MARKET PULSE: Ezra, SPH, CMA, A-REIT, Lian Beng (15 Jan 2013)

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.05

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.16

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

Research House: OCBC

Price Call: HOLD

Target Price: 2.43

MARKET PULSE: Ezra, SPH, CMA, A-REIT, Lian Beng

15 Jan 2013

KEY IDEA Ezra Holdings: Share price has run up; downgrade to HOLD Summary: Ezra Holdings (Ezra) reported a 54% YoY rise in revenue to US$278.7m and a 44% rise in gross profit to US$49.9m in 1QFY13. But higher administrative expenses, a lower share of profit of associated companies, and a higher tax rate led to a 49% fall in net profit to US$6.8m. Though the fall in core net profit is lower at 16%, the 1QFY13 amount of US$4.3m represents only about 13% of our full year core net profit estimate of US$33m, which is already one of the lowest in the street. Still, we expect better performance in 2HFY13 as the subsea division continues to grow. Ezra's share price has run up by about 18.5% since our last report on 3 Dec 2012. Due to limited upside potential, we downgrade our rating to HOLD. (Low Pei Han) MORE REPORTS Singapore Press Holdings: Circulation and ad revenues continue weak trend Summary: Singapore Press Holdings (SPH) reported 1QFY13 PATMI of S$91.1m which was 6.6% lower YoY mostly due to a reduced contribution from the Newspaper and Magazine and the exhibitions business. 1QFY13 PATMI now forms 24.3% of our annual forecast and is broadly in line with expectations. Of note, circulation revenues declined by S$1.3m (down 2.6% YoY) to S$49.0m during the quarter, while rental income for the group increased by S$1.3m (up 2.9%) to S$48.2 due to higher rental rates achieved at the Paragon. We believe that the persistent trend of falling circulation and advertisement revenues point to increasing uncertainties in SPH's core newspapers and magazines business, and would put pressure on overall operating margins over the mid to long term. However, an attractive dividend yield at 5.8% likely points to limited price downside at this juncture. Maintain HOLD with an unchanged fair value estimate of S$4.05. We would turn buyer around S$3.90 levels. (Eli Lee) CapitaMalls Asia: Retail land site acquisition in Wuhan, China Summary: CapitaMalls Asia (CMA) announced this morning that it has been awarded a retail mall land site in Wuhan, China for RMB660m (S$128m) or RMB2,700 per sqm. It is located at the junction of Jiefang Avenue and Gutian Second Road, and will be the group's fourth mall in Wuhan. The site area is 70,400 sqm and the envisioned development would consists of a six-storey shopping mall with two office towers to open in 2015. Total GFA (excluding car-park) is estimated at 240k sqm (160k sqm retail, and 80k sqm office). The total development cost for the project is ~RMB 2,800m (S$543m) or RMB 12,000 per sqm. We would speak further with management regarding this acquisition this morning and, in the meantime, maintain BUY but our fair value estimate of S$2.16 is under review. (Eli Lee) Ascendas REIT: No surprises from 3QFY13 earnings Summary: Ascendas REIT (A-REIT) released its 3QFY13 results this morning. NPI rose by 11.5% YoY to S$104.7m while distributable income increased by 13.5% to S$81.1m. DPU for the quarter came in at 3.62 S cents, up 4.0%. This brings the 9MFY13 DPU to 10.68 S cents, forming 76% of both our and consensus full-year DPU projection. A-REIT reiterated that it expects to maintain a stable performance for FY13, barring any unforeseen event and deterioration of the economic environment. We note that A-REIT only has ~2.1% of its revenue due for renewal for the remaining of its financial year and has a weighted average lease to expiry (WALE) of 3.8 years. We will be incorporating the results into our model. In the meanwhile, we place our Hold rating and S$2.43 fair value under review. (Kevin Tan) Lian Beng Group: 1HFY13 results below expectations Summary: Lian Beng Group's net profit for 1HFY13 (ending 30 Nov 2012) was below our expectations, falling 36.2% to S$19.2m (37% of our FY13 forecast). The drop in profit was mainly due to the absence of a S$7.9m one-time gain in 1HFY12 on the sale of an investment property. Revenue was broadly in line with our expectations, declining 1.2% to S$234.9m (48% of our FY13 forecast), due mainly to lower revenue recognised from property development. The order book for the group's main construction business (73% of 1HFY13 revenue) stood at S$547m at 30 Nov, with orders stretching through FY15. Its 55%-owned M Space industrial development project at Mandai Estate has been fully sold but the revenue and profit will only be recognised at the TOP date, expected in Sep 2013 (FY14). We are keeping Lian Beng UNDER REVIEW pending a change in analyst. (Research Team)

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NEWS HEADLINES - US stocks ended mixed on Mon, with major indices weighed down by Apple Inc shares after reports that the company had cut iPhone production plans because of lower-than-expected sales. The Dow rose 0.1% to 13,507.32, the S&P 500 index fell 0.1% to 1,470.68 and the Nasdaq ended 0.3% lower at 3,117.50. - Singapore's productivity growth target of 2-3% a year this decade is challenging, but not overly ambitious, Trade and Industry Minister Lim Hng Kiang said. - Sin Heng Heavy Machinery has incorporated a heavy machinery leasing joint venture in Myanmar in a bid to secure a foothold in the country's potentially lucrative infrastructure market. - Renewable Energy Asia Group plans to build a 20-megawatt solar farm in China's Gansu province at an estimated cost of CNY226m, financed via internal resources and borrowings. - Miyoshi Precision posted a 1QFY13 net loss of S$0.7m, narrower than the S$3.4m net loss a year ago, as revenue more than doubled to S$54m, from S$22m.