OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 3.80

Stock Name: Hyflux
Company Name: HYFLUX LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.44

Market Compass

11 April 2013~ Good Morning Singapore!

Singapore Idea Snippets:

11 April 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : The truth is you don't know what is going to happen tomorrow. Life is a crazy ride, and nothing is guaranteed. - EMINEM Singapore: The Day Ahead SINGAPORE DAYBOOK:Upside for office Reit sector limited: Credit Suisse. But sector still attractive given hunger for yields THE office real estate investment trust (Reit) hot streak is expected to cool, with CapitaCommercial Trust (CCT) and Keppel Reit pegged at "neutral" in the latest Credit Suisse equity research report. Suntec Reit, with its larger exposure to older offices, has been rated "underperform". CCT and Keppel Reit appear set for "moderate rental growth" and were favoured by Credit Suisse for their higher proportions of Grade A offices, at 67 per cent and 92 per cent, respectively. Yesterday, CCT and Keppel Reit's counters closed a cent lower at $1.655 and half a cent higher at $1.375, respectively. The report has a target price on CCT of $1.59 a share and on Keppel Reit of $1.32 a share. Over much of 2012, the Reit space in general enjoyed a blistering performance in the realm of investor sentiment. The FTSE ST Real Estate Index, for example, has climbed more than 20 per cent over the last year, compared to the Straits Times Index's (STI) gain of about 10 per cent during the same period. MARKET SCOOP Private residential resales up in March S'pore 2nd most attractive destination for China FDI: EIU Car COE premiums fall across board Forterra to sell Central Plaza for US$267m to fund development DBS:Danamon takeover bid aids Indonesian bank consolidation UOB KAY HIAN Securities says... WILMAR INTERNATIONAL | BUY | TP: S$3.80 In its 2012 annual report, Wilmar highlighted its long-term strategy to focus on greenfield projects with high potential despite the longer gestation Key expansion will be in the fast-emerging markets in Africa - Ghana and Nigeria We expect lower refining margins for 2013 but will be compensated by the expanded capacity in Indonesia Sustaining its market leader position in:- Consumer packs cooking oil - the main markets are China,Indonesia, Bangladesh, Vietnam and India (under Adani Wilmar). Wilmar's share price has fallen 8% over the last one week on fears over the avian flu in China Crushing pre-tax margin still holding up as soybean prices trend down Maintain BUY and target price of S$3.80, based on sum-of-the-parts (SOTP) methodology, implying a blended PE of 13.6x 2013F, below its historical mean of 14.8x 1-year forward PE OCBC Securities says... HYFLUX LTD | HOLD | TP: S$1.44 Hyflux recently announced that its subsidiary - Hyflux Investment Consultancy and Management Service (Tianjin) Co - has signed two memoranda of understanding (MOUs) with the prefectural governments of Chuxiong and Qujing in Yunnan province to develop water and environmental projects in these two cities While it is still early days yet, we view the MOUs as a positive development as it suggests that China is back on the radar screen These projects are certainly not small - management estimates the total investment value for the project in Qujing to be around RMB1.2b and Chuxiong to be less than RMB2b, where these could be developed by Hyflux and/or its potential partners Meanwhile, we note that the company's current order book remains healthy at S$2.9b (as of end-2012) This is expected to increase with the recent signing of the water purchase agreement (WPA) to deliver desalinated water to the Dahej Special Economic Zone in Gujarat, India Management expects the WPA to have positive material financial impact if the financial close is concluded by end FY13 For now, we will maintain our HOLD rating and S$1.44 fair value on the stock; but we do see room for re-rating should these MOUs translate into actual contracts NOMURA Securities says... COMFORTDELGRO CORPORATION | BUY | TP: S$2.13 Metroline to acquire London bus operations from FirstGroup for S$109mn (£57.5mn) The acquisition will increase its London bus market share from 12.5% to 19%, according to management The acquired business has an annual turnover of ~£111mn and an EBITDA margin close to 10%, according to the press release The acquisition is priced attractively at a historical EV/EBITDA of 5.2-5.5x, in our view We believe there is room to extract synergies from the acquisition to enhance the return on investment We estimate that the accretion to the bottom line will be in the range of S$7.6-11.4mn (£4-6mn), which is 2.6-3.9% of FY14F earnings We expect the stock reaction to be neutral to mildly positive, as this acquisition provides additional growth but which will only be meaningful in FY14F