SG: MARKET PULSE: Astro Malaysia, CDLHT, SembMarine (18 Mar 2013)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 2.11

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.84

MARKET PULSE: Astro Malaysia, CDLHT, SembMarine

18 Mar 2013

KEY IDEA Astro - FY13 results mostly within expectations Summary: Astro Malaysia Holdings Berhad (Astro) reported FY13 revenue of MYR4265.0m, up 10.9%, and was 0.3% above our forecast. Although net profit fell 33.6% to MYR418.0m, weighed by higher operating cost including depreciation, it was 4.7% below our forecast. Hence the results were mostly within our forecast. Astro declared a third interim dividend of 1.5 MYR cents and a final dividend of 1.0 MYR cent, bringing the full-year post-IPO payout to 4.0 MYR cents. Going forward, management remains relatively upbeat about its prospects, citing the expected 5-6% growth in the Malaysian economy, a corresponding rise in income per capita and the share of entertainment expenditure. However, it notes that the B.yond conversion and aggressive customer acquisition will impact EBITDA in FY14; hence margin could remain around 32%. But once the swap out of the B.yond is completed in FY15, management expects to see EBITDA margins recovering back towards 36%. As such, we continue to maintain our BUY rating on the stock. Our DCF-based fair value improves slightly from MYR2.98 to MYR3.00. (Carey Wong) MORE REPORTS CDL Hospitality Trusts: Competition to increase Summary: We believe that CDLHT's Singapore hotels are best classified as being in the Mid-tier/Upscale range, because their FY12 RevPAR was S$211, close to the mean of S$264 and S$171, which are the RevPAR averages for Singapore Upscale and Mid-tier hotels respectively. As detailed in our hospitality sector report dated 5 Mar 2013, we project that for 2013-2015, the Economy, Mid-tier and Upscale/Luxury categories will grow +5.9% p.a., +8.5% p.a. and +4.4% p.a. respectively. As a group, the Mid-tier/Upscale/Luxury segment will grow 5.8% p.a., the same rate that the overall supply will grow. This rate is lower than the projected room demand of 5.4% p.a. over the same period, indicating that competition is likely to intensify in the segments that CDLHT is represented in. Adjusting our assumptions and removing the 10% discount to RNAV to better reflect the worth of CDLHT's hotel properties, we are raising our fair value from S$1.93 to S$2.11; but maintain a HOLD rating since CDLHT is trading near our fair value. (Sarah Ong) Sembcorp Marine: Good demand from Mexico; secures two more jack-ups Summary: Sembcorp Marine (SMM) announced this morning that its subsidiary, PPL Shipyard, has secured orders worth US$417m for the construction of two jack-up rigs from Mexican-based Integradora de Servicios Petroleros Oro Negro (Oro Negro). Scheduled for delivery at end-4Q14 and end-1Q15, the high-spec rigs will be built based on PPL's proprietary Pacific Class 400 design. Oro Negro is a repeat customer - it ordered two similar jack-up rigs from SMM in Dec last year at a price of US$217m per unit. The strong demand coming from Mexico is within our expectations, as PEMEX plans annual capital expenditures of ~US$30b till 2019 to stem the country's declining oil production. We see SMM as one of the beneficiaries of these developments. Maintain BUY with S$5.84 fair value estimate on SMM. (Low Pei Han)

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NEWS HEADLINES - US stocks retreated on Friday, ending the longest advance by the Dow Jones in more than 16 years and containing the S&P 500 just as it neared its record close. - Popular Holdings' 3QFY13 net profit attributable to owners slipped 4% YoY to S$11.7m. Turnover also fell 8% to S$152.8m. - Boustead Singapore said it will enter the solar power market in Japan with the acquisition of shares in an industry player for S$73k. - Singapore Airlines said its Feb passenger load factor grew to 78.2% from 76.1% in Feb 2012. Systemwide, passenger traffic grew 5.1%, while capacity grew by 2.4%. - Retail sales fell 2% YoY in Jan 2013, partially cushioned by stronger sales of motor vehicles. Excluding motor vehicles, retail sales slipped a steeper 4.9%.