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)

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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.