SG: MARKET PULSE: Roxy-Pacific, First REIT, SingTel, Yoma (28 Jun 2013)

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.74

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.20

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: HOLD

Target Price: 3.83

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.87

MARKET PULSE: Roxy-Pacific, First REIT, SingTel, Yoma

28 Jun 2013

KEY IDEA Roxy-Pacific Holdings: Strong sales at key launches - Upgrade to BUY Over 2Q13, ROXY launched three out of four land-bank sites - LIV on Sophia, WhiteHaven and Jade Residences - which are 100%, 71% and 50% sold to date, respectively. Overall, we judge these pace of sales to be fairly strong with selling prices above expectations. These successful launches are a key milestone for ROXY given their significant combined size - S$407m and S$76m in estimated total sales and net profits - relative to the group's project portfolio. ROXY now sits on a whopping S$1,188m of unrecognized progress billings from sold units (up 38% from end FY12), which is 8.5 times total FY12 development revenues. We also note that a significant portion of ROXY's value is diversified in its hotel segment (Grand Roxy Mercure Hotel worth S$0.47 per share) and that only 10% of ROXY's total launched development GDV is now left unsold. Our fair value increases to S$0.74 (30% RNAV disc.) versus S$0.61 (25% discount) previously. Upgrade to BUY. (Eli Lee) MORE REPORTS First REIT: Volatile times ahead Concerns over the tapering off of the U.S. Federal Reserve's quantitative easing programme have driven bond yields up and adversely impacted high-yield stocks such as First REIT (FREIT). We see risks coming from higher borrowing costs in the medium-term as ~72% of its debt is based on a floating rate structure, although short-term interest rates in Singapore are likely to stay low in the near future. We expect management to take a more prudent approach towards new acquisitions given the volatile market conditions. Maintain HOLD with a lower fair value estimate of S$1.20 (previously S$1.31) as we raise our cost of equity assumption from 7.7% to 8.3% to take into account the rising bond yields and reduced investor sentiment for interest rate sensitive stocks. (Wong Teck Ching Andy) SingTel: Not awarded Myanmar telco licence SingTel was not among one of the two winners awarded the 15-year telecommunications licences in Myanmar. Instead, these licences went to Norway's Telenor and Qatar's Ooredoo (formerly known as Qatar Telecom). While we do expect a pull-back in SingTel's share price, it is mainly because of the 3.3% jump yesterday ahead of the announcement (as SingTel was widely touted as one of the front-runners). Otherwise, we do not expect any lasting impact as there will be other opportunities for SingTel to get involved at a later stage. In addition, some market watchers note that those awarded the maiden licences may face a lot of challenges in getting the infrastructure in place. For now, we maintain our HOLD rating and S$3.83 fair value on SingTel. (Carey Wong) Yoma Strategic Holdings: Missed out on telco license Yesterday evening, Myanmar authorities announced that it would award two telecommunications licenses to Norway's Telenor and Qatar's Ooredoo, with the France's Telecom-Orange group as a reserve. We see some downside risk to Yoma's share price from this news, given that Digicel was widely perceived by the market to be one of the frontrunners. That said, we believe there is still some scope for the group to stay involved in the telecommunications sector in Myanmar, which could still throw up various opportunities ahead. This is especially since Digicel has already spent several years investing in Myanmar and establishing a business presence. Given the limited color from Digicel's press release yesterday, however, we see this to be uncertain at this juncture and likely contingent on further negotiations between the parties in the consortium. Maintain HOLD with a fair value estimate of S$0.87. (Eli Lee)

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