19 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 : Mothers all want their sons to grow up to be president, but they don't want them to become politicians in the process.
- JOHN F. KENNEDY
Singapore: The Day AheadSINGAPORE DAYBOOK :CFO to take over the helm at Keppel Corp [SINGAPORE] Keppel Corporation's incoming head honcho will not be a shipyard man.
Instead, the Singapore- headquartered conglomerate will next be led by its current chief financial officer Loh Chin Hua, who has picked up over 25 years of real estate investing and fund management experience.
Mr Loh will take over on Jan 1, 2014, from 65-year- old group chief executive officer Choo Chiau Beng, who began his 42-year career at Keppel as a ship repair management trainee at Keppel Shipyard.
Mr Choo, who has been CEO since 2009, announced the leadership renewal yesterday at the group's second-quarter financial results briefing. (Source: The Business Times)
MARKET SCOOP
MLT posts DPU of 1.80 cents, up 5.9%
Keppel Corp Q2 profit down 33%
Oxley in move for China projects
F&Ngets final extension to restore float by Dec 31
Ezion gets LOI to provide service rig for 5 years
OUE's US$476m hospitality trust IPO priced at bottom of range: sources
CRCT posts 1.2% fall in Q2 DPU
Keppel Land hits 5-week high on strong China sales
(Source: The Business Times)
UOB KAY HIAN says...
KEPPEL LAND | BUY | TP: S$5.11
Keppel Land reported 2Q13 net profit of S$94.7m, down 2.5% yoy due to the lower bumper contributions from Reflections at Keppel Bay, offset by contributions from The Lakefront Residences and The Luxurie
1H13 results were in line with our expectations accounting for 46% of our full-year forecast of S$417m
Net profit from property investment was up 32% yoy to S$24.5m with improved performance from Keppel REIT (KREIT) and higher contribution from Marina Bay Financial Centre (MBFC) Tower 3
Earnings from property fund management fell 39% yoy to S$9m due to the absence of KREIT acquisition fees earned in 2Q12
Geographically, Singapore accounted for the bulk 74% of profit contributions in 1H13, due to contribution from associates MBFC Tower 3, KREIT and development properties such as Marina Bay Suites, with the remaining largely from China residential projects
Keppel Land has deployed S$1b from its balance sheet to acquire three sites in 1H13
This includes a residential site in Tiong Bahru opposite the MRT (S$550m/S$1,163psf ppr), a 34% stake in a retail development in Shanghai Lifehub @ Jinqiao (S$157m) and a prime landed residential site in Sheshan, Shanghai (S$266m)
Keppel Land's net debt-to-equity ratio currently stands at comfortable levels of 0.4x, up from 0.22x in end-12
Keppel Land has a healthy debt headroom of S$1.4b for further acquisitions if gearing were to expand to a still comfortable 0.6x
Management noted that they will continue to selectively acquire prime residential and commercial sites in key gateway cities, especially in the focus markets of Singapore and China
Management noted that the home sales momentum remained strong in 1H13 despite cooling measures in Singapore and China
Management highlighted that the demand for Grade A office space remains resilient with Marina Bay Financial Centre Tower 3 pre-commitments increasing to about 90%, up from 79% as at end-12
We retain our earnings estimates
Maintain BUY with unchanged target price of S$5.11/share, pegged at 5% discount to its RNAV of S$5.37/share
Key catalysts include acquisitions, divestment of its office assets and sustained recovery in China sales
DBS VICKERS Securities says ...
CAPITACOMMERCIAL TRUST | HOLD | TP: S$1.62
CCT announced 2Q13 gross revenue of S$97.5m (+1.8% y-o-y), NPI of c.S$75m (-0.5%) and distributable income of S$59.6m (+1.9%)
This translates to a quarterly DPU of 2.07Scts and 1H DPU of 4.01scts (+1.3% y-o-y)
The slight uptick in gross revenue was attributable to better performances from Six Battery Road and higher rental contribution from HSBC Building
CCT signed c.192k sqft of office space commitment, of which c.40% were new tenants
Management reported an unweighted average reversion rate of S$9.93 psf pm, higher than the market rate of S$9.55 psf pm (as provided by CBRE)
Management guided that they expect the loss of yield protection income for 2H13 to be c.S$8.0m
However, they have indicated a willingness to utilise a portion of their retained distributable income from Quill Capita Trust (amounting to c.S$11m) in order to stabilise the DPU going forward
As plans are still tentative at this point, we have not factored any additional payout in our DPU projections
In addition, the decline should also be mitigated by an improvement in our portfolio occupancy assumption to 95-98% from the present 95.8%
Looking ahead, we expect office rents to be rather flat over the next 12 months as new demand remains bite-sized
CCT will also be conducting S$40m worth of AEI works at Capital Tower which will focus on the upgrading of common areas and certain technical specifications of the building, with a target of achieving a ROI of 7.8%, upon completion by 2Q15
We made slight downward adjustments to our rental assumptions for CapitaGreen to $12psf/mth as well as raised our risk free rate assumptions to c.2.7% from 1.8%, to reflect the higher rate expectations going forward
The stock is offering of 5.4% for FY13 and FY14, at the lower end of peers' comparison range
With relatively minimal DPU growth to act as share price catalyst, we maintain our HOLD call
NOMURA Securities says...
KEPPEL LAND | BUY | TP: S$4.75
KPLD reported its 2Q13 results on 17 July after the market closed
2Q PATMI of SGD95.5mn (+0.9%y-y; -1.1%q-q) brought the total PATMI booked during 1H13 to SGD192.1mn (-18.8%y-y), which met 52.5% of our full year forecast of SGD366mn
We judge the performance to be broadly in line with our expectation
KPLD's net debt to equity was 0.4x as of end-June 2013 (up from 0.3x as of end-March), with a cash balance of c.SGD1bn
KPLD sold a total of 210 units in Singapore during 1H13, of which 141 units were sold at Corals at Keppel Bay (total 366 units)
Our estimates suggest another 59 units were sold at Reflections at Keppel Bay (total 1,129 units, including 154 units set aside for leasing) during 1H and there were another 46 for-sale units that were still unsold as of June
KPLD plans to launch the The Glades at Tanah Merah (total 726 units) in 3Q
We expect KPLD to target an ASP of c.SGD1,300psf for this project
Commitment at Marina Bay Financial Centre (MBFC) Tower 3 improved to 90% during the quarter (from 86% as of end-March and 79% as of end-December). Considering:
KPLD's gearing is now at the highest level since 3Q11 [i.e. just before the sale of Ocean Financial Centre (OFC) to 46%-owned KREIT (KREIT SP, Reduce) was announced]
MBFC Tower 3 is now substantially committed,
KREIT has been one of the best performing S-REITs YTD,
And potential opportunities to recycle capital into China could start to surface in the near term, We believe the probability of the sale of Tower 3 has increased
KPLD sold 1,090 units in its China projects during 2Q13 (vs. 850 units in 1Q13 and 490 units in 2Q12), of which c.75% were sold in The Springdale in Shanghai and The Botanica in Chengdu
Phases 4 and 5 (total 260 units) at 8 Park Avenue in Shanghai were launched in 2Q13 at an ASP of RMB70,000psm with 54 units sold
Park Avenue Heights in Chengdu also made its debut during the quarter at an ASP of RMB14,500psm with 120 units sold
Trading at a discount of 43% to our NAV estimate of SGD6.26/share, we believe KPLD's current valuation is attractive, notwithstanding concerns on China could continue to cap the stock's near term performance
Potential asset divestment/capital recycling could be a positive catalyst for the stock
Maintain Buy |
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