SG: MARKET PULSE: First REIT, GAR, Lian Beng, Yoma (4 Apr 2013)

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.31

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.63

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: SELL

Target Price: 0.71

MARKET PULSE: First REIT, GAR, Lian Beng, Yoma

4 Apr 2013

KEY IDEA First REIT: Enhancing its portfolio value First REIT (FREIT) recently announced its proposal to acquire two Indonesian hospitals from its sponsor Lippo Karawaci (Lippo) for a total purchase consideration of S$190.4m. This would be funded largely by debt and the issuance of new units to a smaller extent to Lippo. We are positive on the acquisitions as it offers DPU accretion of 6-13% for FY13-14F, according to our estimates, while also providing stability and visibility to unitholders. We now adopt a DDM model (cost of equity: 7.7%; terminal growth rate: 1.0%) as our new valuation matrix (previously RNAV). Coupled with our higher DPU forecasts, we bump up our fair value estimate from S$1.00 to S$1.31. But we maintain our HOLD rating as we believe that the market has largely priced in the positives from these acquisitions and FREIT's continued transition to a sizeable healthcare REIT in the region. (Wong Teck Ching Andy) MORE REPORTS Golden Agri-Resources Ltd: Near-term outlook remains weak Golden Agri-Resources (GAR), after reporting a disappointing set of FY12 results at end Feb, has languished below S$0.60 in recent weeks; and may continue to do so in lieu of the still-weak near-term outlook. The main reason for the expected near-term underperformance comes from the uninspiring CPO (crude price oil) prices, which has again fallen below MYR2,400/ton. The other reason is probably the still-high stockpiles seen at several planters in both Malaysia and Indonesia. Despite the near-term headwinds, management remains relatively upbeat about its prospects, as it still sees robust demand growth for CPO as an edible oil from emerging and development countries. For now, we intend to maintain our HOLDrating and S$0.63 fair value (based on 12.5x FY13F EPS); and we see value emerging at S$0.55 or better. (Carey Wong) Lian Beng Group - Awarded two contracts worth $201m Lian Beng announced that it has secured two construction projects which would boost its order book to a record S$1.085b. The first contract is worth S$112m and is awarded by Oxley Holdings to design and construct a multiple-user light industrial development at Sunview Road, Jalan Buroh and Pioneer Rd. It will commence in Apr-13 and take 24 months to complete. The second contract, also awarded by Oxley Holdings, is worth S$89m and involves the design and construction of a three-storey and seven-storey building forming a multiple-user industrial development at Tampines Industrial Crescent, Tampines Ave 10 and Tampines Expressway. It will also commence in Apr-13 and take 24 months for completion. We are keeping our rating on Lian Beng UNDER REVIEW pending a change in analyst. (Research Team) Yoma Strategic Holdings: JV with Dragages Singapore Yoma announced that its wholly-owned subsidiary SPA Project Management Pte. Ltd. has formed a JV with Dragages Singapore Pte Ltd to construct 1,043 apartment units at Thanlyin Star City in Myanmar. The development would cost ~US$94m and construction would commence in Apr-13 and last for 33 months. The JV would be 60% owned by Dragages Singapore and the remaining by SPA Project Management Pte Ltd. While we are positive on the company entering into a JV with an established name in the sector and giving added visibility on the construction timeline for Star City, there is limited impact on our RNAV estimate at this juncture. Maintain a SELL based on a 12-month fair value estimate of S$0.71 (20% premium to RNAV). (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks fell on Wednesday, with the benchmark indexes dropping the most in over five weeks, following disappointing labour market data. - Macquarie International Infrastructure Fund is considering the divestment of its 47.5% interest in Taiwan Broadband Communications to the trustee-manager of Asian Pay Television Trust, which will be a business trust that may IPO on the SGX-ST. - Logistics Holdings has secured two contracts amounting to S$50.9m from the HDB for the upgrading of four HDB precincts. - ISDN Holdings has entered into an agreement for the placement of up to 23.73m new ordinary shares, which could raise gross proceeds of up to S$10.7m. - Sunlight Group has entered into an agreement for the placement of up to 130m new ordinary shares to raise gross proceeds of up to S$4.94m.