SG: MARKET PULSE: Biosensors, Fortune REIT, Keppel Corp (9 Apr 2013)

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: OCBC

Price Call: BUY

Target Price: 1.60

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 7.28

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

MARKET PULSE: Biosensors, Fortune REIT, Keppel Corp

9 Apr 2013

KEY IDEA Biosensors International Group: Challenges apparent, but seeking market share gains Biosensors International Group's (BIG) regional peers have faced headwinds in the Chinese drug-eluting stent market, as highlighted in their recent results announcement. We believe that these factors, such as a slowdown in growth of PCI surgeries, would also have an adverse impact on BIG. However, we expect BIG to continue its market share gains in other key markets such as the EMEA region. BIG is also stepping up its collaboration with its licensee Terumo Corp to address the recent decline in licensing revenue from Japan. Nevertheless, we believe that a further depreciation of the Japanese Yen due to stimulus measures by the Bank of Japan could exacerbate this problem. We thus trim our FY14F revenue and core PATMI forecasts by 0.6% and 1.6%, respectively. However, we maintain our BUY rating although our FCFE-derived fair value estimate declines marginally from S$1.63 to S$1.60. (Wong Teck Ching Andy) MORE REPORTS Fortune REIT: Strong fundamentals The growth in HK's retail sales has picked up significantly since 4Q12. Combining the first two months of 2013 to eliminate distortions from the timing of Chinese New Year, retail sales climbed up 15.8% in value. Robust retail sales will continue to underpin the growth in retail rents throughout HK. The media has reported that a group has called for the boycott of Park'N Shop supermarket chain, which is part of Li Ka-shing's Hutchison Whampoa Ltd, in support of dock workers who are striking for better work conditions. Park'N Shop is FRT's top tenant, accounting for 8.0% of the REIT's total gross rental income in Dec 2012. According to FRT management, businesses are running as usual and impact to the Park'n Shop outlets in FRT's malls has not been seen. Management has indicated that 2013's rental reversions are likely to be in the mid-teen percentages. FRT has a low gearing of 23.4% and no refinancing needs till 2015. We are maintaining our fair value of HK$7.28 and BUYrating on FRT. (Sarah Ong) Keppel Corporation: Market for premium jackups is strong Keppel Corporation (KEP) announced that its O&M arm has secured a contract to construct a KFELS B Class jackup rig from Ensco. The construction cost, together with the commissioning, systems integration testing and project management is expected to be US$225m. When completed in 1Q15, this will be the fourth KFELS B Class Bigfoot unit in Ensco's fleet. With this latest order, KEP has won about S$1.85b of new orders YTD, accounting for 37% of our full year estimate. Looking ahead, we expect order flows for such premium jackups to continue. Indeed, Ensco's Chairman, President and CEO also commented that the market for premium jackups is "very strong", and "customer demand is broad-based for high-specification jackup rigs". Maintain BUY with S$12.68 fair value estimate on KEP. (Low Pei Han)

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