26 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 : Humor is perhaps a sense of intellectual perspective: an awareness that some things are really important, others not; and that the two kinds are most oddly jumbled in everyday affairs.
- CHRISTOPHER MORLEY
Singapore: The Day AheadSINGAPORE DAYBOOK :CapitaLand rattles off a few blunt 'home truths' [SINGAPORE] In a candid assessment of the Singapore residential property market, CapitaLand yesterday warned of headwinds in the near term.
Following the introduction of a 60 per cent cap on total debt servicing ratio that financial institutions must apply before issuing property loans, effective June 29, CapitaLand said in its latest financial results statement that "prices and sales volume of Singapore residential property are expected to moderate as the cumulative impact of the various property measures continue to be played out in the coming months".
Analysts note that CapitaLand has been quite responsive to market changes and introduced discounts at its projects d'Leedon, Interlace and, most recently, Sky Habitat in Bishan.
Referring to Sky Habitat, CapitaLand Residential Singapore CEO Wong Heang Fine said: "We are doing selective unit discounts - but not on a mass basis."
(Source: The Business Times)
MARKET SCOOP
Advance SCT chairman removed as defendant, arbitration to resume
Stamford Land Q1 net up 41.3%
Q1 net profit up 11.9% for SATS
SIA's Q1 boosted by Virgin sale and lower fuel costs
OUE H-Trust debuts 0.6% above IP0 price
AIMS AMP Reit's Q1 DPU unchanged at 2.5 cents
Yangzijiangis first counter to trade RMB shares on SGX
CapitaLand Q2 net profit slightly down on lower portfolio gains
(Source: The Business Times)
UOB KAY HIAN says...
CAPITALAND | BUY | TP: S$4.45
CapitaLand reported 2Q13 net profit of S$383.1m bringing the 1H13 earnings to S$571.3m, up 10.1% yoy driven by strong revenue contribution from development projects in Singapore and China, as well as rental income from the shopping mall business
Excluding the impact of portfolio gains of S$108.5m, revaluation gains of S$232m, S$10.5m in impairment charges and S$27.7m one-off loss booked in 1H13, the core 1H13 operating profit of S$269m is below our expectations accounting for 33.6% of our full year forecast of S$801.5m (36.5% of consensus forecast of S$736.7m)
Strong residential sales of S$1.6b reported in Singapore (683 units of which lions share came from D'Leedon) which is more than a threefold increase over S$467m seen in 1H12
CapitaLand targets to launch Marine Point and Bishan St 14 in 2H13
In China, CapitaLand sold 1691 units with a sales value of S$640m in 1H13, 60% higher yoy
The units sold were from The Metropolis in Kunshan, The Pinnacle and Paragon in Shanghai, The Loft in Chengdu and iPark under Raffles City Shenzhen
Management guided for a cautious stance towards the housing market in Singapore in the near term with the recent government measures on Total Debt Servicing Ratio cap expected to have an impact on overall residential property sales
However, management expects a sustainable demand for new homes over the long-term
For CapitaMalls Asia Limited, the revenue growth in 1H13 was mainly contributed by Olinas Mall and The Star Vista
CMA's key markets Singapore, China and Malaysia are expected to perform well in 2013, on the back of sustained tenant sales growth and meaningful contribution from the malls that opened in 2012
We have a BUY recommendation with a target price of S$4.45/share, pegged at a 15% discount to our RNAV of S$5.23/share
OCBC Securities says ...
STARHILL GLOBAL REIT | BUY | TP: S$0.95
Starhill Global REIT (SGREIT) announced 2Q13 NPI of S$39.1m and distributable income of S$26.7m, up 5.2% and 14.7% YoY, respectively
While the number of units outstanding was enlarged post conversion of 152.7m convertible preferred units (CPUs) into 210.2m ordinary units, income to be distributed to CPU holders declined 88.2% YoY to S$0.3m
As a result, distribution to unitholders was up 22.1% to S$25.6m (S$0.9m retained), while DPU was up 10.2% YoY to 1.19 S cents
Together with 1Q DPU of 1.37 S cents, 1H13 DPU totaled 2.56 S cents, up 19.1% YoY
This forms 52.1%/51.2% of our/consensus full-year DPU forecasts, well within expectations
The positive performance was mainly due to strong contribution from its Singapore and Australia portfolios
Both Wisma Atria (WA) and Ngee Ann City (NAC) benefited from higher occupancies and positive rental reversions (15.1-15.6% increase for office segment and WA retail leases committed from Jul 2012 to Jun 2013)
In addition, NAC saw its NPI grow 9.8% YoY due to a 10.0% rent increase for Toshin master lease
This led to a 6.9% YoY growth in Singapore portfolio's NPI
Australia portfolio NPI also jumped 32.7% YoY as a result of incremental income from its recently acquired Plaza Arcade, despite a weaker AUD (down ~5%)
This has more than offset the soft performance at the other overseas portfolios
For 2Q, we note that SGREIT's Singapore portfolio contributed 63.7% of total revenue, largely unchanged from 66.3% in 1Q
Overall occupancy also stayed stable at 99.6%, compared to 99.7% seen in previous quarter
Looking ahead, management believes the new renewal rate (+6.7%) for Toshin lease, 7.2% rental uplift from the Malaysia master leases, and continued repositioning of WA will help to bolster SGREIT's income in 2H13
On its capital management front, SGREIT also expects its debt duration to improve from 1.2 years to 3.5 years and the percentage of debts fixed/hedged will increase from 81% to over 90%, having secured loan facilities to refinance all its debts due in 2013
We maintain BUY with unchanged fair value of S$0.95 on SGREIT
DBS VICKERS Securities says...
CAMBRIDGE REIT | HOLD | TP: S$0.78
Cambridge REIT (CREIT) reported a 14% and 13% y-o-y rise in revenues and net property income to S$24.6m and S$20.8m, respectively
The better performances were largely due to the contribution from acquisitions and development projects, rental escalations, offset by loss of income from divestments
Portfolio occupancy remained high at c.98% with a weighted lease expiry of 3.2 years
Distributable income rose by 8% y-o-y to S$15.3m (which was largely a distribution of capital as the Manager was entitled to a performance fee of S$13.9m after a voluntary 50% waiver)
DPU was 1.24Scts (+5% y-o-y)
CREIT also reported net revaluation gains of S$31.9m, 3% higher compared to Dec 12 values
CREIT's organic growth performance is likely to remain stable
The Manager has leased close to 500,000 sqft of space in 1H13 with positive uplifts of 5-10%
CREIT has a weighted average lease expiry of 2.4 years
There is a further c4.0% of its income up for renewal for the rest of 2013, implying that earnings are likely to be fairly stable
The Manager continues to execute on development projects, with an aim in optimising the value of its portfolio
One such strategy is to maximize available GFA in selected properties - 3 Pioneer Sector 3 and 21B Senoko Loop - where CREIT will raise the plot ratios of these properties to 1.3x and 2.4x respectively, adding close to 384k additional GFA to the portfolio
While the impact is not expected to be substantial, we remain positive on the ability of CREIT to extract value within its portfolio, which is likely to imply further growth in rentals and capital values for the properties, and thus having a positive impact on unit holders' distributions
Maintain HOLD and TP S$0.78, given limited upside
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