SG: MARKET PULSE: Venture, DBS, OKP, CAPL, ART (2 May 2013)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 8.00

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.46

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.29

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.35

MARKET PULSE: Venture, DBS, OKP, CAPL, ART

2 May 2013

KEY IDEA Venture Corp: Disappointing start to FY13 Venture Corp (VMS) reported a sluggish set of 1Q13 results which came in below ours and the street's expectations. Revenue fell 7.6% YoY to S$530.5m, forming 20.6% of our full-year estimate. PATMI fared worse, dipping 21.1% YoY to S$28.0m, or just 16.9% of our original FY13 forecast. Management sounded cautious during the analyst briefing, given the still uncertain macroeconomic environment. We believe that VMS's 2H strength would be weaker than our previous expectations. We expect some near term selling pressure on the stock given this lacklustre set of results and also because the stock trades ex-dividend today (2 May, from 9 a.m.). We cut our FY13 revenue forecasts by 5.7% (FY14 by 4.8%) and our PATMI estimates by 11.9% (FY14 by 5.4%). Consequently, our fair value estimate is lowered from S$9.08 to S$8.00 (15x FY13F EPS). Downgrade VMS from Buy to HOLD. (Wong Teck Ching Andy) MORE REPORTS DBS: Stronger-than-expected 1Q DBS Group Holdings Ltd posted stronger-than-expected 1Q13 net earnings of S$950m, up 2% YoY and -21% QoQ, and this is sharply ahead of market expectations of S$824m (based on Bloomberg poll). Net Interest Income fell 1% YoY to S$1327m, but higher Non-Interest Income, which rose 21% YoY to S$990m, helped to give total income a boost to S$2317m (+7.5% YoY). The key contributors were the strong double-digit increase in Fee and Commission Income, +25% YoY to S$507m, as well as higher Trading Income (+26% YoY to S$410m). With this strong set of 1Q performance, there is likely to be upward revision of its full year 2013 earnings forecast, as 1Q now accounted for 27% of consensus full-year earnings. We will provide more details after the analysts' briefing later in the day. Meantime, do note that we have a BUY rating on DBS but we are likely to revise our fair value estimate. (Carmen Lee) OKP Holdings: 1Q13 misses expectations OKP's 1Q13 revenue grew 28.4% YoY to S$32.0m but gross margin fell to 15.1% from 21.0% in 1Q12, chiefly due to increased subcontracting and labour costs. PATMI dropped 22.2% YoY to S$2.4m. 1Q13 EPS of 0.77 S cents was lower than expected, forming 18% of ours and 15% of the street's FY13 estimates. The effective tax rate fell from 16.0% in 1Q12 to 13.2% in 1Q13 due to tax-deductible purchases under the Productivity and Innovation Credit plan, which will apply through 2015. We have adjusted our forecasts for OKP's FY13 and FY14 performance. Applying the same P/E multiple of 11x to FY13F EPS, we derive a FV of S$0.46, slightly lower than our previous FV of S$0.48. We maintain our HOLD rating on OKP. (Sarah Ong) CapitaLand Limited: Capital recycling at serviced residences CAPL announced that it would divest three serviced residences in China and 11 rental housing properties in Japan for a total of S$165.0m to Ascott Residence Trust. The divestment of these properties, which include Somerset Heping in Shenyang, Citadines Biyun in Shanghai and Citadines Xinghai in Suzhou, would take place by 28th Jun 2013 and result in a net gain of S$15.1m for CapitaLand. We like that management continues to recycle capital steadily for stabilized assets in its serviced residences business segment, which would free up capital for deployment and further consolidate its balance sheet. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.29 (20% discount to RNAV). (Eli Lee) Ascott Residence Trust: Proposed 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 an aggregate purchase consideration of S$165.0m. ART expects to acquire the target properties 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. 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 are placing our Hold rating and S$1.35 fair value UNDER REVIEWpending incorporation of the acquisitions into our model. (Sarah Ong)

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

NEWS HEADLINES - US stocks fell Wednesday as the Fed said it would continue purchasing US$85b in bonds each month, but may reduce or expand the programme depending on the economy. - Forterra Trust reported 1Q13 net loss of S$16.7m. It had registered a net profit of S$8.0m in 1Q12. - Religare Health Trust has announced that the Gurgaon Clinical Establishment, which accounts for 26% of its total portfolio value, had its official opening launch on 1 May 2013. - Del Monte posted 1Q13 net profit of S$4.4m, up 3.7% YoY, as revenue climbed 17% to S$87.4m. - Ho Bee's 1Q13 PATMI climbed 230% YoY to S$52.1m on the back of a 68% increase in revenue to S$60.8m.