OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.31

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 3.80

Market Compass

17 April 2013~ Good Morning Singapore!

Singapore Idea Snippets:

17 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 :I've failed over and over and over again in my life and that is why I succeed. - MICHAEL JORDAN Singapore: The Day Ahead SINGAPORE DAYBOOK:Free MRT rides to city before morning rush hour. One-year trial will start from June 24; programme likely to cost govt $10m. [SINGAPORE] Commuters who travel early into the city area by train will pay nothing at all from June 24. The Land Transport Authority (LTA) announced yesterday that it is embarking on a one-year trial to offer completely free trips to those who end their weekday journeys at any of the 16 designated MRT city stations before 7.45am. Commuters who exit these stations just slightly after 7.45am will also not be left out. Those who alight between 7.45am to 8am can still enjoy a discount of up to 50 cents off their train fares. This pilot programme, which will be fully funded by the government, is likely to cost $10 million, said Minister for Transport Lui Tuck Yew during a visit to Raffles Place MRT Station during the pre-peak period yesterday morning. He added that the LTA hopes to see 10 to 20 per cent of commuters make changes to their daily schedules to travel into the city earlier. Currently, the SMRT Early Travel Discount scheme only offers a reduction of up to 50 cents for commuters arriving at 14 designated SMRT stations in the city area before 7.45am. This discount is limited to travel on SMRT lines only. MARKET SCOOP Keppel Land and China Vanke enter strategic partnership Singapore Exchange Q3 net profit surges as trading volume jumps Perennial consortium gets S$1.4b Beijing Tongzhou Phase 2 proj M1's Q1 profit up 1.8% S'pore Index edges up; Keppel REIT jumps to 5-yr high AIMS AMP Reit Q4 DPU up 16.3% Breadtalk invests S$14.5m in Beijing property JV OCBC Securities says... FIRST REIT | HOLD | TP: S$1.31 News agency Reuters reported that Lippo Karawaci (Lippo), which is First REIT's (FREIT) sponsor, is seeking to raise at least US$200m in an IPO of its Siloam Hospitals healthcare division1 Should this IPO materialise, we believe that proceeds would be used to fund Lippo's aggressive healthcare expansion plans, which includes the construction of a large number of hospitals We also expect Lippo to retain a strong majority of the controlling stake of the listed entity, given that it has earmarked its healthcare division as one of its core growth drivers As the Siloam Hospitals entity would likely continue to be consolidated in Lippo's financial statements, we believe that future hospitals will still be injected into FREIT Lippo also has a deemed interest of ~28.7% in FREIT An EGM has been scheduled on 29 Apr to obtain unitholders' approval for the forementioned acquisitions, issuance of new units to Lippo as partial payment for SHTS and proposed whitewash resolution for a waiver of a mandatory offer from Lippo As we expect the acquisitions to be DPU accretive and value-enhancing to unitholders, we expect unit-holders to vote in favour of the proposed conditions Meanwhile, we retain our HOLD rating and S$1.31 fair value estimate on FREIT UOB KAY HIAN says... WILMAR INTERNATIONAL | BUY | TP: S$3.80 Wilmar International is acquiring a 27.5% equity stake in Cosumar SA (Cosumar) from Societe Nationale d'Investissement (SNI) for a total cash consideration of MAD2.3b (US$263m) Cosumar is the sole sugar supplier in Morocco, one of the largest sugar producers in Northern Africa and third largest sugar producer in Africa With this, Wilmar will have sugar operation in Australia, New Zealand, Indonesia and Africa Wilmar is paying about MAD 2.3b (US$263m) for the 27.5% stake in Cosumar, representing 11.5x 2012 PE and 2.6x 2012 P/NTA Wilmar has about US$8.56b cash on hands to fund the acquisition and adjusted net gearing of 0.36x In line with company strategy to expand in Africa. Africa region contributed 3.3% of Wilmar's revenue in 2012 Also, sugar business is the fifth largest business in Wilmar and contributed about 7% of 2012's total PBT Maintain BUY and SOTP 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 DBS VICKERS Securities says... FAR EAST HOSPITALITY TRUST | BUY | TP: S$1.13 Far East Hospitality Trust (FEHT) announced that they have signed a conditional sales and purchase agreement with Straits Trading Company limited (STC) for the acquisition of Rendezvous Grand Hotel Singapore and Rendezvous Gallery The agreed acquisition price for the property is S$264.5m, which is a 2-5% discount to appraised values from 2 appointed valuers (Colliers: S$277m, JLL : S$268.5m) Upon completion of this acquisition, the property will be master leased to the sponsor, Far East Organization, under a management contract as the operator of the hotel for a initial period of 20 years, with an option to renew for another 20 years We estimate the hotel component to be valued at close to S$225m (after attributing S$40m for the gallery wing based on S$1,600 psf) which works out to a valuation/key of close to S$755,000/key The purchase will be funded through a combination of debt and newly issued equity (to STC and sponsor Far East Organization) Based on the above funding scenario, this acquisition is expected to result in a net accretion of c1.5% for distributions We expect further upside to our TP as we have not factored in this acquisition in our numbers.