Phillip - Morning Note - 31 Jan 2013

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: Phillip Securities

Price Call: HOLD

Target Price: 2.13

Stock Name: SATS
Company Name: SATS LTD.

Research House: Phillip Securities

Price Call: BUY

Target Price: 3.33

Fundamental Call

CDL Hospitality Trust - Results(Travis Seah) Recommendation: Neutral (Maintain) Previous close: S$2.010 Fair value: S$2.130 · 4Q12 (FY12) revenue S$38.3mn (S$149.5mn), NPI S$35.6mn (S$139.3mn), distributable income S$28.1mn (S$109.5mn) · 4Q12 (FY12) DPU of 2.90 cents (11.32 cents) · Maintain Neutral with revised target price of S$2.130 SATS Ltd - Results (Derrick Heng) Recommendation: Accumulate Previous close: S$3.08 Fair value: S$3.33 · 7.6% growth in underlying net profit. · Guidance positive for passenger travel business, while air freight business is expected to remain weak. · We expect dividend yields to sustain above 5% over the next few years. · Maintain Accumulate with TP of S$3.33.

Source: Phillip Securities Research Pte Ltd

Morning Commentary

- STI: +0.80% to 3285.9 - SET: +0.81% to 1490.8 - JCI: +0.31% to 4452.9 - KLCI: -0.59 to 1627.7 - HSCEI: +0.78% to 12172.2 - Hang Seng: +0.71% to 23822.1 - Nikkei 225: +2.28 to 11114 - S&P500: -0.39% to 1501.9 MARKET OUTLOOK: By Joshua Tan, Hd of Research US 4q12 GDP growth registered an unexpected mild contraction -0.1%q-q annual pace. But the headline number really does obscure underlying strength - consumption and fixed asset investment, the core of the US economy, added strongly. Detractions were mainly from one-quarter events - inventory took a huge hit due to the fiscal cliff which has since seen a positive resolution for middle class taxes, exports was poor but the global economy is rebounding, and defense spending fell dramatically due to the on-going sequester saga. While we expect inventory and exports to come back, defense spending may be hampered by the sequester. Overall, we think 4q12 was strong likelihood for upward revision to a positive print as this advanced estimate only uses 2 months of data. We do not also think our 2013 outlook of OW stocks MW bonds needs to be revised. Chief risk of course is that the US sequester/debt ceiling debate this Feb/Mar if it really does end ugly. Bond markets certainly did NOT think the US GDP data was bad, as 10yr Treasuries further fell to drive yields to above 2% now! And Crude oil continued its rise to US$97! So if there is a negative reaction in Asia Equity markets today, we do not expect corrections to be deep, but merely an excuse to take profit given the strong run-up. We expect eventual buying on weakness if such profit taking occurs. A note on the KLCI - yesterday's fall eventually closed with an intraday rebound above the 200dma, so we have survived a second test of that key support (in this correction), which provides more impetus for another try for a rebound. Again we wish to highlight the risks for this index - even if it rebounds, beware downside volatility on political risk. No change to our market outlook for the year: we continue to believe that this is a year for stocks and maintain OW on CN, HK, SG, TH and PH, while MW on the US, MY and ID. Investors looking to invest in the first 4 markets should check out our Country Strategy reports, else invest/trade them thru ETFs/PhillipCFDs listed in the Asset Strategy reports (see Sector/Strategy Reports section). Equity Strategists: - Hd of China Research, top picks: China Life Insurance (2628 HK), China Lumena New Material (67 HK) - Hd of HK Research, top picks: AIA (1299 HK) and HSBC (5 HK) - SG Equity Strategist (Derrick Heng): For 1Q2013, we believe that cyclical stocks in the Industrials space could do well in the near term: SIA (Buy, TP: S$13.40), Keppel Corp. (Accumulate, TP: S$12.38) & NOL (Accumulate, TP: S$1.36). Top picks for the year are Pan United (Buy, TP: S$0.88), SIAEC (Buy, TP: S$5.00) & Capitaland (Accumulate, TP: S$3.97). Pan United is a dominant supplier to the construction industry in Singapore and we expect the company to perform well given the strong pipeline of infrastructure work over the next few years. Although current price (S$0.99) has overshot our TP, we look forward to 4q12 results to reassess our TP. SIAEC is a key beneficiary of the aviation capacity growth story in the region and offers excellent dividend yields. Capitaland would be a beneficiary of the stabilisation of property prices and bottoming out of economic conditions in China. SECTOR/STRATEGY REPORTS: - Sector Reports: Bank, 21 Jan / Property, 16 Jan / Gaming, 4 Jan / REIT, 31 Dec / Telecommunications, 12 Dec / Commodities Sector 3 Dec - Country Strategy: China & HK, 28 Jan / S'pore, 26 Dec / Thai, 19 Dec - Global Macro, Asset Strategy: 24 Jan, Update / 4 Jan / US, 21 Dec / ASEAN, 5 Dec

Source: Phillip Securities Research Pte Ltd

Macro Data

In US, GDP unexpectedly fell in 4q12 by annualized 0.1%q-q, but the headline weakness obscures underlying strength. Household consumption and fixed asset investment, the core of the economy, has remained fairly strong. Consumption growth accelerated to annualized 2.2%q-q (+1.5%pts), faster than the 1.6% growth rate in 3q12 and beating the market expected 2.1% pace. Total fixed investment rose 9.7%q-q annual pace (+1.2%pts) with strong gains in Corporate spending on equipment and software (12.4%q-q annual pace, +0.9%pts) after the 2.6% decline in 3q12, and Residential construction continuing to gain as well (15.3% q-q annual pace, +0.4%pts).. The main drags to 4q12 was due to the biggest plunge in defense spending in four decades (-1.3%pts), inventory drawdown (-1.3%pts), export weakness (-0.8%pts). Core inflation reported 0.9% y-y in 4q12, compared to the 1.1% y-y pace in 3q12. With the tame inflation and economy at moderate expansion, the FED is likely to continue the QE. In Euro zone, economic confidence index rose to 89.2 in Jan from a revised 87.8 in Dec, higher than the market expected 88.2, indicating an improving business confidence. Regardless the improvement in sentiment, In Spain, recession deepened more than economists forecast in the fourth quarter as the government's struggle to rein in the euro region's second-largest budget deficit weighed on domestic demand. Gross domestic product fell by 0.7% q-q in 4q12, exceeding the 0.6% contraction predicted by the Bank of Spain and comparing to the 0.28% q-q drop in 3q12. Over the year, GDP contracted by 1.8% in 4q12, compared to the 1.6% y-y gain in 3q12. In South Korea, industrial production unexpectedly rose by 0.8% y-y in Dec, while the market was predicting a 1.5% y-y fall. South Korea's government is frontloading budget spending in the first half to spur economic growth as won gains and yen weakness aid export rivals in Japan.

Source: Phillip Securities Research Pte Ltd

Company Results
S/N	Company Name	Q/HY/FY	Currency, Units	Revenue			Net Profit
				Current	Previous	Change (%)	Current	Previous	Change (%)
1	SATS	3Q	S$'mn	470.6	442.3	6.4	47.2	38.7	22.0
2	MTQ Corporation Limited	3Q	S$'000	36,554	32,173	14	4,088	6,230	-34
3	Tuan Sing Holdings Limited	FY12	S$'000	371,847	239,720	55	117,807	41,110	187
4	Yoma Strategic Holdings	3Q	S$'000	12,986	9,834	32.1	3,550	1,337	171.0
Source: SGX Masnet

Company Highlights

United Engineers Limited (UE) launched a takeover for WBL Corporation Limited (WBL) in an all-cash pre-conditional voluntary general offer (the Offer) that values WBL at close to $1.1 billion. The Offer by UE's subsidiary, UE Centennial Venture Pte Ltd (the Offeror), is for the remaining 61.7% of WBL, or 167.6 million shares, and all outstanding convertible bonds in WBL, that the Offeror and its concert parties do not own. The Offer price at $4.00 per share is at a 19.0% premium to a competing cash offer (adjusted for dividend). It represents a 14.0%, 13.3% and 12.0% premium to the last transacted price on 23 November 2012, 1-month volume weighted average price (VWAP) and 3-month VWAP up to 23 November 2012, respectively. (UE Closing price: S$3.320, unchanged; WBL Closing price: S$4.200, unchanged) Libra Group Limited (the "Company" and its subsidiaries, the"Group") announced that the Group is expected to report a net loss for its full year financial results ended 31 December 2012 ("Full Year"), mainly due to the writing-off and provisioning of gross amounts due from certain specific customers for contract work-in-progress. This is in respect of variation orders which are now deemed not recoverable from these specific customers (Closing price: S$0.085, unchanged) Saizen Real Estate Investment Trust("Saizen REIT"), announced the acquisition of Clair Court Roka Koen by its TK operator Yugen Kaisha ("YK") Kokkei (the "Acquisition"). YK Kokkei has entered into a conditional sale and purchase agreement for the acquisition of Clair Court Roka Koen ("CCRK") from an independent party for a cash consideration of JPY 712,516,829 (S$9.7 million) (the"Purchase Price"). The Purchase Price will be paid on the completion date, which is expected to be on or around 26 February 2013 (Closing price: S$0.1980, +1.0%)

Source: SGX Masnet, The Business Times

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