SG: MARKET PULSE: ART, Swiber (7 May 2013)

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.35

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.70

MARKET PULSE: ART, Swiber

7 May 2013

KEY IDEA Ascott Residence Trust: Acquisition of assets in China and Japan Ascott Residence Trust (ART) has entered into conditional agreements to acquire three prime serviced residences in China and a portfolio of 11 rental housing properties in Japan for S$287.4m at an EBITDA yield of 5.4% on a pro forma basis for FY12. On a pro forma basis, these accretive acquisitions are expected to have increased FY12 distribution per unit by 2.9% from 8.76 S cents to 9.01 S cents. However, with the Japanese Yen currently ~22% weaker in SGD-terms versus the FY12 average, any accretion post-acquisition is likely to be lower. The acquisitions will be funded partly by the S$150m recently raised from an equity placement and the balance will be funded by debt. We maintain our FV of S$1.35 and HOLD rating on ART. (Sarah Ong) MORE REPORTS Swiber Holdings: Still bidding for projects According to Upstream, Punj Lloyd is poised to win a US$131.45m contract from India's state-owned ONGC to lay subsea pipelines and execute topside modification work for the B-127 field development in India. We understand that Swiber was the highest bidder for the project with a 13.3% difference from Punj Lloyd's price quote. Meanwhile, Swiber is still bidding for other work; management has been upbeat regarding its potential pipeline. Despite the positive industry outlook, we would continue to monitor operating margins and cash flows of the group. Meanwhile, the stock price has fallen by about 1.6% YTD vs the STI's 6.9% rise. Though there is currently a more than 10% upside for the stock, we prefer to maintain our HOLD rating and fair value estimate of S$0.70 on Swiber, pending its 1Q13 results announcement next week. (Low Pei Han)

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