MARKET PULSE: CMA, A-REIT, Ezion, YZJ (16 Jan 2013)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.55

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

Research House: OCBC

Price Call: HOLD

Target Price: 2.43

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.95

MARKET PULSE: CMA, A-REIT, Ezion, YZJ

16 Jan 2013

KEY IDEA CapitaMalls Asia: Deepening its presence in Wuhan China CapitaMalls Asia (CMA) announced yesterday that it has been awarded a 70,400 sqm land site in Wuhan, China for RMB660m (S$128m) or RMB2,700 per sqm. The envisioned development would consist of a six-storey shopping mall and two office towers to open in 2015. Estimated total GFA is 240k sqm (160k sqm retail, and 80k sqm office), with a total development cost of ~RMB 2,800m (S$543m) or RMB 12,000 per sqm. We continue to favor CMA for executing sharply on a well thought-out strategy: active capital deployment into its growth market China through deepening its operational presence in key cities. Maintain BUY with an increased fair value estimate of S$2.55, versus S$2.16 previously, as we update our model for firmer cap rate assumptions and valuations of listed holdings. (Eli Lee) MORE REPORTS Ascendas REIT: Paying premium for strength Ascendas REIT (A-REIT) reported a 4.0% YoY increase in 3QFY13 DPU to 3.62 S cents. This brings the 9MFY13 DPU to 10.68 S cents (+6.2%), forming 76% of both our and consensus full-year DPU projection. The strong performance, we note, was driven by recognition of full-quarter rental income earned from completed development projects and new acquisitions over the past year. Portfolio occupancy as at 31 Dec 2012 was also stable at 94.0% on a sequential basis. In addition, A-REIT continued to achieve positive rental reversions averaging 18.5% across all its property types in 3Q. While A-REIT has been quiet on its acquisition front in FY13, it continues to be actively involved in asset enhancement (AEI) / development activities to boost its returns on its portfolio. This should sustain its growth profile in our view. We are maintaining our HOLD rating with an unchanged fair value of S$2.43 as the stock appears fairly priced at current level. (Kevin Tan) Ezion Holdings: Secures LOI for a liftboat charter worth US$116.8m Ezion Holdings (Ezion) announced that it has secured a letter of intent from a SE Asian state-linked corporation for the charter of one unit of liftboat over a four-year period with an approximate contract value of up to US$116.8m. The liftboat is expected to be deployed in SE Asia upon its completion at end 2014, and the charter is likely to commence in 1Q15. Confirmation of this contract would further lengthen the group's earnings visibility. We will have more details after an analyst briefing this morning. For now, we maintain our BUY rating on the stock and S$2.05 fair value estimate on Ezion. (Low Pei Han) Yangzijiang Shipbuilding: Proposes warrants issue for general working capital Yangzijiang Shipbuilding (YZJ) has proposed an issue of 330m warrants at an issue price of RMB0.3072 (S$0.0605) per warrant, each with the right to subscribe for one new ordinary YZJ share at RMB7.617/share (S$1.50). The expiry date of the warrants is 29 Apr 2016. Net proceeds from the warrant issue will be about RMB92.17m (~S$18.15m), and YZJ intends to use them for general working capital purposes. Based on the warrant strike price, assuming all warrants are exercised, YZJ will receive additional proceeds of about RMB2,514m (~S$495m), which will also be used for general working capital. Pending more details from management, we put our Hold rating and fair value estimate of S$0.95 under review. (Low Pei Han)

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NEWS HEADLINES - The S&P 500 Index rose 0.1% on Tues, with its worst performer being Apple Inc., which closed down 3.2% on concerns about slow demand for the iPhone 5. - Regarding the takeover battle for F&N, the Securities Industry Council has stated that the final time by which TCC Assets or OUE Baytown can revise their offers is 5.30pm on Jan 20, after which an auction procedure will kick in if a competitive environment still exists. - Armarda Group expects to remain loss making and report a loss for 3QFY13 ended 31 Dec 2012. - Pan Pacific Hotels Group's 367-room Parkroyal on Pickering, located across from Hong Lim Park, opens today. The introductory rate is S$238 a night. - Mun Siong Engineering has been awarded a term contract from a new customer, bringing the total number of recurring term maintenance contracts for the company to eight.