Wednesday, June 12, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT
Research House: UOB KayHianPrice Call: BUYTarget Price: 1.06

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 4.29

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST
Research House: UOB KayHianPrice Call: BUYTarget Price: 2.86




Market Compass


12 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
12 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping



Source: Marketwatch

Quote for the day : Life is 10 percent what you make it, and 90 percent how you take it.
- IRVING BERLIN
Singapore: The Day Ahead

SINGAPORE DAYBOOK:DBS wants to buy entire stake in Danamon: chairman. A smaller stake will require a review of the economics of the deal, he says

[SINGAPORE] Peter Seah, DBS Group Holdings chairman, yesterday told BT that the bank would still want to buy Temasek Holdings' entire stake in PT Bank Danamon Indonesia. A smaller stake would require a review of the economics of the deal, he said.
"We entered into an agreement to buy Temasek's stake in Danamon. Having done that, we hope it'll get approval (from the Indonesian authorities)."
Mr Seah's comments on the Danamon acquisition came in an interview with BT on Singapore's evolving banking landscape.
"Indonesia is an attractive market and fits very well into our Asian strategy," he said (Source: The Business Times)

MARKET SCOOP

Medi-FlexQ3 profit jumps to RM5.1 million
Low Keng Huat's units transfer retail units at Paya Lebar Sq
Indonesian state-owned servicing firm plans year-end IPO
San Miguel sells control of banking unit to Malaysia's CIMB
Petronasto spend US$5b on Canadian LNG project -exec
UEproposes 1-for-1 rights issue after WBL takeover
GuocoLeisurelaunches global hotel management company

(Source: The Business Times)

UOB KAY HIAN says...

STARHILL GLOBAL REIT | BUY | TP: S$1.06

Starhill Global REIT (SGREIT) has announced that the Toshin master lease has been renewed at a rate which is 6.7% higher than the prevailing rate
This is based on the average of three market valuations by independent market valuers
The renewal rent will be valid for a period of 12 years from 8 June 2013, with a provision for a rental review every three years during the renewal period
We estimate that the rental uplift will provide a 1% and 2% accretion to 2013 DPU and 2014 DPU respectively
We have a BUY recommendation on SGREIT with a target price of S$1.06, based on the dividend discount model (required rate of return: 6.5%, terminal growth: 2.0%)

OCBC Securities says ...

CAPITALAND LIMITED | BUY | TP: S$4.29

CapitaLand (CAPL) announced yesterday that it has secured a contract to manage a
serviced residence in Alabang, a major business district in Metro Manila, Philippines
The 150-unit Somerset Alabang Manila is expected to open in 2017 and will be The Ascott Ltd's (Ascott) eighth property in the Philippines
Over the last month, we note the Ascott Limited secured two management contracts in Wuxi, China (the 134-unit Ascott Central Wuxi and 169-unit Somerset Wuxi), one contract in Riyadh, Saudi Arabia (the 230 unit Ascott Olaya Riyadh) and two in Jeddah, Saudi Arabia (the 166-unit Citadines Tahlia Jeddah and 136-unit Citadines Al Salamah Jeddah)
This carries on a track record of robust growth for CAPL's serviced residence business where the number of owned/managed units has grown at a CAGR of 13% since 2000
Ascott is now the world's largest international serviced residence owner-operator with 31,770 units in 78 cities as at end 1Q13
Over 1Q13, overall portfolio REVPAU remained stable at S$109, with China, Europe and the Gulf region and India up 4%, 2% and 2% YoY, respectively
We see the continued growth of CAPL's serviced residence business extending its competitive edge in terms of scale and branding
With about S$0.9b of assets under development (on an effective stake basis), Ascott enjoys a good pipeline for capital recycling and growing the Ascott REIT ahead
The group recently divested three Chinese properties and 11 Japan properties to the Reit with a gain of S$15m and the transaction is expected to complete in 2Q13
We continue to favor CapitaLand for its diversified real estate portfolio across asset classes, its strong balance sheet and renewed management focus on improving shareholder ROE
Maintain BUY with an unchanged fair value estimate of S$4.29 (20% discount to RNAV)

UOB KAY HIAN says...

ASCENDAS REIT | BUY | TP: S$2.86

Upgrade to BUY (from HOLD) with an unchanged target price of S$2.86, based on Dividend Discount Model (required rate of return: 6.8%, terminal growth: 2.0%)
AREIT share price has seen the sharpest share price correction of 19% amongst the S-REITs under coverage vs an 11% correction for the sector
Valuations are looking attractive with a forward yield of 6.7% relative to large-cap industrial peers (MINT: 7.0%, MLT:6.3%). P/B of 1.2x for AREIT is lower than the 1.3 for large-cap industrial REITs
Growth fundamentals remain intact with DPU expected to grow 4% in FY14 and 8% in Y15 on the back of positive rental reversions, completion of asset enhancements and the completion of new developments
Business park rentals are expected to remain resilient in light of the bottoming of office rentals in 2013
Gearing at 28.3% in 1Q13, its lowest point in over four years as AREIT issued 160m new units to raise S$406m (S$2.54 per unit) in a March private placement
Even after factoring in committed investments, gearing is expected to rise only to 30.4%, giving AREIT headroom of S$1.9b for acquisitions before reaching 45% gearing
The conservative gearing structure, which is one of the lowest amongst the S-REITs, also means that the impact of a rise in interest rates will be muted
AREIT has taken advantage of the low interest rate environment to extend its debt maturity to 3.9 years, which is 18% longer than its average maturity of 3.3 years between 2009 and 2011
Over 50% of AREIT's debt is maturing in three years or later, with debt tenure extended to as long as 2024 (11 years)
All-in interest costs have fallen only 11% from the 2009-11 average of 3.7% to 3.4% in 1Q13 as AREIT has opted to extend maturities in-lieu of lower financing costs
A gradual rise in interest rates can be mitigated by shortening debt tenure



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