SG: MARKET PULSE: Cache, TEE, Midas (20 Mar 2013)

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.33

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.30

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.595

MARKET PULSE: Cache, TEE, Midas

20 Mar 2013

KEY IDEA Cache Logistics Trust: Raising equity to fund acquisition Cache Logistics Trust (CACHE) has exercised the call option to acquire the newly completed ramp-up logistics warehouse known as Precise Two. In a separate announcement, CACHE also launched a private placement to raise gross proceeds of S$86.8m, of which ~66.0% of the gross proceeds is expected to be used to wholly fund the proposed acquisition of Precise Two. We have earlier anticipated CACHE to fund the acquisition fully by debt, since it has recently received its maiden credit rating from Moody's (which allows it to exceed its previous debt ceiling of 35%). With this new development, we now adjust our estimates to factor in the placement and enlarged unit base. We also forecast a reduction in leverage as we believe CACHE may pare down its debts using the remaining proceeds to cushion a near-term dilution in DPU. Our fair value is revised to S$1.33 from S$1.34 previously. Maintain BUY. (Kevin Tan) MORE REPORTS TEE International: Potential new real estate projects TEE International recently announced the establishment of two wholly owned indirect subsidiaries, TEE Industrial Pte Ltd (yesterday) and TEE Hospitality Pte Ltd (12 Mar), under its real estate unit, TEE Land Private Limited. The principal activity of both subsidiaries will be in real estate development. Though no other details were given, the choice of names suggests that the group is preparing to expand its property business further, into the industrial and hospitality services segments. Meanwhile, TEE's plans to spin off its real estate business appear to be on track for a listing on SGX by May and we expect more updates in the weeks ahead. Its share price should remain supported in the near term by expectations of a special dividend if the plan succeeds, but we remain cautious on TEE until we see stronger contributions from its real estate business. We maintain our fair value estimate of S$0.30 and HOLDrating for TEE. (Conrad Tan) Midas Holdings: Wins first international contract of the year Midas Holdings (Midas) announced last evening that it has secured a EUR22.7m (~CNY182.8m) contract from Ural Locomotives LLC, a joint-venture company between Siemens AG and Russia's Sinara Group. We note that Midas' relationship with Siemens stretches a long way back, as it was appointed as a preferred global long-term supplier of aluminium alloy products for Siemens in Oct 2005.This is Midas' first international contract of 2013 and also helps to boost its total order wins YTD to ~CNY292.4m, following the five metro contract wins announced on 12 Mar. This latest contract entails the supply of aluminium alloy extrusion profiles for use in the manufacture of 100 electric train sets (or 500 electric train cars) for commuter passenger service in the Russian railway sector. Delivery is expected to take place progressively from 2013 to 2019. We had previously highlighted that management would be deepening its efforts to secure international railway contracts as a means of buffering the current standstill from the high-speed railway side in China. Maintain BUY and S$0.595 fair value estimate on Midas. (Wong Teck Ching Andy)

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NEWS HEADLINES - US stock indexes finished mixed on Tuesday, with the S&P 500 extending its longest losing streak since late December. The S&P fell 0.2% while the Nasdaq eased 0.3%. - Rickmers Maritime plans to raise S$98.5m in a non-underwritten renounceable rights issue and use the proceeds to repay bank loans. - Noble Group says it sees an unprecedented amount of opportunities and is confident of another bull market for commodities in a few years. - China New Town drew mixed reactions after a unit of China Development Bank said it might buy 40% of the company. Its shares were up 7% in Singapore but down 11% in Hong Kong.