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)

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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.