SG: MARKET PULSE: SingPost, CDLHT (14 Jun 2013)

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.23

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 1.79

MARKET PULSE: SingPost, CDLHT

14 Jun 2013

KEY IDEA Singapore Post: Good stock to hold in current environment Since our last report on Singapore Post (SingPost) on 6 May 2013, its share price rose about 8.5% to reach S$1.40 in mid May, but fell by an even greater amount (~10%) subsequently to its current price, which is a level that is supported by fundamentals. With increasing labour-related expenses and administrative expenses, operating costs of the group have been steadily increasing. Along with the changing profile of mail, the group is diversifying its businesses. Even during the midst of its transformation, SingPost is a good stock to hold in the current volatile environment. However, we see limited upside potential unless earnings growth from its acquisitions proves to be better than expected. Maintain HOLD with S$1.23 fair value estimate. (Low Pei Han) MORE REPORTS CDL Hospitality Trusts: Lowering FV to S$1.79 STB data shows that RevPAR for Upscale and Mid-tier Singapore hotels for Apr fell 12.8% YoY and 4.7% to S$229 and S$160 respectively. We understand from sources that Singapore hotel bookings have generally been weak through 2Q13. Just to recap, CDLHT's hotels registered a RevPAR fall of 7.9% YoY to S$191 in 1Q13, contributing to income available for distribution falling 2.8% to S$29.0m. Concerned with an oversupply situation building up in the hospitality market, we are lowering our FY13 RevPAR growth assumption for CDLHT's Singapore hotels from 0% to -5%. We update our model for these weaker RevPAR assumptions and a lower LT gross gearing target, which reduces our FV to S$1.79 from S$2.05. We maintain a HOLD rating on CDLHT. (Sarah Ong)

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NEWS HEADLINES - US equities rose and the S&P 500 Index posted its second-biggest advance of the year, climbing 1.5% to 1,636.36 with yesterday's better-than-forecast U.S. economic data and speculation that the Fed will look to maintain low interest rates. - Singapore's April retail sales index is estimated to fall 3% from a year earlier, according to the median estimate in a Bloomberg survey of nine economists. Actual data is due 1pm local time. - Singapore Exchange intends to keep the STI 30 constituents status quo after a June quarterly review; 3 new IPOs gain entry to FTSE ST indexes. - Swee Hong has secured a contract from LTA worth approximately S$14m for the proposed sewer diversion at Springleaf station. - CFM Holdings expects to report losses for the financial year as a result of lower revenues due to the disposal of assets in its Thailand operations. - Low Keng Huat reports 1Q net profit of S$15.3m vs S$13.1m a year ago.