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)

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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.