SG: MARKET PULSE: Cache, CMA, SingTel & StarHub (25 Apr 2013)

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.45

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.55

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: BUY

Target Price: 3.68

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.00

MARKET PULSE: Cache, CMA, SingTel & StarHub

25 Apr 2013

KEY IDEA Cache Logistics Trust: Promising start to FY13 Cache Logistics Trust (CACHE) reported 1Q13 DPU of 2.234 S cents, up 7.1% YoY. This is in line with our expectations, given that the quarterly DPU made up 26.5% of our DPU forecast. The strong performance was mainly attributable to upward rental adjustments and incremental contribution from its past acquisitions. As at 31 Mar, the portfolio assets remained 100% occupied, with a healthy weighted average lease to expiry of 3.7 years. We also understand that CACHE has secured a new tenant, Agility Logistics, for its lease at APC Distrihub during the quarter. With this, CACHE has fully addressed its lease expiry in 2013, with zero renewals due for the rest of the year. CACHE currently has an aggregate leverage of 29.2% and a stable all-in financing cost of 3.52%. This provides CACHE with ample flexibility and firepower to pursue its growth opportunities. We are maintaining our BUY rating with a higher fair value of S$1.45 (S$1.33 previously) on CACHE. (Kevin Tan) MORE REPORTS CapitaMalls Asia: Sharp execution bearing fruit CMA's 1Q13 PATMI came in at S$73.2m - up 9.6% YoY mostly due to contributions from Star Vista, four malls in Japan and Queensbay Mall, a S$6.6m gain from warehousing of two assets sold to CCDFII, better performance from CMT, ION Orchard and the China Funds, and a sale at The Orchard Residences. Excluding one-time items, we judge 1Q13 results to be somewhat above expectations. Given the H7N9 bird flu outbreak, shopper traffic for CMA's Chinese malls showed a decrease of -0.9% YoY. On a same mall basis, however, tenant sales were up +15.9% YoY. We see worsening H7N9 fears potentially reducing retail traffic over the nearer term but a sustained long-term business impact, in our view, is unlikely. Maintain BUY with an unchanged fair value estimate of S$2.55. (Eli Lee) Telecom Sector: StarHub to get BPL on cross carriage basis Summary: StarHub Ltd (STH) will be able to broadcast "live" matches of the much-coveted Barclays Premier League (BPL) for the upcoming 2013-2016 season. This after the MDA (Media Development Authority) asked SingTel to cross-carry the matches over the next three seasons even though SingTel had earlier secured the rights on a non-exclusive basis. Understandably, SingTel said it was "gravely disappointed" with the decision, adding that "it disadvantages both consumers and the industry". SingTel has also said it intends to appeal the decision and seek legal recourse if necessary. The decision came as a bit of a surprise, given that SingTel had earlier secured the rights on a non-exclusive basis. However, the MDA has ruled that the agreement between SingTel and FAPL (content owner) had restrictions that prevent other Pay TV retailers from offering the same content, thus triggering the cross-carriage ruling. It is also unclear as to how FAPL would respond to the decision. We will be speaking further with both companies to get a clearer picture on this. In the meantime, we put our ratings on SingTel [BUY, S$3.68 fair value] and StarHub [HOLD, S$4.00 fair value] under review. (Carey Wong)

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