MARKET PULSE: ComfortDelgro, LMIRT (13 Feb 2013)

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.95

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.52

MARKET PULSE: ComfortDelgro, LMIRT

13 Feb 2013

KEY IDEA ComfortDelGro: Comforting results but rich valuations Summary: ComfortDelGro's (CD) FY12 results came in within our expectations with revenue increasing 3.9% YoY to S$3.5b while operating profit rose 3.3% YoY to S$412.3m as the group managed to keep a lid on operating expenses. With PATMI rising 5.6% YoY to S$248.9m, management declared a final dividend of 3.5 S cents (FY11: 3.3 S cents), taking the total dividend declared for the year to 6.4 S cents (FY11: 6.0 S cents). Investors can now look forward to an announcement in the coming months for local fare increases, which will provide much-needed relief for domestic operations. Away from home, we expect CD's overseas ventures to stay lucrative despite greater competitive pressures. However, while we raise our fair value to S$1.95 (from S$1.90 previously), we feel that the market has already priced in much of the upside. Therefore, we downgrade CD to HOLD on valuation grounds despite favouring the group over SMRT. (Lim Siyi) MORE REPORTS Lippo Malls Indonesia Retail Trust: Downgrade to HOLD Summary: LMIRT posted 4Q12 gross rental income of S$33.0m, up 35% YoY. The increase was primarily due to the contributions from Pluit Village and Plaza Medan Fair (acquired in 4Q11) and marginal contributions from the six acquisitions made in 4Q12. Results for the quarter were generally in line with our expectations; DPU of 0.74 S cents formed 97% of our estimate. NAV per unit rose 6.3% QoQ to 56.16 S cents, giving a current P/B of 0.93x. Gearing remains healthy at 24.5%. Management indicates that the average weighted all-in cost of debt for FY13 is likely to be 5.5%-5.7%. We maintain our fair value of S$0.52. Since the current unit price is near our fair value, we downgrade LMIRT to a HOLD. We estimate a FY13F yield of 6.9%. (Sarah Ong)

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NEWS HEADLINES - US stocks pushed higher on Tuesday as blue chips, led by the financial sector, closed at levels not seen in more than five years. The Dow rose 0.3% to close at 14,018.70, with 23 of 30 components finishing in positive territory. - CitySpring Infrastructure Trust reported a net profit of S$6.5m for its 3QFY13, compared with a net loss of S$3.8m in the year-ago period. - United Industrial Corp's FY12 net earnings doubled to S$391.6m, boosted by revaluation gains of its investment properties. Excluding the gains, net profit from operations would have fallen 16% to S$168.2 million. - Kian Ann Engineering will be delisted from SGX on 14 Feb 2013. Separately, Hup Soon Global Corporation said that its offerer, Spei Holdings, has proposed to its board to seek its voluntary delisting from the catalist board. - The Hour Glass reported a 7% YoY dip in turnover to S$157.9m and a 19% decline in earnings to S$14.6m for 3QFY13.