SG: MARKET PULSE: Property Sector, First REIT, A-REIT, KepCorp, FEHT (16 Apr 2013) - Resend

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.29

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.53

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.55

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.31

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 2.63

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

MARKET PULSE: Property Sector, First REIT, A-REIT, KepCorp, FEHT

16 Apr 2013

KEY IDEA Singapore Residential Property: Wave of launches driving firm Mar sales Summary: URA reported that a headline total of 3,072 new private homes (including 279 EC units) were sold in Mar 13, which was up 235% MoM and 1% YoY. These healthy numbers were driven by a wave of new launches after the Lunar New Year, including D'Nest (912 total units, Pasir Ris) 699 units sold at a median S$963 psf, Bartley Ridge (868 total units, Mt Vernon Rd) 367 units sold at S$1,296 psf and Urban Vista (582 total units, Tanah Merah) 348 units sold at S$1,503 psf. We see sales reflecting still firm residential demand and an environment of continued liquidity but remain cognizant of potential incremental curbs should the housing sector show excessive activity going forward. Maintain NEUTRAL on the residential property sector and we prefer developers with strong balance sheets and diversified exposure. Our top picks are CapitaLand [BUY, S$4.29], Keppel Land [BUY, S$4.53] and CapitaMalls Asia [BUY, S$2.55]. (Eli Lee) MORE REPORTS First REIT: No major impact from possible Siloam Hospitals IPO Summary: 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 division. We do not foresee any major impact to FREIT's prospects, as we believe that FREIT would remain as an important vehicle for Lippo to implement its asset-light strategy. Moreover, FREIT has a right-of-first-refusal for the purchase of healthcare assets from its sponsor and/or any of its subsidiaries. Meanwhile, FREIT will hold an EGM on 29 Apr to seek unitholders' approval in relation to its two proposed acquisitions 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. Maintain HOLD and S$1.31 fair value estimate on FREIT. (Wong Teck Ching Andy) Ascendas REIT: Strength reflected in price Summary: Ascendas REIT's (A-REIT) FY13 DPU totalled 13.74 S cents, up 1.3%. This is somewhat below our and street's full-year estimates of 14.0-14.2 S cents. Excluding performance fee, however, we note that DPU would have grown 3.6% to 14.05 S cents, closer to our projections. Looking ahead, A-REIT expects the positive rental reversions to persist, albeit at a slower pace. Management also pointed out there is ~10% vacancy in the multi-tenanted portion of its portfolio, which may provide upside if these spaces are leased out. During the quarter, A-REIT announced the development of DBS Asia Hub Phase 2 for S$21.8m and two new asset enhancement projects totalling S$14.0m. These initiatives, together with the announced investments, are likely to maintain its stable performance in FY14, in our view. We incorporate the results into our forecasts and roll over our valuation to FY14. Maintain HOLD with a marginally higher fair value of S$2.63 (previously S$2.60) on A-REIT. (Kevin Tan) Keppel Corporation: Secures US$226m jack-up rig contract from Falcon Summary: Keppel Corporation (KEP) announced that its O&M arm has secured a US$226m contract from Falcon Energy to construct a KFELS Super B Class jack-up rig. Recall that KEP won a US$820m contract for four jack-up rigs from Grupo R in Mar (KFELS B Class design) and a US$225m contract from Ensco in early Apr (KFELS B Class design). The latter figure includes the construction cost, commissioning, systems integration testing and project management costs. Meanwhile, the last time Keppel secured a KFELS Super B Class jack-up rig was in Mar 2011 for US$210m. This latest order brings KEP's YTD orders to about S$2.2b, accounting for about 43% of our full year order win estimate. Maintain BUY with S$12.68 fair value estimate on KEP; the group will also be announcing its results on 18 Apr 2013. (Low Pei Han) Far East Hospitality Trust: Agreement to acquire Rendezvous Grand Hotel Singapore Summary: Far East Hospitality Trust (FEHT) has entered into an agreement with The Straits Trading Company Limited (STC) to acquire Rendezvous Grand Hotel Singapore and Rendezvous Gallery (70-year old leasehold estate) for an estimated total cost of acquisition of S$270.1m. The acquisition will be financed by the proposed issue proposed issue of new stapled securities in FEHT to STC (S$68.0m), the Sponsor (S$67.8m), as well as debt facilities (S$132.2m). The pro forma effects of the acquisition for FY12 (27 Aug-31 Dec) would have been an increase in DPU from 2.09 S-cents to 2.12 S-cents. Pro-forma effect on NAV per stapled security as of 31 Dec 2012 would have been an increase from 97 S-cents to 98 S-cents. This is Far East H-Trust's first acquisition since its initial public offering in August 2012. The master leasee will be a member of the Far East Organization group of companies. We maintain a HOLD rating but place our fair value of S$1.05 under review. (Sarah Ong)

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NEWS HEADLINES - US equity indexes fell the most in five months, with the prices of commodities dropping after disappointing growth numbers from China and bomb blasts at the Boston Marathon. - Keppel REIT's net property income increased 20.7% YoY to $34.4m primarily due to improved performance from Ocean Financial Centre and 77 King Street. - Qian Hu's 1Q13 net profit fell 88% YoY to S$62k. Revenue declined 2% YoY to S$20.2m. - K-Green Trust achieved 1Q13 profit after tax of $3.2 m, down 10% YoY. Cash flow from operating activities was S$9.8m, down 16% YoY. - Sino Gradness has reported that it received tremendous response at a Chengdu trade exhibition, with indicative orders for "Garden Fresh" juices received to-date exceeding RMB290m, ~45% more than last year.