SG: MARKET PULSE: S-REIT, Bumi Armada (22 May 2013)

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

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

Research House: OCBC

Price Call: BUY

Target Price: 8.64

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 1.05

MARKET PULSE: S-REIT, Bumi Armada

22 May 2013

KEY IDEA Singapore REITs: The burgeoning market In our latest assessment of the S-REITs sector, we continue to see familiar trends. REIT managers have generally maintained firm growth in their trusts' rental income, on the back of contributions from past investments and improved operational performance. For 2013, we are maintaining our view that S-REITs are likely to continue to deliver firm performance. Nevertheless, the S-REIT index has been enjoying a good run-up, raking up 36.7% gain in 2012 and another 12.7% increase YTD. Given that the S-REITs are now trading at a 24% premium to book value on average, we feel that it is prudent to be selective on S-REITs. We continue to prefer S-REITs with good growth potential, strong financial position and compelling valuations. In this respect, we continue to pick CapitaCommercial Trust [BUY, S$1.80 FV], Fortune REIT [BUY, HK$8.64 FV] and Starhill Global REIT [BUY, S$1.05 FV] as our preferred BUYs. Reiterate our OVERWEIGHTview on the broader S-REITs sector. (S-REITs Team) MORE REPORTS Bumi Armada Berhad: A good start to FY13F Bumi Armada Berhad's 1Q revenue jumped 46% YoY to MYR489m and net profit to shareholders increased by 22% YoY to MYR110m. The results were roughly in-line with ours and the consensus' estimates. Segment results were mixed. Although the FPSO, OSV and T&I segments had YoY increases in revenue, only FPSO and OSV showed segment profit improvements. The OFS segment reported no activity for 1Q13. The group also benefited from disposal gain of a subsidiary of MYR9.4m, write-back of doubtful debt of MYR2.0m and a net foreign exchange gain of MYR3.0m. We tweaked our models slightly to reflect 1Q13 results and roll forward our estimates to FY13/14. Accordingly, our fair value increases slightly to MYR3.56 (previously MYR3.74) on 21x PER. Maintain HOLD. (Chia Jiunyang)

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NEWS HEADLINES - US stocks closed higher on Tuesday after a strong earnings report from Home Depot and also due to market anticipation of Wednesday's testimony by Ben Bernanke in Congress. - Boustead Singapore's FY13 PATMI rose 46% YoY on the back of a 26% increase in revenue YoY. It announced a final dividend of 3 cents and a special dividend of 2 cents. - RELIGARE Health Trust (RHT) registered DPU of 3.55 S cents for the period spanning 19 Oct 2012 to 31 Mar 2013, missing its projected DPU of 3.61 S cents. - The Asian prime brokerage unit of Credit Suisse has replaced Morgan Stanley as the second largest firm servicing the region's US$148 billion hedge funds industry, a survey shows. - Fashion group Giorgio Armani's sales revenue rose over €2.0b (US$2.6b) in 2012, a 16% rise YoY. It saw a 11% jump in sales in crisis-hit Europe. - British luxury group Burberry posted a 14% rise in full-year pretax profit but forecasts declining profit in 1H13 due to reduction in wholesale markets in favor of retail markets.