on 23 Feb 2012. We will provide more details after the analyst briefing. For now, our Hold rating and S$0.305 fair value estimate is under review. (Wong Teck Ching Andy)

Page 1 of 1

TIGER AIRWAYS: 33% STAKE IN MANDALA AIRLINES

Summary: Tiger Airways Holdings Limited (TGR) announced today it has completed the share subscription agreement with PT Mandala Airlines ("Mandala") for 22,618,594 new Class C shares in the issued share capital of Mandala, representing approximately 33% of the enlarged issued capital. The terms of this agreement was previously announced on 23 Sep 2011 - TGR is subscribing for shares amounting to 33% of Mandala Airlines (Mandala) at a cost of US$1 cash and the provision of technical know-how. As we have previously mentioned, this is a positive development to TGR since such joint-ventures should help to absorb TGR's expected new aircraft deliveries for the rest of FY12. We have a HOLDrating on TGR, with a fair value estimate of S$0.65/share. (Eric Teo)

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


NEWS HEADLINES


- US economy grew at 2.8% annualized rate in the three months through Dec, lower than the forecast of a 3% increase. This dims the earnings outlook for Asian exporters and sent Japanese stock futures and Australian equities down.

- A disorderly Greek default appears less likely as Greece and private investors in their bonds have reached a tentative deal to reduce the country's debt and enable it to receive a €130b bailout.

- Fragrance Group and Aspial Corporation started the preview of Parc Rosewood in Woodlands on Saturday. The price range for Parc Rosewood has been adjusted downwards 8-10% to S$925-998 psf, to offset any impact on sales from the additional buyers' stamp duty.

- Catalist-listed SBI Offshore has secured US$30m of new orders less than a month into 2012 from major rig builders in Asia and leading international drilling contractors to bring its total order book to US$36.1m, ~6x its US$6.1m order book a year ago.


- Bemax Resources has agreed to purchase a number of heavy mineral tenements from Simto Resources for AUD$25m. The acquisition should significantly add to the company's resources base and mining operations in Western Australian's South West.

Thursday, January 26, 2012

OCBC raises Olam's target price

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 2.63



OCBC Investment Research has raised its target price for commodity firm Olam International to $2.63 from $2.05 and kept its hold rating.
By 9:17 a.m., shares of Olam were 2.3% higher at $2.70, and have fallen about 13.8% since the start of last year.
Olam’s shares have risen 24% since the start of the year, driven by liquidity and hopes that China will ease its monetary policy, OCBC said in a report.
Although the brokerage said outlook remains uncertain with the European debt crisis threatening to derail the world economy, Olam will be helped by firm demand for soft commodities from China, especially in essential food items.
As a result, OCBC now expects Olam’s valuation to be pegged to 18 times its earnings per share for the fiscal year ending June 2012, up from 14 times.

Ying Li International Real Estate rated 'buy' by Kim Eng

Stock Name: Ying Li
Company Name: YING LI INTL REAL ESTATE LTD
Research House: Kim EngPrice Call: BUYTarget Price: 0.50



Kim Eng Research in a Jan 25 research report says: "Ying Li recently said that it has won the tender for a strategic plot of land in Chongqing Financial Street (CQFS) for RMB50.35 million (excluding resettlement cost).

"The 5,452-sq-m Wei Yuan site sits next to its existing Wu Yi Road landbank and the group is in advanced discussions with the authority to enlarge the combined land area of the project to about 17,000 sq m. Separately, Ying Li has had a soft opening of Yingli IFC retail mall late last month, where the committed occupancy rate to-date has already exceeded 80%.

"The mall showcases both internationally and domestically renowned brands, some of which have chosen to open their flagship stores there. Target price is unchanged at 50 cents, still pegged at a 40% discount to the stock's RNAV per share of 83 cents. MAINTAIN BUY."

Viz Branz rated 'hold' by OCBC

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 0.33



OCBC Investment Research in a Jan 18 research report says: "Following the settlement agreement between Viz Branz's (VB) former and current CEO (father-son relationship), attention has been on the impending transfer of a 15% stake from the latter to the former, which will trigger a mandatory general offer if an exemption is not obtained from the Securities Industry Council.

"This focus has been a catalyst for its share price of late despite the lack of further updates from the company since mid-Dec.

"Incorporating the above into our assumptions, we raised our FY2012 revenue growth projections by 3% from $169 million to $174 million, which improved our bottom line by $1.2 million to $12.2 million. Fair value estimate of 33 cents (32 cents previously). MAINTAIN HOLD."

Broadway Industrial Group rated 'hold' by DBS

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD
Research House: DBS VickersPrice Call: HOLDTarget Price: 0.30



DBS Vickers Securities in a Jan 25 research report says: "Broadway warned that it will report a net loss for 4Q2011 and that FY11 will also be loss making. This is worse than our estimates, as we were projecting 4Q11 to breakeven.

"We had highlighted in our report that the impact of the floods in Thailand on Broadway will be material but not immediately quantifiable especially as Broadway had powered up its Wuxi plant to compensate for the loss of production in Thailand. We are currently reviewing our earnings forecast.

"As our current target price is based on -1SD P/BV valuation of 0.6x, we do not think that our target price will be significantly affected by any potential revisions in our earnings estimates. Target price of 30 cents. MAINTAIN HOLD"

Yangzijiang Shipbuilding (Holdings) rated 'neutral' by DMG

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: DMGPrice Call: HOLDTarget Price: 1.04



DMG & Partners Securities in a Jan 18 research report says: "Yangzijiang (YZJ) is venturing into ship-owning activities in a joint venture with Peter Dohle. Management explained that the move is to help alleviate the pressure on fewer shipbuilding orders.

"We believe the move is not likely to be well received as more cash are channelled into non-core investments. We see high risk in moving to the ship-owning business as dry bulk charter rates are likely to remain weak given strong supply pressure.

"We are negative on the commercial shipbuilding sector and shipping sector but share price downside should be supported by its net cash balance sheet and yield of 4.4%. Our unchanged target price of $1.04 implies FY12F P/E of 5.6x. MAINTAIN NEUTRAL."

Capitacommercial Trust rated 'buy' by OCBC

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST
Research House: OCBCPrice Call: BUYTarget Price: 1.29



OCBC Investment Research in a Jan 25 research report says: "CapitaCommercial Trust (CCT) reported a distributable income of $212.8 million for FY2011, down 3.7% y-o-y and in line with our full year forecast of $211.2 million.

"DPU for the full year is 7.52 cents. Topline came in at $361.2 million, again tracking closely to our expectations of $362.7 million. This was down 7.8% y-o-y mostly due to the sale of Robinson Point and StarHub Centre in 2010, the redevelopment of Market St Carpark in 2011.

"As widely anticipated, we saw an inflection point in office rentals over 4Q11 as Grade A office market rents declined by 0.5%. Lower fair value estimate of $1.29, versus $1.41 previously, to reflect lower capitalization rate assumptions. MAINTAIN BUY. "

Metro Holdings rated 'buy' by DMG

Stock Name: MetroHldg
Company Name: METRO HOLDINGS LIMITED
Research House: DMGPrice Call: BUYTarget Price: 0.86



DMG & Partners Research in a Jan 20 research report says: "Metro has evolved from its early days as a department store operator to, increasingly, a property play on China's commercial real estate market.

"To date, all its property ventures have been profitable, with divestment gains ranging from 5-25% premium over book value. Over the past five years, shareholders' equity compounded at a CAGR of 9%, before taking into account dividends.

"The group is currently in the midst of selling its 50% stake in retail mall Metro City Beijing at a price tag of RMB 1.25 billion, a 50% premium over its latest valuation. Should the deal be successful, it will be able to book a pretax profit of $87.4 million, with NAV per share raised by 9 cents.

"We value the stock at 86 cents per share on a discount of 30% to RNAV, suggesting 29% upside from current levels. BUY"

Mapletree Logistics Trust rated 'buy' by OCBC

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST
Research House: OCBCPrice Call: BUYTarget Price: 1.10



OCBC Investment Research in a Jan 20 research report says: "NPI increased by 14.4% y-o-y to $61.6 million due to contributions from its acquisitions and organic growth (better rental and occupancy rates) from its existing portfolio.

"Distributable amount similarly grew by 12.2% y-o-y to $41.3 million, though impacted slightly by higher borrowing costs and other expenses. For the quarter, DPU stood at 1.70 cents, up 9.7% y-o-y. This brings the total YTD DPU to 6.54 cents, representing a yield of 7.6%.

"The results were within both our and consensus expectations, with YTD DPU forming 103.4%/97.6% of our/consensus DPU estimates. Portfolio operating performance continues to be healthy, in our view. Higher fair value of $1.10 ($1.07 previously) after rolling our RNAV valuation to 2012. MAINTAIN BUY."

Marco Polo Marine rated 'buy' by AmFraser

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.
Research House: AmFraserPrice Call: BUYTarget Price: 0.53



AmFraser Research in a Jan 20 research report says: "MPM announced that it has won a $22.5 million contract to outfit a construction vessel equipped with Dynamic Positioning-3 systems.

"Early this week, MPM delivered the only posted barge rig under construction in the world. MPM also commissioned its third and largest drydock, measuring 195m x 45m x 9m capable of servicing vessels up to 45,000dwt.

"MPM is now trading at a very low PEG of 0.4, based on a forward P/E of 6.3x and a 3-year CAGR of 15.8% by our estimation.

"We continue to value MPM at 53 cents, based on a sum-of-parts valuation of its key operational segments. This is equivalent to 9.0x FY12F P/E, still undemanding for a company growing at 16% a year. MAINTAIN BUY."

Wednesday, January 25, 2012

OCBC cuts CapitaCommercial target price

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST
Research House: OCBCPrice Call: BUYTarget Price: 1.29



OCBC Investment Research has cut its target price for CapitaCommercial Trust (CCT) (CACT.SI), which owns office properties, to $1.29 from $1.41 but kept its buy rating.

By 9:03 a.m., units of CCT were flat at $1.145. They have fallen about 24% since the start of last year.

OCBC said although CCT's distributable income of $212.8 million for 2011 was in line with its forecasts, it expects office rents to decline further this year.
However, the brokerage said it continues to like the trust for its quality portfolio and strong execution by the management.
OCBC also noted the redevelopment of its Market Street property in downtown Singapore remains on track. Also, 100% of the upgraded space of Six Battery Road office building in the central business district has been pre-committed.
Overall portfolio occupancy remained flat at 97.2% for CCT in the fourth quarter, which is higher than the industry average of 91.2%, OCBC said.

Friday, January 20, 2012

Goldman starts GLP coverage with buy rating

Stock Name: GLP
Company Name: GLOBAL LOGISTIC PROP LIMITED
Research House: Golman SachsPrice Call: BUYTarget Price: 2.34



Goldman Sachs started coverage of Singapore-listed logistics company, Global Logistic Properties (GLP) (GLPL.SI), with a buy recommendation and set a 12-month price target of $2.34.

By 10:20 A.M., GLP shares were up 1% at $1.865. The stock fell 13% since the start of last year.

Goldman Sachs said GLP’s size and depth of its network in China and Japan displayed key competitive advantages.
The brokerage said GLP’s operations in China are supported by structural growth in domestic consumption and limited supply of existing logistics facilities.
In Japan, its businesses provide annuity-like income streams which serve as an internal funding source for its expansions in China, Goldman Sachs said, explaining that GLP’s fundamentals look compelling with self-funded growth.
Goldman Sachs expects the company to outperform the sector over the next three years with an estimated compounded average growth rate of 16% in its earnings per share.

Thursday, January 19, 2012

MARKET PULSE: CMT, SPH, Cache & FCT (19 Jan 2012)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST
Research House: OCBCPrice Call: BUYTarget Price: 2.02

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD
Research House: OCBCPrice Call: BUYTarget Price: 3.99

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST
Research House: OCBCPrice Call: BUYTarget Price: 1.19




MARKET PULSE: CMT, SPH, Cache & FCT
19 Jan 2012
KEY IDEA

CapitaMall Trust: Upgrade to BUY - results in line
CMT announced 4Q11 distributable income of S$75.5m, or a DPU of 2.30 S-cents. Cumulatively, FY11 distributable income came in at S$301.6m, in line with our forecast of S$300.3m. Net property income for the year increased 4.8% YoY to S$418.2m, driven mostly by contributions from Clarke Quay and Illuma acquired in Jul10 and Apr11, respectively, and positive rental reversions. Management's execution remains solid with new projects tracking closely to schedules. We also like that a substantial portion of income is derived from resilient suburban malls, given an uncertain economic outlook. Upgrade to BUY with a lower S$2.02 fair value (versus S$2.06 previously) with a 12m DPU forecast of 10.0 S-cents. (Eli Lee)

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SPH: Top bid for Sengkang commercial site
A 70:30 JV between SPH and United Engineers bid S$328m (S$1,156 psf) for a commercial site at Sengkang West Avenue beside Fernvale LRT station. We expect total development cost (including land) to be ~S$2,450 psf NLA (net leasable area). Assuming rentals of S$15 psf per month (roughly in line with levels seen at Clementi Mall and Bukit Panjang Plaza), this works out to a rental yield of 5.3% which we are fairly neutral about. We are neutral on this acquisition and keep our fair value estimate unchanged. Maintain BUY at fair value estimate of S$3.99 and 12m dividend of S$0.24. (Eli Lee)

Cache Logistics Trust: On a clear growth trajectory
Cache Logistics Trust (CACHE) delivered a good set of 4Q11 results, with DPU growing 8.5% YoY to 2.102 S cents. Looking ahead, we believe CACHE will continue to perform. While its master lease arrangements may appear to limit its growth potential, we expect the REIT to continue to benefit from full-year contributions from its 2011 acquisitions. CACHE is also certainly in a comfortable position to seek growth via asset injection, with its aggregate leverage at a healthy 29.6%. Maintain BUY with a revised fair value of S$1.19 on CACHE. (Kevin Tan)

Frasers Centrepoint Trust: 1QFY12 results in line
Frasers Centrepoint Trust (FCT) reported NPI of S$24.9m (+33.6% YoY) and distributable income of S$19.5m (+31.3% YoY) for 1QFY12, supported by strong uplift from Causeway Point (CWP), full-quarter contribution from Bedok Point and positive rental reversions. DPU for the quarter stood at 2.20 S cents (+12.8% YoY), and will be paid on 29 Feb 2012, together with DPU of 0.28 S cents announced in Oct 2011. The results were within our estimates, with headline numbers forming 23.5-26.7% of our full-year forecasts. Over the quarter, we also note that FCT's portfolio continued to register improvement in its occupancy. Looking forward, management guided that its portfolio performance is expected to remain stable, with positive growth in overall rental reversions. We will be tuning in to the analyst teleconference call scheduled this morning to get more details on its outlook. For now, we keep our BUY rating but put our fair value under review. (Kevin Tan)

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


NEWS HEADLINES

- The euro rose as the IMF proposed to raise its lending capacity by up to US$500b to insulate the global economy from further effects of the debt crisis in Europe.

- US stocks rose as a gauge of confidence among American homebuilders climbed to the highest level in over four years and data showed that US industrial production recovered in December.

- Courage Marine's wholly-owned subsidiary has agreed to sell MV Raffles, a 38,000 dwt vessel, to generate cash, and the company estimates that it will record a loss on the disposal of ~US$2.1m for the FY ending 31 Dec 2012.

- China Oilfield Technology Services announced that the Daqing government has compulsorily acquired two pieces of land from the company that were used mainly for warehousing purposes. The total compensation amount of ~RMB40.0m is higher than the net book value of ~RMB16.5.

- Frencken Group announced that its wholly-owned subsidiary will acquire 80% equity interest in US Motion Inc. for ~US2.6m to provide its opportunities to expand in the US and to gain a portfolio of proprietary products.





Citi upgrades CapitaMall Trust to buy

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST
Research House: CitigroupPrice Call: BUYTarget Price: 1.95



Citi upgraded Singapore’s shopping mall owner CapitaMall Trust (CMLT.SI) to buy from neutral and reduced its price target to $1.95 from $2.00.

By 10:30 a.m., CapitalMall Trust shares were flat at $1.745. The shares have fallen about 14% last year.
Citi said CapitalMall Trust shares now offered an attractive estimated yield of nearly six percent, making its valuation look attractive, after its shares fell 10% since last September.
Citi, however, cut its price target to reflect the mall owner’s fourth-quarter results. It said overall occupancy fell to 94.8% as of December 31, down from 96% in the previous quarter, primarily due to asset enhancement works at some of its properties.
Other current asset enhancement works are on track and CMT expects to inject about $15.6 million at Clarke Quay for works with an expected return on investment of 13%, Citi said.

Wednesday, January 18, 2012

Golden Agri-Resources rated 'buy' by OCBC

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD
Research House: OCBCPrice Call: BUYTarget Price: 0.82



OCBC Investment Research in a Jan 16 research report says: "Golden Agri-Resources (GAR) is likely to end off 2011 on a pretty strong note, aided by a fairly resilient CPO (crude palm oil) prices.

"With CPO prices remaining relatively stable at an average of US$959/MT in 4Q11 versus US$964/MT in 3Q11, GAR should put in a pretty strong last quarter. We understand that GAR would also be expecting deferred revenue recognition for some 34k MT of CPO from a delayed delivery during 3Q11.

"Its cash cost of production has never exceeded US$300/ton - and this should afford the group a sizeable margin to cushion any pull-back in CPO prices. We note that even during the last financial crisis, CPO prices did not fall below US$500/ton.

"Leaving our estimates unchanged for now; but due to a higher USD assumption for 2012, our fair value inches up from 80 cents to 82 cents, still based on 12.5x FY12F EPS. MAINTAIN BUY."

Starhub rated 'buy' by Kim Eng

Stock Name: StarHub
Company Name: STARHUB LTD
Research House: Kim EngPrice Call: BUYTarget Price: 3.27



Kim Eng Research in a Jan 16 research report says: "StarHub is slated to release its full-year FY2011 results on Feb 2. We would not be surprised to see a lower-than-forecast net profit, given the stronger-than-expected demand for iPhone 4S.

"Our full-year revenue forecast of $302.7 million suggests a 4Q11 net profit of $79.8 million and EBITDA margin on service revenue of 31%. While this is in line with management's full-year guidance of "about 30%" (9M11 margin was 30.4%), we would not be surprised by a lower-than-forecast EBITDA margin in 4Q11 due to the robust demand for iPhone 4S.

"StarHub will likely keep its dividend per share at 20 cents in 2012. Net debt/EBITDA hit 0.69x in 3Q11, giving it ample headroom to its target of 1.5x. Assuming a range of 1-1.2x, StarHub could pay 6-15 cents more on top of the regular dividend. Target price of $3.27. MAINTAIN BUY."

Adampak rated 'buy' by DMG

Stock Name: Adampak
Company Name: ADAMPAK LIMITED
Research House: DMGPrice Call: BUYTarget Price: 0.31



DMG & Partners Research in a Jan 16 research report says: "Last October, the group updated that its Thai plant in the Hi-Tech Industrial Estate, Ayutthaya while not badly affected by the flood, stopped operations as a safety precaution.

"The news meant that Adampak will take an impairment charge of US$1.4 million in FY2011 for damages to its Thai plant, but this will be covered by insurance upon settlement. The rapid relocation to a new facility will enable the company to restore operations in Thailand and capitalize on an eventual upturn in the HDD as supply chain bottlenecks are resolved.

"The stock is currently trading at 5x FY12 P/E and offers an attractive yield of 11%. Given the solid net cash balance (6.4 cents per share) as well as the healthy operating cash flows, we think the company will have little difficulties to sustain the high payout. Target price of 31 cents. MAINTAIN BUY."

M1 downgraded to 'reduce' by Phillip Securities

Stock Name: M1
Company Name: M1 LIMITED
Research House: Phillip SecuritiesPrice Call: SELLTarget Price: 2.36



Phillip Securities Research in a Jan 17 research report says: "M1 reported a decent set of results for FY2011. Revenue increased by 8.8% y-o-y, mainly due to strong growth in handset sales. The results were marginally below our expectations of $170 million.

"Management attributed the strong handset sales to an increase in sales volume and unit selling price. International calling service revenue declined by 3%, despite a 22% increase in international retail minutes recorded. The company also announced a final dividend of 7.9 cents, translating to a full year payout ratio of 80%.

"Following the weaker than expected results and potential margin compression, we revised our earnings estimates down by 1.1-1.6% for the next 2 years and introduce FY2014E estimates. Revised target price of $2.36. DOWNGRADE TO REDUCE."

Singapore Exchange rated 'underperform' by CIMB

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: CIMBPrice Call: SELLTarget Price: 5.43



CIMB in a Jan 17 research report says: "SGX's core net profit fell 19.9% y-o-y, and 14.3% q-o-q in a lacklustre quarter. 2Q12 core net profit ($65.4 million) is within our $62.9 million expectation and the street's $61.4 million estimate. Revenues fell 14% y-o-y and 17% sequentially.

"Operating costs ($68.9 million) declined (-3.9% y-o-y, -7.6% q-o-q) after SGX scaled down staff and technological costs. SGX continued to introduce new ADR listings and derivatives products in the quarter. Efforts to increase retail participation are also underway, as are overall attempts to cut its reliance on securities clearing.

"We adjust our FY2012-2014 forecasts on cost assumption changes. We raise our DDM disc rate from 9.5% to 9.7% to account for valuation-compression risks, lowering our target price to $5.43. UNDERPERFORM."

Noble Group rated 'hold' by DBS

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED
Research House: DBS VickersPrice Call: HOLDTarget Price: 1.45



DBS Vickers Securities in a Jan 17 research report says: "While 3Q11 earnings were disappointing and there are concerns arising from the outlook for softer global economic growth and uncertainty regarding its next CEO, Noble remains in a strong financial position.

"We expect Noble to book decent 4Q11 core profit of US$86.8 million (-67% y-o-y) versus a US$17.5 million loss in 3Q11 on recovery of commodity prices and reversal of mark-to-market currency losses.

"Proposed capital recycling through the divestment of its Agriculture segment and a merger of Gloucester Coal with Yanzhou Australia should crystallise value and contribute towards seed money for Noble for further investments going forward. Target price of $1.45. MAINTAIN BUY.

Olam International rated 'buy' by DMG

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: DMGPrice Call: BUYTarget Price: 2.98



DMG & Partners Research in a Jan 17 research report says: "Olam has a net profit target of US$1 billion by FY2016. The bulk of the target will be achieved via organic SCM business growth (forecast 15-17% pa volume growth) and already-announced projects.

"In addition, management will work on upstream initiatives eg on plantations and fertilizer business as well as selective mid-stream projects to drive its earnings. Management does not foresee any further equity fund raising to enable it to meet the US$1 billion target. Instead, management will look to borrowings, given management's comfort zone of 2-3x leverage, versus Sep 11's 1.7x.

"We also like Olam's sound track record - 33% CAGR net contribution over past 3 years. Target price of $2.98. Olam's FY12 PE of 12.7x is also lower than historical average of 18x. MAINTAIN BUY."

Singapore Airlines rated 'hold' by OCBC

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: OCBCPrice Call: HOLDTarget Price: 10.85



OCBC Investment Research in a Jan 17 research report says: "The parent airline's passenger capacity (ASK) increased by 3.2% y-o-y while its passenger traffic (RPK) gained a smaller 1.8% y-o-y. As a result, it recorded a passenger load factor (PLF) of 79.6%, compared to 80.7% a year ago.

"SilkAir's RPK again gained a strong 7.6% y-o-y but it recorded an even faster ASK growth of 9.3% y-o-y. Thus, SilkAir's PLF also fell to 83.1%, lower than the 84.5% in Dec 2010. SIA Cargo's freight capacity (AFTK) grew 1.3% y-o-y and its freight traffic (FTK) edged ahead by 1.5% y-o-y. SIA Cargo's freight load factor (FLF) improved marginally to 63.6%, from 63.5% in December 2010.

"We maintain our fair value estimate of $10.85 per share, which has already factored in the challenging times the aviation sector is currently facing. MAINTAIN HOLD."

Ascendas Reit rated 'outperform' by CIMB

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST
Research House: CIMBPrice Call: BUYTarget Price: 2.14



CIMB in a Jan 18 research report says: "3Q12/YTD DPU forms 25% and 74% of our full-year estimate. The results are slightly ahead of consensus. Rental renewals rose strongly (compared to the last renewal period, typically three years ago) by 5.7-28.4%, led by the logistics segment (which was 18% below market rents).

"However, new take-up slowed to 0.5-3.6% for the three sectors. We account for the acquisitions of Corporation Place and 3 Changi Business Park Vista totalling $179 million, assuming full contributions in FY2013. We anticipate DPU accretion of 0.1 cent (less than 1%) at 88% occupancy.

"We raise our DPU and DDM-based target price to $2.14 (disc rate: 8.6%) to account for acquisitions announced in Dec 11. OUTPERFORM."

Tuesday, January 17, 2012

MARKET PULSE: M1, SGX, SIA and KS Energy (17 Jan 2012)

Stock Name: M1
Company Name: M1 LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 2.81

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 7.00

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: OCBCPrice Call: HOLDTarget Price: 10.85

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 0.91




MARKET PULSE: M1, SGX, SIA and KS Energy
17 Jan 2012
KEY IDEA

M1: Expecting more of the same in 2012
M1 Ltd reported FY11 results, which came in mostly in line; revenue grew 8.8% to S$1064.9m, or around 4% ahead of our estimate; net earnings came in around S$164.1m, or just 0.5% shy of our forecast. M1 declared a final dividend of S$0.079 per share, bringing the total dividend to S$0.145, or 80% of core earnings as guided. For 2012, M1 expects to maintain stable performance at both top and bottom-line; it has also kept its 80% dividend payout ratio and expects to spend some S$110-130m in capex. We are bumping up our FY12 revenue forecast by 4% but are lowering our earnings forecast by 4%. But due to likely lower working capital requirements and capex expenditure in the near future, our DCF-based fair value inches up from S$2.79 to S$2.81. We continue to like M1 for its defensive earnings and greater NBN potential - maintain BUY. (Carey Wong)

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Singapore Exchange: Dealing with challenges ahead
Singapore Exchange (SGX) posted 2QFY12 net profit of S$65.4m, down 12% YoY. Global outlook remains murky and equities are unlikely to shine in this environment. We have cut our earnings projections by between 7-8% for FY12 and FY13 to account for muted performances ahead. While the pipeline of potential IPO candidates looks healthy, it will still be a slow market due to current depressed valuations and weak sentiment. As such, we expect corporate activities to come off in tandem with lower economic growth. Yield is now attractive at 5.7% (with total base dividend of 16 cents per year). Maintain BUY and fair value estimate of S$7.00. (Carmen Lee)

Singapore Airlines: Little surprise in weak operating statistics
Singapore Airlines (SIA) reported its Dec 2011 operating statistics. The airline's passenger capacity (ASK) increased by 3.2% YoY while its passenger traffic (RPK) gained a smaller 1.8% YoY, resulting in passenger load factor (PLF) falling to 79.6%, compared to 80.7% in Dec 2010. With its ASK already up 3.3% YoY in 3QFY12, SIA is unlikely to achieve management guidance of 2HFY12 ASK similar to that of 1HFY12. We maintain our fair value estimate of S$10.85/share, which has already factored in the challenging times the aviation sector is currently facing, and HOLD rating on SIA. (Eric Teo)

KS Energy: Rig on fire
KS Energy (KSE) announced that a fire incident has occurred on the KS Endeavor jack up rig, which is owned by a jointly controlled entity of KS Drilling Pte Ltd. The operator of the rig is Chevron, and it is currently in the Funiwa Field in Nigeria. The incident occurred between 5-6am yesterday morning local Nigerian time (GMT +1), which would be about 1pm Singapore time. According to Chevron, all but two of the 154 workers on the rig and a nearby support barge have been accounted for, and at the time of KSE's announcement (about eight hours ago), the rig was still on fire. Recall that KS Endeavor was contracted to work for Chevron from Jan 2011 to Jan 2013, after it was delivered in 2010. Meanwhile the cause of the incident is still unknown, as well as the extent of the damage on the rig. Pending more details from the company, we maintain our HOLDrating and fair value estimate of S$0.91. (Low Pei Han)

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


NEWS HEADLINES

- French bonds rose after borrowing costs declined at the first bills sale since S&P downgraded the country. However, the euro continued to weaken, and gold and copper advanced as ratings downgrade in Europe has spurred demand for metals as a store of value.

- Oil in New York rose 1% to $99.96 per barrel, the first rise in four days. Iran is claiming that it will shut the Straits of Hormuz, a transit route for approximately a fifth of global oil trade, in retaliation to international sanctions on its exports.

- Global Logistic Properties announced the pricing of S$250m in aggregate principal amount of 5.50% perpetual capital securities.

- Mermaid Maritime has announced the appointment of Bruce Gemmell as its new CEO. He was previously the CEO of CSOTL Offshore Ltd, formerly named CUEL Swiber Offshore (Thailand).

- China Aviation Oil (Singapore) announced yesterday its proposed acquisitions of China Aviation Oil (Hong Kong) and North American Fuel Corp for National Aviation Fuel for ~US$11.7m and US$4m respectively.





Monday, January 16, 2012

TEE International rated 'increase exposure' by SIAS

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED
Research House: SIASPrice Call: BUYTarget Price: 0.45



SIAS Research in a Jan 12 research report says: "TEE's posted an expected set of 2Q FY12 results with revenue coming in close to our projection of $40 million per quarter while earnings inched down 8.1% y-o-y to $3.6 million.

"1H FY12 revenue and profit after tax was 31.2% and 29.3% of our FY12F respectively - the integrated real estate segment has yet to contribute anything to the P&L YTD and we expect the bulk of the existing projects' milestones to be met by 4Q FY12F.

"TEE also declared interim dividend of 0.6 cents per share this quarter, 20% more than the same quarter last year. We project FY12F dividend to be around 2.5 cents, representing a dividend yield of about 10% given the current trading price of 24 cents. Intrinsic value of 45 cents. MAINTAIN INCREASE EXPOSURE."

Cambridge Industrial Trust rated 'buy' by DMG

Stock Name: Cambridge
Company Name: CAMBRIDGE INDUSTRIAL TRUST
Research House: DMGPrice Call: BUYTarget Price: 0.595



DMG Partners Research in a Jan 13 research report says: "After meeting with the management of Cambridge Industrial Trust (CIT) recently, we believe FY2012 would be one of the most exciting years for CIT since listing in FY2006.

"With the acquisitions of 4 properties, DPU is expected to grow by c.12% in FY2012. Although consensus expects a slowdown in Singapore's economy in FY2012, we believe the rental rate of industry property will remain resilient, following our sensitivity study of industrial rental rate vs Singapore's PMI.

"Although CIT's FY2011 DPU is expected to fall by c.13% y-o-y; due to the enlargement of share base as a result of April rights issue, the contribution from abovementioned projects should allow CIT's DPU to pick up in FY2012. Target price of 59.5 cents posting an potential upside of 22.7%. MAINTAIN BUY."

Wilmar International rated 'hold' by DBS

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: DBS VickersPrice Call: HOLDTarget Price: 5.40



DBS Vickers Securities in a Jan 13 research report says: "As part of its US$5.0 billion Medium Term Note (MTN programme, Wilmar announced its pricing for $250 million 3.5% Notes due 2017 and $100 million 4.1% Notes due 2019. Both 5-year and 7-year Notes will be issued on Jan 25.

"The proceeds will be used for general corporate purposes. Based on its balance sheet as at Sep 30, 2011, Wilmar had US$12,261.1 million net debts, of which US$6,869 million was liquid working capital (including Readily Marketable Inventories). Excluding liquid working capital, net gearing was hence calculated at 42.1% (not including non-controlling interest).

"The new Notes will raise Wilmar's net gearing slightly to 44.2% - which we believe is manageable for the group (i.e. no significant impact on interest cover). Target price of $5.40 remain unchanged. HOLD"

Friday, January 13, 2012

MARKET PULSE: Ezra, CSE and City Dev (13 Jan 2012)

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 1.36

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD
Research House: OCBCPrice Call: BUYTarget Price: 1.06

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 8.38




MARKET PULSE: Ezra Holdings, CSE Global and City Developments
13 Jan 2012
KEY IDEA

Ezra Holdings: 1QFY12 results in line; to tap debt markets this year?
Ezra Holdings (Ezra) reported a 138% YoY rise in revenue to US$180.5m but saw flat net profit of US$13.3m in 1QFY12. Results were within expectations. AMC's loss has narrowed substantially from 4QFY12's US$6-7m loss. The subsea division has also been building up its order book in the past half a year - compared to an order book of more than US$300m as at 14 Jul 2011, the figure has grown to an excess of US$800m currently. We look at the group's cash requirements this year and we think it is likely that the group may look to the debt markets for funds this year. Meanwhile, we maintain our BUY rating and S$1.36 fair value estimate on the stock. (Low Pei Han)

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CSE Global: Look out for Australia LNG project win
We think that a potential catalyst could come from the Australia, where LNG projects appear to be finally gaining momentum. CSE Global has been strengthening its position in the country over the past few years and it has a good chance of winning a major LNG contract. Separately, we note that long-term value investor Chartered Asset Management has increased its stake to 13.5% from 12.8% in Dec 11. With a greater proportion of its shares held by long-term investors, we believe there is lower downside risk to its share price. We also find the current 5.4% dividend yield attractive. Maintain BUY with unchanged fair value estimate of S$1.06. (Chia Jiunyang)

City Developments Limited: Acquisitions in Phuket and Bangkok
City Developments (CDL) announced yesterday that it has paid US$157.6m for a 49% stake in Dolrutei, which in turn holds 95% of Phuket Square. Phuket Square owns two properties in Patong, Phuket Island: Jungceylon Shopping Mall (a retail development with NLA 63k sqm) and Millennium Resort Patong Phuket (a hotel with 418 rooms). It also owns Millennium Mall, a retail mail under construction (est. completion 1H12) in Sukhumvit, Bangkok with an NLA of 3k sqm. We understand the value attributed to these properties under the transaction is US$222m, versus an open market valuation of S$225.8m by Colliers International. Pending further discussion with management, we maintain our HOLD rating with a fair value estimate of S$8.38 (35% discount RNAV). (Eli Lee)



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


NEWS HEADLINES

- Spanish and Italian borrowing rates fell following debt auctions, sending Australian equities and Japanese stock futures upwards on the increasing optimism that European economies are stabilizing with cash injections from the ECB.

- In Dec, China's inflation rate cooled to a 15-month low of 4.1%, indicating that the government may have more room to employ monetary easing to support the economy.

- Wilmar prices bonds totalling S$350m yesterday, with S$250 of five-year 3.5% notes and S$100m of seven-year 4.1% notes.

- F&N's service residence arm, Frasers Hospitality, began construction of its second property in Jakarta. The 45-storey development comprising of ultra deluxe service residences and penthouses is expected to be completed in 2014.

- Far East Organizations' The Hiller project in Hillview Avenue has sold approximately three-quarters out of the 411 units that have been released so far. Units were sold at an average of $1,200 psf.

- Hiap Seng Engineering said yesterday that the CPIB has concluded its probe. The company had announced in Sep that the probe mainly concerned contractual arrangements between the company and certain sub-contractors.





CLSA upgrades CapitaMalls Asia to buy

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED
Research House: CLSAPrice Call: BUYTarget Price: 1.64



CLSA Asia-Pacific Markets has upgraded Singapore shopping mall developer, CapitaMalls Asia (CMA) (CMAL.SI), to buy from underperform and raised its target price to $1.64 from $1.44.

CLSA said it believes that concerns of an over-leveraged balance sheet have been exaggerated as CMA is in line with its Chinese peers. China accounts for around 48% of CMA’s gross asset value.
CLSA also said that it saw deep value in CMA’s China mall business. At the company’s current share price, CMA’s China mall business implied 3,305 yuan ($669.7) per square metre or $0.34 per share, CLSA said, which depicts a deep discount for the asset.
CMA opened three malls in China in 2011 and aims to open seven new malls in the country this year. The ramp-up of new malls may narrow its net asset value discount, CLSA said, adding that acquisitions in 2012 are likely to be more yield-accretive.
At 10:41 a.m., CMA shares were up 2.5% at $1.245. The stock fell approximately 42% last year.

Thursday, January 12, 2012

Singapore Technologies Engineering rated 'accumulate' by Phillip Securities

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: Phillip SecuritiesPrice Call: BUYTarget Price: 3.13



Phillip Securities Research in a Jan 11 research report says: "Being one of the largest players in the industry, we opine that STE would be able to ride on the long term growth in demand for MRO work. STE would also benefit from the shift in MRO work towards lower cost bases.

"While the Aviation MRO industry could experience some near term headwinds, we expect STE to sail through comfortably with its exposure to the less cyclical defence business and strong order book of $11 billion. Long term Aerospace contracts worth at least $3.7 billion, by our estimates, would provide future revenue visibility.

"At the current price, STE is trading below its historical average P/E multiple of 20X and only slightly above levels reached during the past 2 crisis levels of 15X. The stock would also yield >5% on our forecasted dividends, which looks favourable against a paltry 10yr SGS bond yield of 1.6%. Target price of $3.13. ACCUMULATE."

DBS Group Holdings rated 'buy' by UOB KayHian

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: UOB KayHianPrice Call: BUYTarget Price: 16.14



UOB KayHian in a Jan 12 research report says: "We expect DBS to record a healthy loan growth of 3% qoq in 4Q11 due to the drawdown of loans previously approved. Net interest margin is expected to be largely unchanged at 1.74% due to a mild pick-up in 3-month SIBOR to 0.39% by end-4Q11.

"We expect DBS to report a net profit of $758 million for 4Q11, flat q-o-q (3Q11: $762 million, including a gain of $47 million to combine DBS Asset Management with Nikko Asset Management and a hefty general provision of $187 million).

"We have reduced our 4Q11 net profit forecast by 4.7% to $758 million. Our full-year 2011 net profit forecast is marginally lowered by 1.2% at $3,062 million. Our target price is $16.14, based on P/B of 1.32x, which is derived from the Gordon Growth Model. MAINTAIN BUY."

MARKET PULSE: SPH, Lian Beng and TEE International (12 Jan 2012)

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD
Research House: OCBCPrice Call: BUYTarget Price: 3.99

Stock Name: Lian Beng
Company Name: LIAN BENG GROUP LTD
Research House: OCBCPrice Call: BUYTarget Price: 0.51

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.30




MARKET PULSE: SPH, Lian Beng and TEE International
12 Jan 2012
KEY IDEA

Singapore Press Holdings: Retail landlord strategy coming along nicely
Singapore Press Holdings (SPH) reported 1Q12 PATMI of S$97.5m or 6 S-cents per share, down 4.7% YoY. This was mainly due to a poorer performance from the Newspaper and Magazine segment, offset by added contributions from Clementi Mall. 1Q12 PATMI formed 26.3% of our FY12 forecast and is broadly in line with expectations. Clementi Mall contributed S$9m to revenues as it ramped up into full operations this quarter, its contributions buttressing earnings significantly. We like the visibility of recurring income from a suburban retail mall, and believe management's strategy of building a stable counterweight to the print business is coming along nicely. Upgrade to BUY at a fair value estimate of S$3.99 and expected dividends of S$0.24 in FY12. (Eli Lee)

MORE REPORTS

Lian Beng: Reasonably decent 1HFY12 showing
Lian Beng reported a reasonably decent set of 1HFY12 numbers that were just slightly below our expectations. The group recorded YTD sales of S$237.7m, down 4.7% YoY, but 1HFY12 profits of S$30.5m showed a 33% improvement. The sales decline is attributed to lower recognition of construction contract revenue while the net profit jump was contributed by gains from the sale of its property at New Industrial Road. Without which, we estimate that net profit would have been largely flat. Construction remains an important revenue driver (73% of total revenue) and given that Lian Beng still holds a sizeable net order book of S$772m, we expect its earnings to improve when it picks up pace on the execution of its newly awarded contracts. We maintain our BUY rating and fair value estimate of S$0.51. (Benjamin Lim)

TEE: Higher overseas contribution, better margins
TEE saw 34% and 19.4% YoY decline in revenue and net profits respectively due to lower revenue recognition from local projects. Going forward, we expect the group to pick up pace on several overseas projects, which typically provide better margins. Management believes that FY13 will be a more representative year of its operations. Factoring in slower execution, but stronger margins from overseas projects, we update our assumptions and lower our fair value estimate to S$0.30 (previously S$0.34). With an expected dividend yield of around 5%, total anticipated return on the stock is ~33%; therefore we maintain our BUY rating. (Benjamin Lim)

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


NEWS HEADLINES

- US manufacturing and mining helped led the largest annual employment increases in five years in 2011. Employers added a total of 1.64m workers in 2011, the best since 2006, after a 940k increase in 2010.

- Cooper futures rose to a four-week high with the anticipation that China's will pursue monetary easing and thus drive metal demand. Zinc, tin and lead prices also rose, while nickel dropped.

- CapitaLand's wholly-owned serviced residence business unit, The Ascott Limited, has secured a new management contract for its first Citadines Apart'hotel in Surabaya, Indonesia. The 288-unit property is scheduled to open in 2014.

- China Fishery drops plan for HK dual listing due to persisting poor market conditions. The proposed flotation was first announced in December 2010 and was delayed multiple times before.

- SPH's flagship paper, The Straits Times (ST), will launch an Android application next Monday to garner subscriptions through all-in-one packages that will also comprise the daily ST newspaper.





Sembcorp Marine rated 'buy' by DMG

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DMGPrice Call: BUYTarget Price: 5.25



DMG & Partners Securities in a Jan 9 research report says: "Management was particularly upbeat on new order prospects, and believes SMM will see higher fresh order wins in 2012.

"SMM also discussed its commitment to build a strong presence in Brazil and is confident to win a fair amount of work from Petrobras. SMM is experiencing strong order enquiries for newbuild jackup rigs, semisub rigs and conversion work. Management is confident to win more than $5 billion new orders in 2012 ($3.7 billion in 2011), ahead of our forecast of $4.5 billion.

"Unchanged SOTP-derived target price of $5.25. We value the stock using: (1) 15x core shipyard earnings; (2) adjust for FY11 estimated net cash; (3) 30% stake in Cosco Shipyard Group at 8x P/E; and (4) Cosco Corp at 85 cents. MAINTAIN BUY."

Singapore Press Holdings rated 'neutral' by CIMB

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD
Research House: CIMBPrice Call: HOLDTarget Price: 3.90



CIMB in a Jan 11 research report says: "We expect slower ad revenue in FY2012 because of a weakening economy. The slowdown had already been apparent in 1Q12 when newspaper ad revenue fell 4% y-o-y on weaker display (-3% y-o-y) and classified (-4% y-o-y), albeit from a high base in 1Q11.

"While SPH tried to keep a tight lid on costs (staff and newsprint costs were up 2% and 4% respectively), this was not sufficient. While risks to its investment portfolio were to be expected given market volatility, SPH surprised with a 90% y-o-y fall in investment income due to unrealised FX losses on investments.

"1Q12 core profit is in line at 25% of our FY2011 estimate and consensus. Stronger property earnings and lower finance costs made up for weaker print and investment income. Target price of $3.90. MAINTAIN NEUTRAL."

Tat Hong Holdings upgraded to 'buy' by OCBC

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD
Research House: OCBCPrice Call: BUYTarget Price: 1.09



OCBC Investment Research in a Jan 9 research report says: "The group is seeing some improvements in its Australian business and remains optimistic that it will do better in this financial year (ended March 2012), compared with the previous year.

"We think that a recovery in the Australian business would provide a strong boost to the group as the country accounts for over half of its total revenue. Besides Australia, it is also active in Hong Kong, Malaysia and Indonesia markets.

"We increased our projected utilization rates and gross margins for the next few quarters by 2-5%, which in-turn raised our FY2013 EPS by 13-45% (Note that Tat Hong's net profit is highly sensitive to utilization rate changes). Fair value estimate of $1.09 (previously 70 cents), still on 9x FY2013F EPS. UPGRADE TO BUY."

Technics Oil & Gas rated 'buy' by AmFraser

Stock Name: TechOil&Gas
Company Name: TECHNICS OIL & GAS LIMITED
Research House: AmFraserPrice Call: BUYTarget Price: 1.22



AmFraser Research in a Jan 9 research report says: "Technics announced that it intends to spin off two subsidiaries, 51%-owned Norr Systems and 55%-owned Wecom Engineering, on the Gretai Securities Market in Taiwan as the Norr and Wecom Group.

"We believe that the new Norr and Wecom Group should be able to secure a market valuation comfortably north of 10x, thereby unlocking value for existing shareholders. We estimate the spinoff to occur in the first half of calendar year 2013, and we lower our earnings for Technics correspondingly.

"We continue to expect an 8 cents dividend this FY, which at the current price translates into a yield of 9.2%. However, we cut our FY2013F/2014F dividends to 6 cents on the lower expected earnings. Fair value of $1.22. MAINTAIN BUY."

Lian Beng Group rated 'buy' by DMG

Stock Name: Lian Beng
Company Name: LIAN BENG GROUP LTD
Research House: DMGPrice Call: BUYTarget Price: 0.71



DMG & Partners Securities in a Jan 11 research report says: "Lian Beng Group's (LBG) 2QFY12 earnings were in-line with our estimates, coming in at $11 million, easing 5.2% y-o-y on the back of lower construction work recognised.

"LBG is set to ride on Singapore's current building boom and its ventures in private residential and industrial developments will help boost its bottom line. LBG's net cash per share of 15.6 cents (1QFY12: 14.2 cents) would be invested into its property business.

"On the back of strong order books of $772 million (1QFY12: $761 million), we estimate LBG's FY2012 earnings to come in at $53.5 million, which suggests a prospective P/E of 3.5x (peers at 6.3x blended FY11 and FY12 P/E). Target price of 71 cents, based on a target P/E of 7x FY12 earnings. MAINTAIN BUY."

Wednesday, January 11, 2012

J.P. Morgan downgrades SGX to underweight

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: JP Morgan ChasePrice Call: SELLTarget Price: 5.30



J.P. Morgan has downgraded Singapore Exchange (SGX) (SGXL.SI) to underweight from neutral and lowered its target price to $5.30 from $7.00.

J.P. Morgan said SGX’s volumes in the fourth quarter last year were exceptionally low at $1.088 billionper day.

The bank also noted that the volumes in January have been tepid so far, belying hopes of a rebound, and the Lunar New Year period generally sees slow volumes.
SGX is slated to report its second-quarter result for its 2012 fiscal year on Jan 16 and J.P. Morgan said it expects the bourse to post a profit of $59 million, down 33% quarter-on-quarter and 21% year-on-year.
At 10:50 a.m., SGX shares were down 0.8% at $6.11.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD
Research House: CIMBPrice Call: HOLDTarget Price: 0.88

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: DMGPrice Call: SELLTarget Price: 5.40

Stock Name: Hyflux
Company Name: HYFLUX LTD
Research House: HSBCPrice Call: HOLDTarget Price: 1.40




Market Compass


11 January 2012~ Good Morning Singapore!


Singapore Idea Snippets:
Singapore Stock News

CapitaLand (CAPL SP), CapitaMalls (CMA SP): CapitaLand-led group incl. CapitaMalls Asia, Singbridge Holdings sign agreement to develop retail, residential and hotel complex in China; project will cost ~S$4.3b. CapitaLand cut to sell from hold at RBS

City Developments (CIT SP): Downgraded to sell from buy at RBS

Food Junction (FOOD SP): Plans to open 2 restaurants this month.

Kian Ho Bearings (KH SP): Expects "significant drop" in FY profit on weaker demand

Lian Beng (LBG SP): 1H net income rises 33% Y/y to S$30.1m

Singapore Press (SPH SP): 1Q profit falls 4.7% Y/y to S$97.5m

TEE International (TEE SP): 2Q net income drops 5.5% Y/y to S$3.68m

Thai Beverage (THBEV SP): Says stockholder Maxtop buys 1m shrs at 25.398 Singapore cents

Tiger Airways (TGR SP): Dec. passengers down 12% Y/y to 481,000

UMW Holdings (UMWH MK): Ex-div

Wee Hur Holdings (WHUR SP): Gets S$35m contract to manage office building at Changi Business Park

Tuesday Recap

DMG downgrades Singapore Exchange (S68.SG) to Sell from Buy and cuts its target price to S$5.40 from S$6.20, following recent lacklustre securities average daily turnover. The house attributes the weakness in ADT to "negative investment sentiment due to slowing global economic growth" and tips 4QCY11 net profit of S$65 million, which represents a 26% on-quarter decline. The house expects ADT to remain weak in 1QCY12, and cuts its SGX FY12 ADT forecast to S$1.36 billion from S$1.66 billion, and FY13 ADT forecast to S$1.60 billion from S$1.78 billion resulting in 19%/18% cuts to its FY12/FY13 net profit forecasts to S$288 million/S$320 million. Taking a regional view, DMG says expectations of more HKEX (0388.HK) listings could lead to outperformance of HKEX's share price over SGX and says "a pair trade may be rewarding." The house has a Buy rating on HKEX with a HK$146.40 target price, pegged to 28X FY13 EPS, similar to its 10-year historical P/E ratio. SGX shares are up 0.7% at S$6.16.

HSBC initiates Hyflux (600.SG) at Neutralwith blended DCF- and P/E-based target price of S$1.40. It says Hyflux "has a strong record and product portfolio in a growing industry," operating in high-growth, water-scarce regions such as China, India, MENA, and ASEAN. However, it says near-term growth is curbed by its financial capacity to take on big projects and the house expects tepid order flow in the next few quarters. Valuation-wise, the house says, "Hyflux looks cheap on historical profit multiples, but less so on cash flow multiples." The shares are up 1.6% at S$1.24.

HSBC upgrades Singapore Airlines (C6L.SG) to Overweight from Neutral, citing "compelling value as momentum starts to turn." It says SIA is well-positioned, but the relatively strong SGD and European exposure "help to generate underperformance." The house says valuation is compelling with "little downside' to 2009 lows, while the key share performance indicator of earnings momentum is turning. It maintains SIA's S$12.50 target price, implying 1.1X 2012E P/B. The shares are up 0.8% at S$10.41.

CIMB maintains its Underweight stance on Singapore with a STI target of 2680, due to the island nation's small open economy status and high external exposure. It says "a global slowdown would impact on export-related stocks, impact office demand and other cyclical sectors such as the offshore marine sector negatively." It adds, the key property sector has also been plagued by a string of government cooling measures with a large supply stream upcoming, while in light of the recent transport price hikes, still high residential prices and relatively tight labor market, inflation is another variable that may remain stubborn for a large part of 2012." It notes, while STI valuations remain inexpensive, with P/B trending close to 2 SD below 2003-09 full cycle mean levels, "this market has remained weak for some time." The house adds, Singapore's ROE trend remains lackluster and the house is also forecasting marginal 4% earnings growth for 2012, with a bigger 14% pick up only in 2013. The STI is +1.0% at 2716.76.

Citigroup raises Neptune Orient Lines (N03.SG) target price to S$1.05 from S$0.90 and keeps its Sell rating.Its new target is based on 0.8X 2012E P/B, or 1 SD below its historical mean, "in line with valuations seen during periods of weak (but not extremely depressed) profitability set against a weak global macro backdrop." The house uses a USD/SGD exchange rate of 1.27. It says NOL may dip into losses in the coming quarters on the back of weak freight rates, and shares may not have factored in earnings disappointments. "While valuations are already below the historical mean, we see further downside as book value deteriorates on multiple quarters of losses." On a broader sector view, Citi says it expects a low-rate environment in 2012 with high volatility. The house recommends a bottom-up stock picking approach, and prefers small- over large-caps on compelling value. Its top pick is Pacific Basin Shipping (2343.HK), rated Buy with a HK$4.40 target price. NOL shares are flat at S$1.165.

CIMB downgrades CSE Global (544.SG) to Neutral from Outperform saying "CSE's business diversification, quality management and strong focus on ROE and FCFF have shone through. We find it opportune to take some profits." The house notes the stock outperformed the STI by 27% in December (it upgraded the stock to Outperform on Dec. 6), but taking a leaf from the recession in 2009, it expects earnings growth to slow and says "we believe this business cycle has peaked for CSE." It tips a 3-year earnings CAGR of 8%, compared to 30% for the boom years of 2006-08. The house adds, on a rolling forward core P/E basis, the stock is trading above its 5-year mean and a premium gap with the small- to mid-cap industrial average has opened up (CSE typically trades at a discount); "with limited catalysts on the horizon, we believe CSE will at best perform in line with the market." CIMB raises its target to S$0.88 from S$0.76, based on 7X CY13 earnings, one SD below its 5-year mean. The stock is last +3.5% at S$0.89.

Ezra Holdings (5DN.SG) is +3.4% at S$0.920, outperforming a broadly higher O&M space after saying its subsea division, EMAS AMC, has won two contracts from Statoil for mooring chain and riser replacements in the North Sea. The total contract value is about NOK425 million (around US$70.5 million) and could rise to NOK600 million with options. OCBC notes execution risk should be lower as EMAS AMC has done similar work for Statoil previously in 2009; the house estimates Ezra's subsea order book has now exceeded US$800 million, nearing its US$1 billion short-term order book target. It keeps its Buy call with a S$1.36 fair value estimate. However, some analysts remain cautious on the stock, which fell 53% over 2011; DMG says despite the impressive order wins it remains lukewarm on Ezra, citing higher costs incurred by the company to strengthen its global presence. It notes subsea margins remain difficult to predict and it sees risks of further fund raising to beef up its balance sheet. DMG stays Neutral with a S$1.06 target.

(Dow Jones News)

Asia Stock News

Asian stocks rose, with a regional benchmark index climbing the most in a week, on stronger U.S. and Australian economic reports and speculation that slowing China trade boosts the case for easier monetary policy.

China Merchants Bank Co. led mainland lenders higher on speculation the government will take action to stimulate the economy amid slower exports. James Hardie Industries SE, an Australian supplier of building materials, climbed 3.1 percent after a report that construction permits increased. Honda Motor Co., which depends on North America for 44 percent of sales, advanced 1.4 percent in Tokyo.

The MSCI Asia Pacific Index rose 1.2 percent to 116.04 as of 7:38 p.m. in Tokyo, with almost three shares rising for each that fell. The gauge advanced 0.9 percent last week as manufacturing growth from China to the U.S. bolstered confidence in the global economy.

Commodity News

Gold futures closed at the highest price in four weeks as a weaker dollar bolstered demand for commodities. The greenback retreated for the second straight day against a basket of currencies amid signs that European leaders are taking more steps to stem the region's debt woes. The MSCI All- Country World Index of equities rose as much as 1.6 percent, and the Standard & Poor's GSCI Spot Index of 24 raw materials advanced as much as 1.5 percent, the fifth gain in six sessions."The dollar is selling off, benefiting gold and commodities," Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama, said in an e-mail. "Risky assets have been well bid in 2012 on the heels of relatively solid economic news in the U.S. and the belief that much of the bad news out of Europe has been priced in."

Oil rose for the first time in four days on renewed concern that Middle East tension will disrupt supply and as equities advanced, raising economic optimism. Crude gained 0.9 percent as the European Union moved up a meeting to discuss an oil embargo against Iran by a week to Jan. 23 and Iran announced another step in its nuclear program. "There is no way traders are going to short oil if there is potential for some fighting," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "People are feeling a little bit better about the economy." Crude for February delivery climbed 93 cents, or 0.9 percent, to settle at $102.24 a barrel on the New York Mercantile Exchange. West Texas Intermediate oil traded on the Nymex has surged 20 percent in the past three months.

Source Bloomberg