01 July 2013~ Good Morning Singapore!
Central Execution Team - The Excellence of Execution
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Global Flash: While You Were Sleeping
Source: Marketwatch
Quote for the day :Beauty without grace is the hook without the bait.
- RALPH WALDO EMERSON
Singapore: The Day AheadSINGAPORE DAYBOOK:SC Global saves millions with QC cancellations. Step was taken after the group delisted from the stock market in March [SINGAPORE] SC Global has managed to cancel the qualifying certificates (QCs) that were issued to its developments after it delisted from the stock market in March, saving millions of dollars it would otherwise have to pay for failing to meet the sales deadline under the government's QC rules.
The luxury property firm is the first to delist and obtain QC cancellations since tough additional buyers' stamp duties (ABSD) were introduced for land bought from late 2011 onwards. The duties upset listed property developers because they face a double whammy from hefty ABSD and QC charges if they fail to sell all units at their developments within the time stipulated by both rules.
While SC Global would not have been hit with the ABSD for the projects it got the QC cancellations for, its case is significant because many developers and market watchers had believed that the rule was not retroactive, and would still apply to its existing projects. It was therefore seen as a test case.
Yet BT understands that SC Global is not the first listed property developer here to delist and subsequently obtain QC cancellations. In 2010, Soilbuild Group became the first such company when it applied for and obtained QC cancellations when it delisted.
(Source: The Business Times)
MARKET SCOOP
Singapore's F&N may separate property from other operations
Singapore introduces new steps to cool property market
Singapore's Temasek to boost US, European portfolios: report
Prices of completed apartments/condos dip 0.2% in May
Unilever officially opens first global leadership centre outside UK
Singapore May bank lending up 1.2% from April
Freight Links FY profit up 19.1%, raises dividends
China Fishery says to start arbitration against Veramar
No client data compromised by hacking: Eu Yan Sang
(Source: The Business Times)
UOB KAY HIAN says...
GENTING SINGAPORE | SELL | TP: S$1.17
Expect improvement in 2Q13 EBITDA but volumes remain sluggish
We reckon that Genting Singapore (GENS) could deliver a 2Q13 EBITDA in the US$350m range, reflecting a single-digit qoq fall in gross gaming revenue (GGR) but a marked improvement in win percentage
We continue to expect low single-digit growth in the industry GGR in 2013, reflecting a mild contraction in mass-market GGR growth and a 5-10% rise in VIP GGR
In addition, we conservatively trim our 2014 GGR growth projection to low single-digit from high single-digits
Key concerns are persistent weak local patronage and sluggish VIP market, which could be impacted by China's latest effort to regulate credit extension
Trim 2014 EBITDA projection by 4% to S$1.41b
We expect2Q13 rolling chip volume (RCV) to contract qoq, after having recovered for the third consecutive quarter to about S$20.8b in 1Q13 (+38% yoy, +14% qoq)
Although RCV at Resorts World Sentosa has bottomed out in 4Q11 and is set to moderately recover 7% in 2013, we foresee sluggish growth prospects in 2014
While we note that the RCV from mainland Chinese players, which we estimate account for over 50% of RWS's RCV, has in the past been directly correlated to RWS's credit extension policy and less impacted by the credit situation in China, we need to gauge the impact of China's effort to regulate its banks' credit practice and also crimp shadow banking
While GENS continues to be comfortable with its credit extension programme, we do not expect it to expand its credit programme, noting the rise in impairment losses
Our latest channel checks suggest that patronage in the mass-market gaming area remains relatively quiet, reflecting weak visitation trends by local gamers
Ongoing efforts to raise mass-market momentum include sustaining 1Q13's high-win percentage of 24-25%, better market segmentation (eg players categorised from five to seven tiers), and enhancing of reward points for its 2m members
Ongoing cost management exercises would eventually lift GENS's EBITDA margin
While GENS continues to scout for greenfield opportunities, including opportunities in the US, we reckon that Japan would represent as the first significant tangible opportunity for GENS
Maintain SELL and target price of S$1.17, pegged at 10x 2013F EV/EBITDA
CREDIT SUISSE Securities says ...
MAPLETREE COMMERCIAL TRUST | OUTPERFORM | TP: S$1.45
We upgrade MCT from Neutral to OUTPERFORM following its recent share price weakness, where share price has fallen some 25% from its S$1.54 peak on 14 May (second worst after CRCT)
We believe the selling has been overdone as fundamentals continue to be resilient, underpinned by its quality retail assets (mainly VivoCity) and long leases at two of its three offices
We view this as an opportunity to accumulate quality at cheaper valuations
Despite noise concerning potential slowing visitation to Sentosa due to haze (and subsequent impact to VivoCity, due to its proximity), we understand from management that feedback from mall managers seem to suggest that shopper traffic remains strong
Meanwhile, near-term vacancy risks at its offices are mitigated by the longer leases at BoaML HF and Mapletree Anson
Both VivoCity and BoAML HF make up 71% of NPI
At current levels, valuation for MCT is now looking attractive, where MCT now offers FY14 yields of 6.1% and trades on 1.1x P/B, in line with historical average
Maintain our DDM-based target price of S$1.45, which implies 32% total return
DBS VICKERS Securities says...
CROESUS RETAIL TRUST | BUY | TP: S$1.14
Croesus Retail Trust (CRT) offers investors a unique exposure to the Japan retail real estate sector through a capital efficient vehicle with an initial portfolio of stable and growth-oriented assets
In addition to income stability, as a Singapore listed business trust, this platform offers NAV growth potential through CRT's ability to undertake lower risk non-speculative development activities and diversify into higher growth overseas markets in the medium term as well as prospects of asset reflation in Japan in the longer run
CRT's portfolio is well located near transport conveniences in prefectures that are enjoying expanding per capita GDP
The trust enjoys high income certainty with a long WALE of 11.3 years and derives 44% of rental income from long term master leases with AEON
CRT commands good flexibility in tenant management to optimize tenant mix and property returns as 61.5% of leases are on fixed term lease basis and 49.4% of income comes with an in-built growth engine through its variable rent component
This puts CRT in a strong position when renewing 26.3% of its rental income over FY14-FY15. CRT has a visible acquisition pipeline of assets, 4 currently, in Japan and a right to negotiate to buy 2 assets in Shanghai and Shenyang from its strategic partner Marubeni in the medium term
When fully purchased, this could more than double CRT's portfolio NLA. With a gearing of 43.7% vs a 60% ceiling, CRT is estimated to have debt headroom of JPY23b to fund these purchases
CRT is currently trading at 8.0-8.2% FY14 and FY15 DPU yield
Our DCF-based TP of S$1.14 offers a total return of c28%
Our numbers have not factored in any accretion from new acquisitions
Key risks include the adverse impact of a global slowdown on economic activity and consumption in Japan
Socio-economic and political changes could also affect the competitive landscape and environment in which CRT operates
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