OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.74

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.50

Stock Name: M1
Company Name: M1 LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 3.18

Market Compass

18 July 2013~ Good Morning Singapore!

Singapore Idea Snippets:

18 July 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 : Losers live in the past. Winners learn from the past and enjoy working in the present toward the future. - DENIS WAITLEY Singapore: The Day Ahead SINGAPORE DAYBOOK : Falling exports may scupper GDP growth SINGAPORE] Singapore's miserable run on the exports front has continued and the advance official estimate of strong GDP growth in the last quarter may turn out to be overly optimistic. There are also questions over whether key non-oil domestic exports (NODX) will pick up steam in the second half after they wrapped up the April-June quarter with the longest run of declines since the global financial crisis. The NODX extended its fall in June with a steeper-than-expected 8.8 per cent tumble from a year ago, the fifth drop in as many months, according to the latest trade figures released yesterday by the government's trade promotion agency International Enterprise Singapore. Last month's decline followed a 4.6 per cent decrease in May and exceeded the 5.8 per cent drop which the market was looking at. Chua Hak Bin, an economist at Bank of America Merrill Lynch, calculated that the decline brought the full second quarter (Q2)'s NODX down 4.9 per cent, against a 12.5 per cent fall in the first quarter (Q1). (Source: The Business Times) MARKET SCOOP Singapore yards benefit from China shipbuilding woes Keppel Land Q2 profit up 0.9% Singaporeand Barbados sign open skies agreement SPH Reit priced at 90 cts, sees strong institutional interest Unifiberto place 74.56m new shares at S$0.02322 each CCT'sQ2 DPU at 2.07 cts, embarks on S$40m upgrade of Capital Tower Singapore's non-oil domestic exports fall 8.8% y/y in June One in 10 Singapore firms settle trade in yuan: HSBC (Source: The Business Times) UOB KAY HIAN says... CAPITACOMMERCIAL TRUST | BUY | TP: S$1.74 CapitaCommercial Trust (CCT) reported a 2Q13 distributable income of S$59.6m (+1.9% yoy, +7.0%qoq) and a DPU of 2.07 cents (+0.5% yoy, +5.6% qoq) The 1H13 DPU is in-line with our expectations, accounting for 50.1% of our full year DPU estimate of 8.0 cents 1Q13 revenues improved 1.8%yoy to S$97.5m while Net Property Income dipped 0.5%yoy to S$74.9m, due to better performance at 6 Battery Road and higher rental contribution from HSBC Building offset by lower occupancy at Capital Tower and higher property tax and operating expenses Occupancy rate rose 0.5ppt to 95.8% in 2Q13, helped by rising occupancies at 6 Battery Road and One George Street CCT signed and renewed 191,700sf of leases in 2Q13, with about 58% renewals and 42% new leases New and renewed tenants include CBRE, Mitsubishi UFJ Lease, Noonday Asset Management, AAPC Singapore and Bryan Cave Intl. Consulting Committed occupancy at 6 Battery Road rose to 1ppt qoq to 94.2% while occupancy at 1 George St rose 2.8ppt to 97.2% S$40m AEI announced for Capital Tower for the upgrading of common areas and technical specifications, with a projected return on investment of 7.8% (incremental NPI of S$3.1m) upon completion in 2Q15 Revaluation gain of S$85.3m from mid-year revaluation of properties With cap rates unchanged at 3.75% for Grade-A offices, gains were achieved primarily from higher signing rentals at CCT's properties and lower cap rates at Raffles City (down 15-20bps for retail and hotel components) Gearing fell 1.5ppt to 28.9%, due to higher asset valuations and lower borrowings, while average cost of debt also fell 0.2ppt to 2.8% as CCT adopted a 76% fixed/24% floating rate for its borrowing Sensitivity to a rise in the interest rate remains low as a 50bps increase in interest rate will impact DPU by -1% Average debt maturity fell 0.2 years to 2.8 years CCT has a debt headroom of S$1.2b for acquisitions before reaching a gearing of 40% Expiry of yield protection may be mitigated by retained earnings from Quill Management anticipates that estimated impact from the loss of yield protection at One George Street from July 2013 will be S$8m for 2H13 (7% of 1H13 distributable income) However, this will be mitigated by better portfolio occupancies, positive rental reversions and savings on interest expense In addition, CCT has retained S$10.8m of distributable income from Quill Capita Trust, which may be used for potential distribution to unitholders Positive rental reversions with average portfolio rents up 1.7% qoq to S$7.96 psf pm in 2Q13 from S$7.83 psf pm in the previous quarter AEI and redevelopment works remain on track, with CapitaGreen due to be completed in 4Q14, and the asset enhancement works (AEI) at Raffles City also due to be completed in 2Q14 AEI works at 6 Battery Road are due to be completed by 4Q13 We have a BUY on CCT with a target price of S$1.74 based on DDM (required rate of return: 7.2%, terminal growth: 2.2%) DBS VICKERS Securities says ... ASCENDAS REIT | BUY | TP: S$2.50 A-REIT's 1Q14 results were in line, with gross revenues and net property income growing 6% and 7% to S$150.9m and S$108.0m, respectively This was largely due to the acquisition of The Galen, supported by an organic uplift in rents Rental reversions remained positive at c9.6% compared to previously contracted rents while occupancy rates dipped slightly to 93.6% due to conversion of certain single-tenanted properties into multi- tenanted properties Weighted all-in cost declined slightly to 3.09% (vs 3.32%) but is expected to remain stable going forward Distributable income came in 11.3% higher at S$85.2m, translating to a DPU of 3.55 Scts for the quarter (+0.6% due to an enlarged share base) The recent completion of Unilever Four Aces Singapore (a built-to-suit facility) and the acquisition of A-REIT City @ Jinqiao are expected to start kicking in from 2Q14 We note that there is a S$13.5m rental guarantee on the latter, which will mitigate any earnings downside REIT has commenced leasing of the space, which is currently 3% leased with a further 20% of the space under negotiation A-REIT has an active good pipeline of development and asset enhancement projects (AEI), with an additional 3 AEIs at Techquest, LogisTech and Corporation Place unveiled, costing cS$25.4m and will complete in 2Q14 Together with its other developments, A-REIT has an additional S$190.8m in investments (new and uncompleted projects) that have yet to be funded Growth momentum will pick up from end of FY14F as these projects are progressively completed from 2HCY13. Amongst the development projects, Nexus@one-north, the largest development project in its pipeline (completing in 3QCY13), is seeing improving take-up rates, with reported occupancy of close to 58% Our TP is revised to S$2.50 as we raised our risk free rate assumption (2.6% vs 1.8%) We continue to like A-REIT for its stability and attractive yield of c6.1-6.5%. Upside to earnings will be acquisitions, which the manager is currently reviewing NOMURA Securities says... M1 | BUY | TP: S$3.18 A steady performance from M1 with service revenue 2% ahead of our expectations while EBITDA came slightly below due to mix change in handset sales Service revenue grew 9%, EBITDA grew 6% with 37% margin, and NPAT grew 11% y-y Management reaffirmed its FY13 guidance for moderate NPAT growth Key takeaways from the result to highlight: Some sequential improvement in postpaid ARPUs from data re-pricing Postpaid ARPU rose 2% q-q compared to a flat to 2% q-q decline for the past four quarters This, however, has a long way to go still as only 26% of postpaid customers are on tiered data plans now and only around 15% of subs appear to be exceeding data allowances M1 is also in discussion with OTT players for revenue sharing arrangements to protect ARPU\ Handsets continue to create margin volatilities Service margin fell from 39% in 1Q to 37% due to a rising mix of Android devices and accounting of these devices (expensed up front) Android handsets are now at 75% of the mix, from 60% in 1Q and 40% a year ago M1 has 67k fibre subs now with net adds of 7k This is around 3% of its total wireless base - improving this ratio is key to improving churn We estimate M1's fibre revenue contribution is SGD9mn, vs wholesale fixed cost of SGD7mn (excluding and advertising and other costs) FY13 capex guidance is now for SGD130mn, or at the lower end of its initial guidance This excludes payment for recently won spectrum, which will occur in end 2014 (SGD40mn) and 2016 (SGD64mn) We maintain Buy M1 has declared a 6.8sen dividend. Its 5% yield remains appealing and the stock is now trading at 17x FY13F P/E