Phillip - Morning Note - 31 Jan 2013

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: Phillip Securities

Price Call: HOLD

Target Price: 2.13

Stock Name: SATS
Company Name: SATS LTD.

Research House: Phillip Securities

Price Call: BUY

Target Price: 3.33

Fundamental Call

CDL Hospitality Trust - Results(Travis Seah) Recommendation: Neutral (Maintain) Previous close: S$2.010 Fair value: S$2.130 · 4Q12 (FY12) revenue S$38.3mn (S$149.5mn), NPI S$35.6mn (S$139.3mn), distributable income S$28.1mn (S$109.5mn) · 4Q12 (FY12) DPU of 2.90 cents (11.32 cents) · Maintain Neutral with revised target price of S$2.130 SATS Ltd - Results (Derrick Heng) Recommendation: Accumulate Previous close: S$3.08 Fair value: S$3.33 · 7.6% growth in underlying net profit. · Guidance positive for passenger travel business, while air freight business is expected to remain weak. · We expect dividend yields to sustain above 5% over the next few years. · Maintain Accumulate with TP of S$3.33.

Source: Phillip Securities Research Pte Ltd

Morning Commentary

- STI: +0.80% to 3285.9 - SET: +0.81% to 1490.8 - JCI: +0.31% to 4452.9 - KLCI: -0.59 to 1627.7 - HSCEI: +0.78% to 12172.2 - Hang Seng: +0.71% to 23822.1 - Nikkei 225: +2.28 to 11114 - S&P500: -0.39% to 1501.9 MARKET OUTLOOK: By Joshua Tan, Hd of Research US 4q12 GDP growth registered an unexpected mild contraction -0.1%q-q annual pace. But the headline number really does obscure underlying strength - consumption and fixed asset investment, the core of the US economy, added strongly. Detractions were mainly from one-quarter events - inventory took a huge hit due to the fiscal cliff which has since seen a positive resolution for middle class taxes, exports was poor but the global economy is rebounding, and defense spending fell dramatically due to the on-going sequester saga. While we expect inventory and exports to come back, defense spending may be hampered by the sequester. Overall, we think 4q12 was strong likelihood for upward revision to a positive print as this advanced estimate only uses 2 months of data. We do not also think our 2013 outlook of OW stocks MW bonds needs to be revised. Chief risk of course is that the US sequester/debt ceiling debate this Feb/Mar if it really does end ugly. Bond markets certainly did NOT think the US GDP data was bad, as 10yr Treasuries further fell to drive yields to above 2% now! And Crude oil continued its rise to US$97! So if there is a negative reaction in Asia Equity markets today, we do not expect corrections to be deep, but merely an excuse to take profit given the strong run-up. We expect eventual buying on weakness if such profit taking occurs. A note on the KLCI - yesterday's fall eventually closed with an intraday rebound above the 200dma, so we have survived a second test of that key support (in this correction), which provides more impetus for another try for a rebound. Again we wish to highlight the risks for this index - even if it rebounds, beware downside volatility on political risk. No change to our market outlook for the year: we continue to believe that this is a year for stocks and maintain OW on CN, HK, SG, TH and PH, while MW on the US, MY and ID. Investors looking to invest in the first 4 markets should check out our Country Strategy reports, else invest/trade them thru ETFs/PhillipCFDs listed in the Asset Strategy reports (see Sector/Strategy Reports section). Equity Strategists: - Hd of China Research, top picks: China Life Insurance (2628 HK), China Lumena New Material (67 HK) - Hd of HK Research, top picks: AIA (1299 HK) and HSBC (5 HK) - SG Equity Strategist (Derrick Heng): For 1Q2013, we believe that cyclical stocks in the Industrials space could do well in the near term: SIA (Buy, TP: S$13.40), Keppel Corp. (Accumulate, TP: S$12.38) & NOL (Accumulate, TP: S$1.36). Top picks for the year are Pan United (Buy, TP: S$0.88), SIAEC (Buy, TP: S$5.00) & Capitaland (Accumulate, TP: S$3.97). Pan United is a dominant supplier to the construction industry in Singapore and we expect the company to perform well given the strong pipeline of infrastructure work over the next few years. Although current price (S$0.99) has overshot our TP, we look forward to 4q12 results to reassess our TP. SIAEC is a key beneficiary of the aviation capacity growth story in the region and offers excellent dividend yields. Capitaland would be a beneficiary of the stabilisation of property prices and bottoming out of economic conditions in China. SECTOR/STRATEGY REPORTS: - Sector Reports: Bank, 21 Jan / Property, 16 Jan / Gaming, 4 Jan / REIT, 31 Dec / Telecommunications, 12 Dec / Commodities Sector 3 Dec - Country Strategy: China & HK, 28 Jan / S'pore, 26 Dec / Thai, 19 Dec - Global Macro, Asset Strategy: 24 Jan, Update / 4 Jan / US, 21 Dec / ASEAN, 5 Dec

Source: Phillip Securities Research Pte Ltd

Macro Data

In US, GDP unexpectedly fell in 4q12 by annualized 0.1%q-q, but the headline weakness obscures underlying strength. Household consumption and fixed asset investment, the core of the economy, has remained fairly strong. Consumption growth accelerated to annualized 2.2%q-q (+1.5%pts), faster than the 1.6% growth rate in 3q12 and beating the market expected 2.1% pace. Total fixed investment rose 9.7%q-q annual pace (+1.2%pts) with strong gains in Corporate spending on equipment and software (12.4%q-q annual pace, +0.9%pts) after the 2.6% decline in 3q12, and Residential construction continuing to gain as well (15.3% q-q annual pace, +0.4%pts).. The main drags to 4q12 was due to the biggest plunge in defense spending in four decades (-1.3%pts), inventory drawdown (-1.3%pts), export weakness (-0.8%pts). Core inflation reported 0.9% y-y in 4q12, compared to the 1.1% y-y pace in 3q12. With the tame inflation and economy at moderate expansion, the FED is likely to continue the QE. In Euro zone, economic confidence index rose to 89.2 in Jan from a revised 87.8 in Dec, higher than the market expected 88.2, indicating an improving business confidence. Regardless the improvement in sentiment, In Spain, recession deepened more than economists forecast in the fourth quarter as the government's struggle to rein in the euro region's second-largest budget deficit weighed on domestic demand. Gross domestic product fell by 0.7% q-q in 4q12, exceeding the 0.6% contraction predicted by the Bank of Spain and comparing to the 0.28% q-q drop in 3q12. Over the year, GDP contracted by 1.8% in 4q12, compared to the 1.6% y-y gain in 3q12. In South Korea, industrial production unexpectedly rose by 0.8% y-y in Dec, while the market was predicting a 1.5% y-y fall. South Korea's government is frontloading budget spending in the first half to spur economic growth as won gains and yen weakness aid export rivals in Japan.

Source: Phillip Securities Research Pte Ltd

Company Results
S/N	Company Name	Q/HY/FY	Currency, Units	Revenue			Net Profit
				Current	Previous	Change (%)	Current	Previous	Change (%)
1	SATS	3Q	S$'mn	470.6	442.3	6.4	47.2	38.7	22.0
2	MTQ Corporation Limited	3Q	S$'000	36,554	32,173	14	4,088	6,230	-34
3	Tuan Sing Holdings Limited	FY12	S$'000	371,847	239,720	55	117,807	41,110	187
4	Yoma Strategic Holdings	3Q	S$'000	12,986	9,834	32.1	3,550	1,337	171.0
Source: SGX Masnet

Company Highlights

United Engineers Limited (UE) launched a takeover for WBL Corporation Limited (WBL) in an all-cash pre-conditional voluntary general offer (the Offer) that values WBL at close to $1.1 billion. The Offer by UE's subsidiary, UE Centennial Venture Pte Ltd (the Offeror), is for the remaining 61.7% of WBL, or 167.6 million shares, and all outstanding convertible bonds in WBL, that the Offeror and its concert parties do not own. The Offer price at $4.00 per share is at a 19.0% premium to a competing cash offer (adjusted for dividend). It represents a 14.0%, 13.3% and 12.0% premium to the last transacted price on 23 November 2012, 1-month volume weighted average price (VWAP) and 3-month VWAP up to 23 November 2012, respectively. (UE Closing price: S$3.320, unchanged; WBL Closing price: S$4.200, unchanged) Libra Group Limited (the "Company" and its subsidiaries, the"Group") announced that the Group is expected to report a net loss for its full year financial results ended 31 December 2012 ("Full Year"), mainly due to the writing-off and provisioning of gross amounts due from certain specific customers for contract work-in-progress. This is in respect of variation orders which are now deemed not recoverable from these specific customers (Closing price: S$0.085, unchanged) Saizen Real Estate Investment Trust("Saizen REIT"), announced the acquisition of Clair Court Roka Koen by its TK operator Yugen Kaisha ("YK") Kokkei (the "Acquisition"). YK Kokkei has entered into a conditional sale and purchase agreement for the acquisition of Clair Court Roka Koen ("CCRK") from an independent party for a cash consideration of JPY 712,516,829 (S$9.7 million) (the"Purchase Price"). The Purchase Price will be paid on the completion date, which is expected to be on or around 26 February 2013 (Closing price: S$0.1980, +1.0%)

Source: SGX Masnet, The Business Times

Read the research report(s), available through the link(s) above, for complete information including important disclosures

MARKET PULSE: SATS, Olam, Yoma (31 Jan 2013)

Stock Name: SATS
Company Name: SATS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 2.80

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.44

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.52

MARKET PULSE: SATS, Olam, Yoma

31 Jan 2013

KEY IDEA SATS Ltd: Results slightly disappoint SATS's 3Q13 results fell short of our expectations following weaker top and bottom-line growth. Higher operating expenses resulted in operating margin stagnating at 9.9%, and the seasonal peak in quarterly performance failed to materialise with PATMI coming in at 23.0% YoY higher (-6.6% QoQ) to S$47.0m. While SATS will likely see out FY13 on a positive note, operating margins could deteriorate further should staff costs rise further and airlines cut back on food solution budgets. In terms of valuations, SATS has had an amazing run and valuations appear stretched at the moment. Even after raising our peg to 16.5x 12-month forward PE (from 15.5x), to incorporate the possibility of a special dividend - our fair value moves to S$2.80 (from S$2.70 previously). As such, we maintain our HOLD rating in anticipation of some profit-taking. (Lim Siyi) MORE REPORTS Olam Int'l: Completes bond rights issue Summary: Olam International (Olam) has completed the bond rights issue which also came with free detachable warrants. While the full subscription by the major shareholders Kewalram (20.2% stake) and Temasek (20% stake) will provide near-term assurance, several medium- to long-term issues remain. Besides scrutinizing future acquisitions plans, we believe that investors will also be following the execution of past acquisitions closely. Lastly, our model assumes that Olam does not raise more money to repay the US$600m debt due this year. But even then, we are now projecting higher financing cost, which would result in a 13% fall in our FY13 earnings estimate. Given the still uncertain medium-term outlook, we keep our HOLD rating, but place our S$1.44 fair value under review pending its 2QFY13 results due shortly. (Carey Wong) Yoma Strategic Holdings: No surprises in 3QFY13 numbers Yoma Strategic Holdings (Yoma) reported 3QFY13 PATMI of S$3.7m, increasing by S$2.3m YoY mostly due to higher sales of residences and land development rights. This brings 9MFY13 PATMI to S$1.9m, which is mostly in line with our expectations but below consensus estimates. Topline for the quarter came in at S$13.0m, up 32.1% YoY, again driven by stronger property sales. Yoma reports that residential sales during the quarter increased by more than three times YoY, and is mainly attributable to multiple projects in Pun Hlaing Golf Estate (Ivory Court Residences II, Bamboo Grove Garden Villa, Lakeview Apartments) and also apartments in Star City. We expect key catalysts for the stock ahead to be the proposed approval and acquisition of the prime site in Yangon and a proposed 1-for-4 rights issue for S$0.38 per share ahead. We would speak further with management regarding the latest results and, in the meantime, put our Hold rating and fair value estimate of S$0.52 UNDER REVIEW. (Eli Lee)

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

NEWS HEADLINES - US stocks declined on Wed after the Federal Reserve said that economic growth had paused in recent months and 4Q12 data showed a surprise contraction in GDP. The Dow slid 0.3% to 13,910.42, while the S&P 500 index and the Nasdaq each fell 0.4%, to end at 1,501.96 and 3,142.31, respectively. - The biggest risk to the population projections by the government from now to 2030 is that Singapore companies fail to raise productivity swiftly enough to make up for the projected slowdown in workforce growth, business associations said. - Thai billionaire Charoen Sirivadhanabhakdi offer for Fraser & Neave (F&N) has turned unconditional, after he successfully raised his stake in F&N to 50.92%. - Tuan Sing Holdings reported 4Q12 net profit of S$79m, more than triple the S$25m it earned a year earlier, due to a surge in fair-value gains from investment properties. Turnover rose 56% YoY to S$112m.

IHH flat; Start-up costs could hurt margins: Nomura

Stock Name: IHH
Company Name: IHH HEALTHCARE BERHAD

Research House: Nomura

Price Call: SELL

Target Price: 1.13

IHH (Q0F.SG) is flat at $1.33, despite a generally buoyant market, after dropping 3.3% on Tuesday, with three analysts saying they weren't aware of a reason for the decline.

IHH's expansion plans are on track, but start-up costs should exert pressure on margins, creating a drag on FY13 EPS growth, Nomura says in a note after a company visit.

"Management conceded that its expansion in Turkey and Singapore will continue to drag margins but core operations remain strong as volumes and average selling prices are progressing well."

The house views IHH's valuations as expensive relative to its growth prospects, and notes its EPS forecasts and target price are below consensus;

"We see risks to consensus earnings, particularly arising from greater-than-expected losses at Mount Elizabeth Novena." It expects Mount Elizabeth Novena break-even at the operating level in 2015, while a slower economy could affect patient admissions, with potential further drag from competition from the Farrer Park Hospital completion this year.

It keeps a Reduce call with MYR2.81 ($1.13) target on the Malaysian-listed share (5225.KU). Its Malaysian share is up 0.9% at MYR3.24.

MARKET PULSE: SMRT, CDLHT, StarHill Global, SingTel (30 Jan 2013)

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.71

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 1.93

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.84

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: BUY

Target Price: 3.53

MARKET PULSE: SMRT, CDLHT, StarHill Global, SingTel

30 Jan 2013

KEY IDEA SMRT Corporation: Rhetoric unchanged Summary: Although revenue growth continued unabated, SMRT's 3Q13 results disappointed as higher operating expenses - namely staff costs and repair and maintenance expenses - hit harder than we had anticipated. With this poor set of results, FY13 is now on track to become the worst performing year in seven in terms of bottom-line performance. Going forward, management continues to advocate caution over weaker profitability to end FY13 as its hiring needs remain unfulfilled, and ongoing repairs and maintenance work will inflate operating expenses. Nonetheless, most of the negativity has already been priced in, and our fair value estimate of S$1.71 stays the same despite lowering our estimates. Maintain HOLD. (Lim Siyi) MORE REPORTS CDL Hospitality Trusts: Flat 4Q12 results as expected Summary: CDL Hospitality Trusts (CDLHT) reported 4Q12 results that were generally in line with ours and consensus estimates. Revenue grew by 1.4% YoY to S$38.3m, and net property income rose by 0.2% YoY to S$35.6m. RevPAR for the Singapore hotels was flat YoY in 4Q12 at S$205 (excludes Studio M Hotel, which was acquired on 3 May 2011). For 1Q13, management noted that apart from stiffer competition, there will be the absence of the bi-annual Singapore Airshow and additionally, CNY will fall later this year (Feb instead of Jan), possibly delaying the seasonal pick-up in corporate travel. Weaker accommodation demand by corporates and leisure travellers is likely over the next 12 months. We maintain our fair value estimate of S$1.93 and HOLD rating on CDLHT. (Sarah Ong) Starhill Global REIT: Robust growth in 4Q12 DPU Summary: Starhill Global REIT's (SGREIT) 4Q12 results came in within our expectations. NPI grew 2.9% YoY to S$37.5m due primarily to strong contribution from its Singapore portfolio. DPU rose at a faster pace of 11.9% to 1.13 S cents on the back of lower interest costs and lower tax expenses. This set of results almost coincides with our quarterly NPI forecast of S$37.1m and DPU projection of 1.10 S cents. We note that ~S$0.6m from the distributable income will be retained for working capital purposes. For the full-year, DPU amounted to 4.39 S cents, up 6.6%. This translates to a respectable FY12 DPU yield of 5.2%. SGREIT recently proposed to acquire Plaza Arcade in Perth, Australia at an attractive yield of 7.8%, which is expected to contribute positively to its DPU post completion in 1Q13. Management guided that the gearing ratio is expected to remain very healthy at 31%, up slightly from 30.3% as at 31 Dec 2012. We will be attending SGREIT's analyst briefing later in the morning. For now, we maintain our BUY rating but place our S$0.84 fair value under review. (Kevin Tan) SingTel - Disposes entire stake in Warid Telecom Summary: SingTel announced that it has entered into a deal to sell its entire 30% stake in Warid Telecom to Warid Telecom Pakistan LLC (WTPL), subject to certain conditions being met. SingTel will receive an aggregate consideration of US$150m and the right to receive a 7.5% share of net proceeds from any future sale, public offering or merger of Warid. However, SingTel notes that the estimated loss on disposal will be approximately S$230m, including foreign currency translation losses and transaction costs. We expect the loss (likely booked in 4QFY13) to have a near-term impact but in the longer run, we see it positively. We currently have a BUY on SingTel and will review our S$3.53 fair value after its 3QFY13 results due 14 Feb. (Carey Wong)

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

NEWS HEADLINES - US stocks mostly ended higher on Tue as oil prices rose to four-month highs, boosting the energy sector. The Dow and S&P 500 index each rose 0.5%, to 13,954.42 and 1,507.84, respectively, while the Nasdaq ended flat at 3,153.66. - Singapore is targeting slower, more sustainable, annual growth of 3-5% from now to 2020, and even more modest growth of 2-3% in 2020-2030, the government said in a new white paper. - Creative Technology reported 2Q13 net profit of US$38m, reversing a US$34m loss a year earlier, as revenue rose 10% YoY to US$66m, due to US$20m in new licensing income and other gains of US$26m for the three months to 31 Dec. - IPC Corp's 2012 net profit rose 31% to S$4.8m, despite a 61% fall in revenue to S$17m, as non-controlling interests fell 72% to S$0.5m. The drop in revenue was due to fewer completed residential units in Japan and the US being available for sale in 2012. - STATS ChipPAC has signed an agreement with Tessera Inc to dismiss all claims and counterclaims between the two companies as well as two of STATS ChipPAC's subsidiaries. It now expects 4Q12 net revenue to be about S$480m, near the upper end of its earlier S$475m-S$482m estimate.

UBS raises HK Land target to US$7.90 vs US$6.50

Stock Name: HKLand US$
Company Name: HONGKONG LAND HOLDINGS LIMITED

Research House: UBS

Price Call: HOLD

Target Price: 7.90

UBS raises Hongkong Land target to US$7.90 ($9.77) from US$6.50 after lowering its NAV discount to 20% from 25% and raising its NAV on improved fundamentals. "We believe the tighter target discount to NAV is justified as Central rents will reverse to a positive trend in 2013 from a negative trend last year."

It raises its 2013 Central office rental assumptions to a 5%-10% on-year rise from the previous expectation for a 0%-5% rise, amid a stabilization of Central rental trends. But it notes the 5%-10% growth rate is slower than previous upcycles, likely related to higher current rental rates and uncertain macro conditions; it adds, more finance firms have relocated back offices to decentralized districts, lowering HKL’s office exposure to the segment. UBS also cites a potential vacancy risk at Chater House as HK SFC, which occupied about 1.7%-1.9% of HKL’s Central portfolio, will vacate its space.

It keeps a Neutral call; “as there is limited upside on rents and demand remains subdued over the near tern, we believe the positives have been priced in at current valuations.” The stock is down 2.0% at US$7.85.

UOB-KH starts Triyards at Buy, $1.11 target

Stock Name: Triyards
Company Name: TRIYARDS HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.11

UOB KayHian starts Triyards at Buy with a $1.11 target. "We see Triyards as a proxy to the growing acceptance of liftboats internationally as it is one of the few yards outside the US capable of building such vessels."

It estimates the markets in Southeast Asia, the Mideast and West Africa will be able to absorb 30-50 additional liftboats over the next two to three years. It expects Triyards to see further growth by developing proprietary third-generation liftboat designs, expanding its ship-repair capacity, diversifying into new products such as aluminum shipbuilding and growing its equipment business and branding.

It also expects Triyards to continue to get shipbuilding and repair contracts from 67%-owner Ezra. UOB-KH estimates 2012-15 core net profit CAGR of 18.7%, excluding the contribution from the Constellation, a US$420 million ($519.5 million) construction vessel, which will comprise 17% of FY14 net profit.

 

OSK-DMG cuts Olam target to $1.97 vs $2.20

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OSK-DMG

Price Call: BUY

Target Price: 1.97

OSK-DMG cuts Olam’s target to $1.97 from $2.20 after lowering FY13-14 earnings forecasts by 11% and 18% respectively on higher interest costs and likely weaker growth from a slower pace of acquisitions.

“With Olam having secured five-year tenor debt funding of US$750 million ($927 million), debt maturity is extended and liquidity improved. However, this comes with additional interest costs.”

It also shifted its target P/E to 10x FY14 EPS from 12x FY13 EPS previously, a discount to the historical average of 17x.

But it adds, “Temasek’s stake in Olam equity and in the Olam bonds will go some way to allay investors’ concerns on Olam’s gearing and liquidity.”

It expects fiscal-2Q13 results, due Feb. 7 post-market, should show continued good volume growth for the food business, but it expects weakness in the industrial commodity segment persisted as weak global economic growth likely limited demand for wood and cotton.

But it adds, “we remain positive on the long term prospects for Olam, and believe investor interest will return as earnings continue to grow.” It keeps a Buy call. The stock is flat at $1.64.

Noble down 2.4%; Argentina grain registry suspension

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 1.17

Noble (N21.SG) is down 2.4% at $1.22 in solid volume, but the decline may be as much due to Monday's 2.0% rise as news Argentina suspended it from a key grain registry for alleged tax evasion; a person at Noble said the suspension wouldn't impact operations.

"A Noble spokesman said the exclusion will only result in a slower procedure to reimburse the VAT and the firm was in the process of appealing," notes Eugene Ng, an analyst at UOB KayHian, in a note, adding similar measures were taken against other major grain exporters. "If Noble is subjected to higher tax rates, we believe there could be some short-term decline in grain volumes from Argentina. However, impact to Noble's bottomline is not likely to be material."

He rates Noble Hold with a $1.17 target. Noble could see some added pressure as 13.2%-owned Yancoal (YAL.AU) said heavy rainfall disrupted production at its Yarrabee and Middlemount open cut mines in central Queensland state, with Middlemount output expected to be affected for at least three weeks.

MARKET PULSE: Marco Polo Marine, Sheng Siong, Biosensors, Ascott Residence Trust (29 Jan 2013)

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.56

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.58

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

Research House: OCBC

Price Call: BUY

Target Price: 1.69

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.37

MARKET PULSE: Marco Polo Marine, Sheng Siong, Biosensors, ART

29 Jan 2013

KEY IDEA Marco Polo Marine: Banking on ship repair and OSV growth Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. The fall in revenue was mainly due to slower progress in newbuild orders, resulting in lower shipbuilding revenue. This was offset by higher ship repair turnover. Overall gross profit margin also increased from 25% in 1QFY12 to 39% in 1QFY13 with a higher proportion of ship repair revenue. Demand for larger AHTS vessels in Indonesia is expected to grow, and MPM is set to capitalise on this market opportunity. The group is still upbeat on the outlook for the ship repair business for the next 12 months, and growth is also expected from the offshore support vessel segment. Maintain BUY with S$0.56 fair value estimate. (Low Pei Han) MORE REPORTS Sheng Siong Group: Caution ahead of FY12 earnings Despite having no significant developments since our last update report issued on 10 Dec 2012, Sheng Siong Group's (SSG) share price has soared by more than 25%. We view this amazing appreciation as a result of the street playing catch-up ahead of SSG's FY12 results release. While we expect a strong set of FY12 results - and have also adjusted our forward expectations accordingly to reflect our optimism, SSG's recent price action has been far too exuberant and unsustainable (TTM PE of 33x), in our view. Even after fine-tuning our DCF model, our fair value only increases slightly from S$0.55 to S$0.58. Therefore, we urge caution in trading SSG at this point and recommend investors take some profit around current levels. Downgrade to HOLD. (Lim Siyi) Biosensors International Group: Obtains CE Mark for BioFreedom™ drug-coated stent Biosensors International Group (BIG) announced that it has obtained the CE Mark approval for its next-generation polymer-free BioFreedom™ drug-coated stent (DCS). One of the key advantages of BioFreedom™ is that it would avoid the late adverse effects that might be attributable to the polymer on a stent. This approval was aided by positive clinical trial results which highlighted the safety and efficacy of the product. BIG expects to launch the BioFreedom™ DCS in selected markets during 2013, with a full commercial launch anticipated in 2014. The group also recently enrolled the first patient (a total of ~2,500 patients expected to be enrolled eventually) in the LEADERS FREE study involving BioFreedom™, as a means of further evaluating the use of BioFreedom™ in a larger patient population. We understand that the BioFreedom™ DCS would initially be targeted at a niche group of patients who are at high risk of bleeding and thus unsuitable for a prolonged course of dual anti-platelet therapy. There are also plans to submit BioFreedom™ for approval from China's State Food and Drug Administration. We view these developments as a platform for BIG to expand its leadership position and market share in the drug-eluting stent industry, although initial contribution from BioFreedom™ is likely to be small, in our opinion. We thus maintain our estimates, BUY rating and S$1.69 fair value estimate on BIG. (Wong Teck Ching Andy) Ascott Residence Trust: Raises S$150m through private placement Ascott Residence Trust (ART) has raised gross proceeds of S$150m through a placement of 114.9m new units at an issue price of S$1.305 per new unit, representing a discount of ~4.6% on the adjusted VWAP of S$1.3685 for trades done on the SGX-ST on 28 Jan. The proceeds will be used to fund potential future acquisitions, finance AEIs, repay existing debt and for general working capital. Assuming that the net proceeds of S$147.9m are used to repay existing debts, the private placement is expected to reduce ART's aggregate leverage from 40.1% to 34.9%. The placement will also increase ART's free float from 51% to 55%. We maintain our HOLD rating but place our S$1.37 fair value estimate on ART under review. (Sarah Ong)

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

NEWS HEADLINES - US stocks ended mostly lower on Mon, snapping an eight-day winning streak for the S&P 500 index, after mixed reports on the US economy. The Dow slid 0.1%, the S&P 500 index fell 0.2% and the Nasdaq edged up 0.1%. - Singapore attracted S$16b in fixed asset investments in 2012, a record high, excluding spikes in 2007 and 2008 due to petrochemical cracker investments. But the government expects lower investment commitments of S$11b-S$13b this year, due to continued uncertainty over the global economy. - Prices of completed apartments and condos in the Central Region slipped 1.3% m-o-m in Dec, erasing the 2.2% m-o-m gain in Nov, according to the NUS Singapore Residential Price Index for Central Region (excluding small units).

Starhill's Perth acquisition "sensible": Daiwa

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: Daiwa

Price Call: BUY

Target Price: 0.88

Daiwa raises Starhill Global REIT (P40U.SG) target to S$0.88 from S$0.83 after incorporating the acquisition of the Plaza Arcade retail property in Perth, Australia for A$48 million ($61.8 million).

"We believe the acquisition is sensible, and would complement the adjacent David Jones Building, already owned by Starhill." There could be some revenue opportunities medium-term from integrating the two adjacent properties and deploying underutilized upper-floor space, Daiwa says.

The acquisition raises Starhill's Australian presence to 7.6% of total assets from 5.5%. It expects the acquisition to be incrementally DPU accretive at an initial net-property-income yield of 7.8%, it says; it raises its 2013-14 DPU forecasts by 1.5%-1.6%.

It keeps an Outperform call; "Starhill still offers some value, which is rapidly becoming scarce in the S-REIT space," it says, noting the 2013-14 DPU yields of 6.0%-6.5% are above the sector's 5.8%-6.1%, based on the house's forecasts.

MARKET PULSE: Frasers Commercial Trust, SingPost, MP Marine (28 Jan 2013)

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.48

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.23

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.56

MARKET PULSE: Frasers Commercial Trust, SingPost, MP Marine

28 Jan 2013

KEY IDEA Frasers Commercial Trust: Expect further DPU accretion Summary: Frasers Commercial Trust (FCOT) delivered 1QFY13 DPU of 1.5832 S cents, up 4.6% YoY. This is congruent with our expectations, as the DPU met 22.2% of our full-year projection. Portfolio occupancy remained stable at 94.6% compared to 4QFY12 occupancy of 94.9%. For the rest of FY13, we note that 13.7% of its leases are due for renewal, with China Square Central (CSC) forming the bulk of lease expiry (8% of total income). As the average passing rent at CSC is lower than the spot market rents, we believe positive rental reversions may be achieved upon renewal. Going forward, we maintain our view that FCOT's DPU will get further uplift going forward as it benefits from lower funding costs post refinancing of its debts and partial redemption of its CPPUs. We maintain BUY on FCOT with a higher fair value of S$1.48 (S$1.31 previously). (Kevin Tan) MORE REPORTS Singapore Post: Stock has done well; downgrade to HOLD Summary: Singapore Post (SingPost) reported a 14.5% YoY rise in revenue to S$171.0m but saw a 5.1% fall in net profit to S$39.5m in 3QFY13. Excluding one-off items, underlying net profit rose 2.5% to S$39.8m in the quarter, in line with our expectations. The group saw strong revenue performance in international mail, logistics and retail; notwithstanding the fact that 3QFY13 was the festive season, it is still encouraging to see the 11.2% QoQ growth (vs average of 7.0% in 3QFY12, 3QFY11 and 3QFY10). As a stock, SingPost has rewarded shareholders with handsome returns while providing stability and ease of mind. As it is now trading close to our fair value estimate of S$1.23, we downgrade it to HOLD due to limited upside potential, unless earnings growth from its acquisitions proves to be better than expected. (Low Pei Han) Marco Polo Marine: 1QFY13 results in line Summary: Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. The fall in revenue was mainly due to slower progress in newbuild orders, resulting in lower shipbuilding revenue. This was offset by higher ship repair turnover, which grew 75.5% to S$8.6m in 1QFY13. Ship chartering revenue fell by 5.2% to $5.5m with the mandatory docking of an offshore vessel. Overall gross profit margin, however, increased from 25% in 1QFY12 to 39% in 1QFY13 with a higher proportion of ship repair revenue (generally commands higher margins compared to ship building). Pending further details from management, we maintain our BUY rating but put our fair value estimate of S$0.56 under review. (Low Pei Han)

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

NEWS HEADLINES - US stocks rose on Fri on positive earnings reports from Procter & Gamble and other firms. The Dow and S&P 500 index each rose 0.5%, to 13,895.98 and 1,502.96, respectively, while the Nasdaq ended 0.6% higher at 3,149.71. - The combined net profit for the 18 SGX-listed companies that have reported their 4Q12 results so far is down 35% YoY at S$1.57b. But just one - Qian Hu - posted a loss, while 12 recorded higher profits compared to a year ago. - Parkway Life REIT's 4Q12 income available for distribution rose 9.5% YoY to S$16.3m, supported by a 5% increase in gross revenue to S$24.0m and a 6.1% rise in net property income to S$22.1m. Distribution per unit rose 9.5% YoY to 2.69 S cents. - Singapore's industrial output declined just 0.6% YoY in Dec, as a 21% jump in pharmaceuticals and a 15% rise in marine and offshore engineering offset a 17% year-on-year drop in electronics, easing fears that 4Q12 GDP data would be revised downwards. - A freehold commercial property at the corner of Changi Road and Lorong 105 Changi has been put up for sale by tender after owner AIA Singapore shifted operations that used to be housed there. The site is expected to fetch over S$62m.

Market Pulse: Keppel Corp, First REIT, Fortune REIT, Starhill Global REIT (25 Jan 2013)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.00

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.84

MARKET PULSE: Keppel Corp, First REIT, Fortune REIT, Starhill Global REIT

25 Jan 2013

KEY IDEA Keppel Corporation: Results in line; proposes Keppel REIT div in specie Keppel Corporation (KEP) reported a 38.5% increase in revenue to S$13.96b and a 15.0% rise in net profit to S$2.24b in FY12. Excluding revaluations gains from the property segment, the group turned in net profit of S$1.9b, in line with our expectations. Operating margin in the O&M segment also remained stable at 12.9% in 4Q12. The group's O&M net order book stood at S$12.8b as at end Dec. Looking ahead, we are expecting new order wins of about S$5b in 2013. Meanwhile, KEP has proposed a distribution of 72.4 S cents/share for the year; this includes a dividend in specie of Keppel REIT units. After incorporating a higher fair value estimate of S$4.53 for Keppel Land and the proposed dividend in specie, our fair value estimate rises slightly from S$12.49 to S$12.68. Maintain BUY. (Low Pei Han) MORE REPORTS First REIT: On the lookout for more acquisitions First REIT (FREIT) reported 4Q12 results which were within our expectations. Distributable income to unitholders rose 4.8% to S$46.0m, and formed 98.8% of our FY12 forecast. DPU for FY12 was 7.26 S cents, versus 7.01 S cents in FY11, and translates into a yield of 6.8%. Looking ahead, we expect FREIT to aggressively seek inorganic growth opportunities in Indonesia, its core market. We raise our fair value to S$1.00 (previously S$0.98) as we incorporate lower discount rate assumptions for FREIT's Indonesian assets in our model. But we maintain HOLDgiven FREIT's rich valuations. (Wong Teck Ching Andy) Fortune REIT: Excellent FY12 results as expected FRT's had a solid FY12, with revenue climbing 22.5% YoY to HK$1.11b and NPI rising 22.8% YoY to HK$788.3m. The two properties acquired on 17 Feb 2012 accounted for 12.4% of NPI growth. The remaining 10.4% of NPI growth from the original portfolio of 14 properties was from strong reversion and AEI results. Overall rental reversion was high at 19.8%, partially because of the low base in 2009 when the leases due to be renewed were signed. We understand from management that, since 2010 provides a higher base, 2013's rental reversions are likely to be in the mid-teen percentages. FY12 DPU of 23.35 HK cents was up 23.0% YoY, representing the highest growth trend in the REIT's 9-years history. The results were in line with ours and consensus expectations. (Sarah Ong) Starhill Global REIT: Acquires property in Australia Starhill Global REIT (SGREIT) yesterday announced the proposed acquisition of Plaza Arcade in Perth, Australia. The purchase consideration was at A$48.0m (~S$61.9m), translating to $2,476 psf NLA. Plaza Arcade is a freehold retail property located in the city centre (next to SGREIT's David Jones Building) and enjoys a high occupancy of 97.6%. According to management, the property has an NPI yield of 7.8% and is expected to contribute 0.08 S cents to SGREIT's DPU. SGREIT intends to fund the acquisition through a combination of cash raised via its rights issue in 2009 and borrowings. Gearing in effect is likely to increase from 31.2% to 32.0% upon completion of the transaction. We now place our Buy rating and S$0.84 fair value under review pending the release of its 4Q12 results on next Tuesday, 29 Jan. (Kevin Tan)

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

NEWS HEADLINES - US stocks ended mixed on Thu, with the Dow gaining on positive economic data but the Nasdaq suffering losses, dragged down by heavyweight Apple, which slumped 12%. The Dow rose 0.3% to 13,825.33, the S&P 500 index ended flat at 1,494.82 and the Nasdaq slid 0.7% to 3,130.38. - The sudden burst of activity in the commercial property sector has caught the government's eye, and the Urban Redevelopment Authority said it may introduce measures to cool this sector if required, BT reported. - A unit of Chip Eng Seng Corp has placed the top bid for a mixed commercial and residential development site in Yishun. Its bid of S$212m, or S$794 per square foot per plot ratio, was the highest of 13 bids. - Rubber processor Halcyon Agri has launched its initial public offering for a Catalist listing. The firm is seeking to raise S$13.8m for the expansion of its Indonesian processing plants and general working capital. - Four directors of SNF Corp, which was the subject of an investigation in 2006 by the Commercial Affairs Department, and five other individuals have been charged with violating the Securities and Futures Act and the Companies Act. - Asia Power Corp and Moya Asia have each separately requested for a trading halt, pending the release of an announcement.

MARKET PULSE: KepLand, ART, CCT, FCT, PARD, First REIT, Tiger Airways (24 Jan 2013)

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.53

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.37

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.13

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.98

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

MARKET PULSE: KepLand, ART, CCT, FCT, PARD, First REIT, Tiger Airways

24 Jan 2012

KEY IDEA Keppel Land: Well positioned for FY13; upgrade to BUY Keppel Land (KPLD) announced 4Q12 PATMI of S$527.3m, down 55.4% mostly due to the S$480.3m gain from the sale of stake in Ocean Financial Center in 2011. Excluding divestment gains and revaluation gains, we estimate FY12 PATMI to be S$451.5m - up 61.4% YoY and mostly within expectations. We see KPLD to be well positioned for FY13 given its strong balance sheet (S$1.6b cash, 22% net gearing), significant exposure to the Chinese property sector (35% asset exposure as of end FY12) and potential divestment gains from MBFC T3 as the asset stabilizes. Upgrade to BUY with a higher fair value estimate of S$4.53, versus S$3.49 previously, as we lower the RNAV discount to 25% to reflect a mid-cycle valuation and incorporate the latest valuations of Keppel REIT. (Eli Lee) MORE REPORTS Ascott Residence Trust: Compressed margins in 4Q12 Ascott Residence Trust registered 4Q12 DPU of 2.00 S cents, above consensus but slightly lower than our estimate. 4Q12 revenue climbed 1% YoY to S$75.9m, with contributions from acquisitions (partially offset by decrease from divestments). Notably, gross profit fell by 4% YoY to S$38.5m. Management attributed the compression in gross profit margin to higher expenses in China, the Philippines and Vietnam (staff cost, and also utilities cost in the Philippines), and expects these cost pressures to persist. Currency movements led to a S$4m drop at the FY12 gross profit level to S$159.1m (~2.5% negative effect, 4Q12 displayed a similar percentage). We maintain our fair value of S$1.37 and downgrade ART to a HOLD. (Sarah Ong) CapitaCommercial Trust: Potential for more growth ahead CapitaCommercial Trust (CCT) reported 4Q12 distributable income of S$58.3m - 7.0% higher YoY. This cumulates to a FY12 distributable income of S$228.5m, up 7.4% YoY, which is within expectations and make up 101% of our forecast. FY12 DPU is 8.04 S-cents; distribution yield is 4.7% based on last closing price. With net gearing at a relatively low 30.1%, we note that CCT has significant debt headroom of ~S$1bn for acquisitions and asset enhancements. Though management would likely be cautious on the acquisitions front due to the criteria for yield accretion, with financing costs at low levels currently and CCT trading at 4.7% yield, we believe that acquisitions are workable in current conditions and that there is meaningful growth potential ahead. Maintain BUY with a higher fair value estimate of S$1.80, versus S$1.75 previously, as we update our model for firmer cap rates. (Eli Lee) Frasers Centrepoint Trust: Still benefitting from AEI Frasers Centrepoint Trust (FCT) reported DPU of 2.40 S cents for 1QFY13, representing a YoY growth of 9.1%. This is largely in line with expectations, given that the quarterly DPU met 22% of both our and consensus FY13F DPU estimates. Causeway Point (CWP) and Northpoint remained the key drivers for the quarter, generating 12.3% and 6.7% YoY increase in NPI. Operationally, we note the overall portfolio occupancy improved from 93.6% in prior quarter to 97.2%. This was boosted by an 8.7ppt QoQ improvement in occupancy at CWP to 96.4% following the completion of its AEI. Management revealed that several new tenants are still in the process of fitting out at CWP and expects the occupancy to trend up further when more tenants commence their operations from Jan onwards. FCT currently boasts a strong aggregate leverage of circa 30.9% and extended debt maturity of 3.6 years following the recent issue of S$70m MTN. This is likely to put it in good stead to take any attractive acquisition opportunities as they arise. Maintain BUY with an unchanged fair value of S$2.13 on FCT. (Kevin Tan) Pacific Andes: Ceasing coverage Pacific Andes Resources Development (PARD) has underperformed the market despite the recent rally in the equity market. Its share price has stayed below its pre-FY12 results level in Nov 2012 when it posted a disappointing set of 4Q and FY12 results. As a recap, it also slashed its dividend payout from 1.08 S cents (about one-third of its earnings) to 0.3 S cent (14.5% of earnings). PARD's earnings growth trend is now limited by several key challenges ahead, including growing its fishing operations and ensuring increases in catch volumes/entitlements in all its fishing grounds for the near to medium term. We projected flat FY13 earnings of HK$638m, which is a decline from the recent high of HK$773m in FY10. As such, we are CEASING COVERAGE on the stock due to the lack of medium-term price drivers and muted earnings outlook. (Carmen Lee) First REIT: FY12 results in line with expectations First REIT (FREIT) reported 4Q12 results which were within our expectations. Gross revenue increased 10.7% YoY to S$15.4m, driven by maiden contributions from two new properties which were acquired in Nov 2012 and higher rental income from its remaining portfolio. Distributable amount to unitholders declined 8.7% YoY to S$11.1m, but this was due to a special distribution of S$2.2m in 4Q11. Excluding this, distributable amount to unitholders would have increased by 11.3% instead. For FY12, gross revenue rose 6.7% to S$57.6m and was just 0.2% below our full-year projection. Distributable income to unitholders rose 4.8% to S$46.0m, and formed 98.8% of our FY12 forecast. DPU for FY12 was 7.26 S cents, versus 7.01 S cents in FY11, which translates into a yield of 6.8%. Looking ahead, we expect FREIT to seek further acquisition opportunities in Indonesia given the nation's robust healthcare dynamics. We will provide more details after the analyst briefing. We maintain our HOLD rating but our S$0.98 fair value estimate is under review. (Wong Teck Ching Andy) Tiger Airways: Finally a profit Tiger Airways (TGR) finally turned in a profitable quarter, after reporting six consecutive quarters of losses. For 3Q13, the group saw revenue jump 47.1% YoY (+25.9% QoQ) to S$247.7m following increases in passenger demand, outpacing the growth in operating expenses, which grew 26.7% YoY to S$229.8m (+12.4% QoQ). This led to an adjusted operating profit of S$20.8m for the quarter versus a loss of S$9.8m and S$7.9m for 3Q12 and 2Q13 respectively. The turnaround for the Group was largely attributed to the stellar performance by Tiger Singapore during the quarter as Tiger Australia continued to suffer yield deterioration from intense competition. We view this set of results favourably as revenue growth met our expectations, and TGR's first net profit validates our turnaround view for 2H13. We will be speaking to management later this morning but raise our fair value from S$0.81 to S$0.86 in the meantime. Maintain BUY. (Lim Siyi)

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

NEWS HEADLINES - US stocks rose on Wed, on news that lawmakers had agreed to extend the country's debt limit to 19 May. The Dow increased 0.5% to 13,779.33, the S&P 500 index gained 0.2% to 1,494.81 and the Nasdaq ended 0.3% higher at 3,153.67. Apple shares, which rose before the market close, slumped 10% in after-hours trading on disappointing earnings. - Consumer prices in Singapore rose a faster-than-expected 4.3% YoY in Dec, driven by higher accommodation and private road transport costs. - Businesses are pessimistic about the business outlook for 1Q13 and expect sales, profits and inventories to decline from 4Q12, a survey by Dun & Bradstreet showed. - The government is standing firm on the rule that all units in property projects with any foreign ownership must be sold within two years of the project receiving its temporary occupation permit, despite developers' efforts to lobby the government to extend the timeframe.

MARKET PULSE: KSH, Suntec, SGX, CCT, FCT, TEE (23 Jan 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.50

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.94

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 6.80

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.13

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.28

MARKET PULSE: KSH, Suntec, SGX, CCT, FCT, TEE

23 Jan 2013

KEY IDEA KSH Holdings: Secures Q Bay contract; order book up 45% KSH reported that it has received the LOA for the main contract works for Q Bay Residences. This contract win - worth a hefty S$142.3m - is one of the largest awarded to KSH in recent years, and would boost its construction order book by ~45% to more than S$460m. Construction for the project would commence in Apr 2013 for a total length of 33 months and, with an anticipated net profit margin above 10%, would contribute more than S$14m of net profits, adding significant incremental visibility to construction earnings ahead. With a good track record of execution from management and a solid earnings growth profile (YoY earnings growth forecasted at 68% in FY13 and 73% in FY14), KSH remains one of our top value picks in the small-cap universe. Potential catalysts ahead include new contract wins and the anticipated launch of Hong Leong Gardens in 1H13. Maintain BUY with an unchanged fair value estimate of S$0.50. (Eli Lee) MORE REPORTS Suntec REIT: Positioning well for growth Suntec REIT posted an encouraging set of 4Q12 results last evening. Despite registering a 41.3% YoY decline in NPI to S$30.6m, DPU for the quarter came in at 2.326 S cents, down only 6.2%. Office segment continued to perform during the quarter, raking up 11.1% growth in revenue amid positive rental reversions and consistently high occupancy of 99.7%. This helped to cushion the softness at its retail segment, which experienced a 27.6% decline in revenue. Suntec City Phase 1 AEI is on track for completion by 2Q13 and 83% of its NLA had been pre-committed (71.2% in 3Q), Phase 2 AEI will commence on Mar and 37% pre-commitment had already been secured. Based on the timeline, we believe that 2Q may face the largest impact on its rental income, thereby prompting the REIT to utilise the Chijmes sales proceeds to mitigate the fall in DPU. We now tweak our model assumptions to factor in the better-than-expected results and a possible S$10m distribution from the divestment proceeds in FY13. Our fair value in turn is raised from S$1.70 to S$1.94. Maintain BUY.(Kevin Tan) Singapore Exchange: Limited price drivers ahead Singapore Exchange (SGX) posted 2QFY13 net earnings of S$76.3m, up 16.7% YoY, supported by better securities and derivatives income. For the Securities business, daily average traded value rose 8% YoY to S$1.2b. For the Derivatives business, daily average volume hit a record of 358,532 contracts, up 30% YoY. Its clearing house, the Singapore Exchange Derivatives Clearing (SGX-DC), has become a qualifying Central Counterparties (CCP) since 14 Jan 2013. The positive momentum in early 3QFY13 means that 2HFY13 is likely to be better than 1HFY13, and we raised our full year net earnings to S$317m. SGX's share price has done well since our last report, up 10%, but we see limited upside from current level. As such, we advocate locking in some profits and re-entering at lower price levels. Maintain HOLD with fair value estimate of S$6.80. (Carmen Lee) CapitaCommercial Trust: FY12 results within expectations CapitaCommercial Trust (CCT) reported 4Q12 distributable income of S$58.3m - 7.0% higher YoY. This cumulates to a FY12 distributable income of S$228.5m, up 7.4% YoY, which is within expectations and make up 101% of our forecast. (FY12 DPU is 8.04 S-cents; 4.7% distribution yield based on last closing price.) The growth in distributable income was mainly due to higher contributions from HSBC Building and the 20 Anson acquisition, partially off-set by negative reversions at 6 Battery Rd and the redevelopment of the Market St Car Park. Portfolio occupancy remained stable at 97.2% as of end 4Q12, versus 97.1% in the previous quarter. Average rentals of remaining leases expiring in 2013 are at S$7.48 - significantly lower than current Grade A levels of S$9.58 - and we expect continued positive rental reversions over FY13. We would speak further with management regarding these results and, in the meantime, put our Buy rating and fair value estimate of S$1.75 UNDER REVIEW. (Eli Lee) Frasers Centrepoint Trust: Continued growth in 1QFY13 Frasers Centrepoint Trust (FCT) delivered 1QFY13 NPI of S$27.1m and distributable income of S$21.8m, up 9.1% and 10.8% YoY respectively. The strong performance was driven mainly by Causeway Point (+9.1% YoY) and Northpoint (+5.2%). DPU for the quarter came in at 2.40 S cents, representing a YoY growth of 9.1%. This meets 22% of both our and consensus FY13F DPU estimates. Operationally, we note that a total of 62,341 sqft of NLA (7.1% of total portfolio NLA) was renewed at an average rental reversion of 5.2% in 1Q. In addition, portfolio occupancy improved from 93.6% in prior quarter to 97.2%, boosted by a 8.7ppt QoQ improvement in occupancy at Causeway Point to 96.4%. Management expects occupancy at the mall to trend up further when more tenants commence their operations from Jan onwards. We will be tuning into the results teleconference this morning. For now, we maintain our BUY rating but place our S$2.13 fair value under review. (Kevin Tan) TEE International: Thai associate buys industrial land for THB46.5m TEE International's 49%-owned Thai associate, Chewathai Ltd, has acquired a 450,922 sq ft piece of freehold industrial land in Thailand's Rayong Province for THB46.5m (S$1.9m). TEE intends to build factories on the property for leasing purposes, at an estimated cost of THB200m, and construction is expected to be completed in Sep 2013. The acquisition of the land will be financed by internal funds and bank borrowings and is not expected to have any material impact on the company's earnings or assets for FY13 (ending 31 May). We maintain our HOLD rating on TEE and fair value estimate of S$0.28. (Conrad Tan)

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

NEWS HEADLINES - US stocks rose on Tue as investors cheered positive earnings reports from Travelers and other companies. The Dow rose 0.5% to 13,712.21, the S&P 500 index gained 0.4% to 1,492.56 and the Nasdaq ended 0.3% higher at 3,143.18. - Foreigners' share of private home purchases in Singapore is expected to decline further in 1H13, from 6.3% last year, given the higher additional buyer stamp duty rates imposed on them under the recent property cooling measures, property consultants say. - Mapletree Industrial Trust's 3Q13 distributable income rose 6.9% YoY to S$37.7m, supported by a 7.7% increase in net property income to S$49.1m. Its distribution per unit rose 7.4% to 2.32 S cents.

MARKET PULSE: Cache, M1 (22 Jan 2013)

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.32

Stock Name: M1
Company Name: M1 LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.89

MARKET PULSE: Cache, M1

22 Jan 2013

KEY IDEA Cache Logistics Trust: Still room for upside Cache Logistics Trust (CACHE) turned in a consistent set of 4Q12 results after market close yesterday. FY12 DPU totalled 8.365 S cents (+1.6%), matching our/consensus full-year DPU forecasts of 8.29/8.3 S cents. This translates to an attractive FY12 yield of 6.4%, higher than the S-REIT sector average yield of 5.8%. CACHE's portfolio occupancy as at 31 Dec 2012 remained at 100% as its leases are predominantly based on triple-net master lease structures. Weighted average lease to expiry also stood resilient at 3.9 years, with only 1.7% of GFA due for renewal in FY13. In addition, its built-in rental escalation for master leases was maintained at 1.25-2.5%. This should give CACHE with good earnings visibility and healthy organic growth in our view. With the major refinancing exercise in Jun 2012, CACHE had successfully increased its loan-to-value over its previous collateral, reduced its all-in financing costs and enhanced its debt expiry profile. Aggregate leverage was also healthy at 31.7%. This provides CACHE with the financial resources and flexibility to drive its new business initiatives. We maintain BUY on CACHE with a revised fair value of S$1.32 (previously S$1.30). (Kevin Tan) MORE REPORTS M1: FY12 results mostly in line M1 Ltd reported its FY12 results, which were mostly in line - revenue of S$1076.8m was 1.5% above our estimate, while net profit of S$146.5m was 3.3% below. We note that the shortfall was due to higher-than-expected tax expenses in 4Q12. M1 declared a final dividend of S$0.063/share and a special dividend of S$0.017/share, bringing the total full-year dividend to S$0.146 (versus S$0.145). Going forward, management expects to see moderate earnings growth in 2013 and has maintained its minimum 80% dividend payout ratio. It also expects to spend S$130-150m capex to expand network coverage and capacity. We are paring our FY13 earnings forecast by 9% after taking the guidance into consideration. But as we shift our DCF valuations out to 2015, our fair value remains unchanged at S$2.89. Maintain BUY as we still believes M1 has potential gain market share in the NBN segment. (Carey Wong)

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

NEWS HEADLINES - US stock markets were shut on Mon for the Martin Luther King Jr. holiday, ahead of a busy week of earnings releases. Heavyweights Google, IBM and Texas Instruments are scheduled to release quarterly results later today, while Apple and Microsoft are expected to release their results on Wed and Thu, respectively. - Singapore's industrial production likely contracted 4.2% YoY in Dec, according to the median estimate of economists polled by Reuters, suggesting that 4Q and full-year 2012 GDP could be revised downwards. - Keppel REIT's 4Q12 distributable income rose 45% YoY to S$51.9m, 13% above its forecast, as net property income grew 85% to S$32.8m. The REIT quashed talk that it was currently looking into acquiring a stake in Marina Bay Financial Centre Tower 3.

MARKET PULSE: CapitaMall Trust, Micro-Mechanics (21 Jan 2013)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.32

MARKET PULSE: CapitaMall Trust, Micro-Mechanics

21 Jan 2013

KEY IDEA CapitaMall Trust: Solid 4Q12 performance CapitaMall Trust (CMT) turned in a sturdy set of 4Q12 results last Friday. DPU saw a 2.6% growth to 2.36 S cents, despite S$15.3m capital distribution received from CapitaRetail China Trust was retained for corporate and working capital purposes. This brings the FY12 DPU to 9.46 S cents (+1.0%), slightly ahead of our full-year DPU projection of 9.16 S cents. Over the year, a total of 446 leases were renewed at an average positive rental reversion of 6.0% (FY11: 6.4%). CMT also completed three major asset enhancement initiatives or AEIs in 2012 and saw strong committed occupancy rates ranging 95.3-99.6% post refurbishment. Looking ahead, CMT anticipates its completed AEI works to continue to boost its rental income in 2013. In addition, management will focus on its repositioning exercise for IMM Building and leasing activities for Westgate (both of which, we note, are currently on track). We maintain our BUY rating with a higher fair value of S$2.32 (S$2.30 previously) after we incorporate the results into our assumptions. (Kevin Tan) MORE REPORTS Micro-Mechanics: Ceasing coverage on the stock We believe that Micro-Mechanics Holdings (MMH) would benefit from the expected gradual recovery in global semiconductor sales in 2013, although downside risks remain. We are more positive on its Semiconductor Tooling division as compared to its Custom Machining & Assembly division, as the semiconductor capital equipment market is only expected to rebound in 2014. We believe that MMH's consistent 3 S cents DPS trend (from FY10 to FY12) could continue in FY13 and FY14, which translates into a yield of 7.0%. While we like MMH for its experienced management team and continuous efforts to improve its product cycle time to its customers, we are CEASING COVERAGE on the stock due to the lack of trading liquidity and a reallocation of resources. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks rose on Fri, showing gains for a third straight week, on a positive earnings report by GE and news that lawmakers have agreed to a short-term increase in the US debt ceiling. - Singapore property developers intensified their discounts and incentives to entice buyers in the wake of the government's latest measures to cool the property market. - Macquarie International Infrastructure Fund's net loss on an adjusted basis widened to S$2.8m in 4Q12 from S$1.8m a year earlier despite a 19% rise in revenue to S$1m, due to a sharp rise in operating expenses. - Teledata (Singapore) has agreed to acquire a 51% stake in Korean telecommunications services firm IP2S Korea for S$19m. The acquisition will be paid for through the issue of 938m shares at 2 S cents each. - Sarin Technologies has closed on its purchase of some 500 sq m of office space costing US$5m in the new International Gem Tower in New York City and expects to start using it by mid-year. The office will serve as a base for the group's planned US and North American operations.

Daiwa upgrades GLP to Outperform vs Hold

Stock Name: GLP
Company Name: GLOBAL LOGISTIC PROP LIMITED

Research House: Daiwa

Price Call: BUY

Target Price: 3.09

Daiwa upgrades Global Logistic Properties (MC0.SG) to Outperform from Hold and raises its target price to $3.09 from $2.70, after using a new model to value the warehouse developer.

Believing that the across-the-board NAV approach undervalues GLP’s development business, the house now values GLP’s stable capital--backed by matured assets--at parity to book value while valuing its high-growth development portions at a higher P/B ratio of 2.51 times, which better “reflects the expected returns and hurdle rates.”

Daiwa says it upgraded ratings because “we believe [GLP] is only at the early stage of realizing the potential of its development model, and think its unwavering focus on developments paves the way for strong EPS growth from FY15.”

The stock is up 0.7% at $2.74.

JPMorgan downgrades Golden Agri to 'underweight'

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: JP Morgan Chase

Price Call: SELL

Target Price: 0.50

J.P. Morgan downgraded palm oil firm Golden Agri-Resources to ‘underweight’ from ‘neutral’ and lowered its target price to S$0.50 from $0.56, on expectations it will be hurt by a muted recovery in crude palm oil (CPO) prices.

By 11:29 a.m., shares of Golden Agri were down 3.1% at $0.62, and have fallen about 4.6% since the start of the year, compared to the Straits Times Index’s 1% rise.

J.P. Morgan said it expects Golden Agri’s fourth-quarter earnings to miss expectations, and forecast a 20% quarter-on-quarter decline in core net profit to US$69 million ($84.5 million) as average CPO prices fell 23% in the period.   

It also cut its 2013 and 2014 earnings per share estimates by 10% to factor in lower CPO prices.

Indonesian plantation companies, including Golden Agri, are expected to see meaningful labor cost increase following this year’s rise in minimum wage, the brokerage said.

MARKET PULSE: Raffles Medical, YZJ, Midas (17 Jan 2013)

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.95

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.60

MARKET PULSE: Raffles Medical, YZJ, Midas

17 Jan 2013

KEY IDEA Raffles Medical Group: Downgrade to HOLD; toning down assumptions We believe that there are still ongoing uncertainties over the possible commencement date of Raffles Medical Group's (RMG) proposed new Specialist Centre in the Orchard area. We thus adopt a more conservative approach, and assume that the delay in operations would stretch until late 2013 or early 2014 (previously 1H13). This could have a negative flow-through effect to its Raffles Hospital as this new Specialist Centre was intended to act as an additional platform for referrals. Hence, we trim our FY13F revenue and EPS estimates by 2.7% and 5.0%, respectively. This lowers our fair value estimate from S$2.82 to S$2.68, still pegged to 24x FY13F EPS. Coupled with RMG's recent strong share price performance, we downgrade the stock from Buy to HOLD. (Wong Teck Ching Andy) MORE REPORTS Yangzijiang Shipbuilding: Preparing future funds Yangzijiang Shipbuilding (YZJ) has proposed an issue of 330m warrants at a price of RMB0.3072 (S$0.0605) for each warrant. Each warrant carries the right to subscribe for one new ordinary share in YZJ at the price of RMB7.617/share (S$1.50). Though this is a fund raising exercise, the amount that YZJ will receive for now (~$18.15m) is actually relatively insignificant to the amount that may potentially come in later when the warrants are exercised (~$495m). Hence management contends that this move is for YZJ to prepare funds for the future when the shipbuilding industry recovers, which we do not see happening this year or even 1H14. There is no impact on the group's EPS for now, though there is a potential 8.6% dilutive effect if all warrants are exercised. Maintain HOLD with fair value estimate of S$0.95. (Low Pei Han) Midas Holdings: JV seals CNY338m tram contract Midas Holdings (Midas) announced last evening that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has clinched its first 100% low-floor tram contract valued at ~CNY338m. This entails the supply of 18 100% low-floor trams for the Suzhou National New & Hi-tech Industrial Development Zone Tramline 1 project. We see potential in the development of the low-floor tram business, as more than ten cities in China are currently working on modern 100% low-floor tram projects. Delivery and hence contribution would only take place in 2014 for NPRT. However, we believe that NPRT's first tram contract win highlights the possibility of a new revenue stream, besides its core metro business. In addition, we understand that these trains are made of aluminium and thus provide potential orders from NPRT to Midas for its Aluminium Alloy Extruded Products Division. We expect a positive reaction to Midas' share price and reiterate our BUY rating and S$0.60 fair value estimate, pegged to 1.2x FY13F P/B. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks ended mixed on Wed, as investors digested earnings reports from JP Morgan and Goldman Sachs, while tech stocks were buoyed by a rebound in Apple after its drop earlier this week. The Dow fell 0.2% to 13,511.23, the S&P 500 index ended flat at 1,472.63 and the Nasdaq rose 0.2% to 3,117.54. - The Straits Trading Co's shareholders have approved the firm's plan to purchase a further 23.6% stake in WBL Corp by issuing new shares, paving the way for it to make a formal offer for the other WBL shares it does not already own. - Mobile phone distributor mDr Ltd has incorporated a subsidiary in Myanmar that will spearhead its push into the market. mDr owns 51% of MDR Myanmar Co, while its local partners, Be-Well (Myanmar), Be-Well Corp and Avitar Enterprises, hold stakes of 20%, 20% and 9%, respectively. - Ntegrator International has secured S$11.7m worth of new contracts from Myanmar Radio and Television and the Viettel Group.