SG: MARKET PULSE: CapitaLand, SIA, SATS, SMM, CDLHT, TEE (26 Jul 2013)

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.77

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: SELL

Target Price: 9.50

Stock Name: SATS
Company Name: SATS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 3.12

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.64

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 1.79

MARKET PULSE: CapitaLand, SIA, SATS, SMM, CDLHT, TEE

26 Jul 2013

KEY IDEA CapitaLand Limited: Building competitive scale CAPL's 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations; 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. The group sold 736 Chinese residential units in 2Q13, which is respectable but somewhat slower than the 955-unit pace in 1Q13. Management guides that Chinese sales would likely fall to around 3.3k units for FY13, pointing to c.1.6k units in 2H13 - still healthy but below the 1.9k-unit pace in 2H12. In Singapore, residential sales slowed to 139 units in 2Q13 in the aftermath of a blowout 1Q13 (544 units sold) driven by discounts. Mall subsidiary CMA continues to report firm operating statistics: same-mall NPI in China and Singapore in 1H13 is up 12.1% and 2.0% YoY, respectively. We believe CAPL's strategy of growing competitive scale in six geographic clusters is sound and well thought out, and we continue to see value in CAPL shares at current levels. Maintain BUY with an unchanged fair value estimate of S$3.77. (Eli Lee) MORE REPORTS Singapore Airlines: No re-rating yet Excluding one-off items, Singapore Airlines's (SIA) 1Q14 results came in below expectations. Revenue would have fallen slightly while PATMI was inflated by exceptional items and aircraft/parts disposal gains. ). SIA remains plagued by intense competition within the premium carrier space and passenger yields continue to stay depressed. With the outlook for FY14 still expected to remain lacklustre, we anticipate an extension of selling pressure on the counter for the interim. Based on a peg of 0.8x P/Book, we maintain SELL on SIA with a fair value estimate of S$9.50 (S$10.00 previously). (Lim Siyi) SATS Ltd: Slightly off the mark SATS's 1Q14 results came in slightly under our expectations as revenue slipped 0.8% YoY to S$434.5m following declines in the food solutions segment and EBITDA fell 2.6% YoY to S$60.5m. Qantas's move to Dubai and lower business volumes from TFK were the main culprits for this decline. Only with a write-back of prior-year's tax provisions was the group able to record an 11.9% YoY improvement in PATMI to S$46.2m. For the coming quarters, we expect some softness in growth trends for passenger traffic and moderate our forecasts for the remainder of FY14 accordingly. While our fair value lowers to S$3.12 (S$3.15 previously) - suggesting limited upside at this juncture - we expect SATS's defensive qualities i.e. earnings stability and healthy dividend attractiveness to provide some support for its share price. Maintain HOLD. (Lim Siyi) Sembcorp Marine: Court of Appeal rules in favour of SMM Sembcorp Marine (SMM) announced that the Court of Appeal has ruled in its favour with regards to its appeal filed in Jun 2012 relating to the High Court's decision on SMM's claims against PPL Holdings. Amongst other rulings, it has been ruled that certain provisions on the JV agreement between SMM and PPL Holdings premised on equal shareholding no longer applied when SMM increased its shareholding from 50% to 85% in PPL Shipyard. SMM is "pleased with the outcome", and the group will now have complete control of PPL Shipyard's board. The consortium (involving Yangzijiang Shipbuilding) that owns the remaining 15% in PPL Shipyard is likely to have little say over the management of PPL Shipyard. MaintainBUY with S$5.64 fair value estimate on SMM. (Low Pei Han) CDL Hospitality Trusts: 2Q13 below street's expectations CDL Hospitality Trusts reported a 2.9% YoY decline in 2Q13 gross revenue to S$35.6m and a 4.4% YoY fall in net property income to S$32.6m. Income available for distribution contracted 6.4% YoY to S$29.4m. 2Q13 RevPAR for the Singapore hotels fell 8.5% YoY to S$193, affected by increased competition, weaker corporate demand, the absence of the biennial Food & Hotel Asia event in April, and a mild impact from the haze. The results were generally in line with our expectations, with 1H13 DPU of 5.41 S cents forming 50% of our FY13 estimate. We judge that the 2Q13 results missed the street's expectations with 1H13 DPU forming only 47% of the mean FY13 estimate. We maintain a HOLD rating on CDLHT but place our FV of S$1.79 under review. (Sarah Ong) TEE International: FY13 earnings down 32% YoY Summary: TEE International (TEE) reported 4Q13 PATMI of S$6.4m, down 45% YoY mostly due to a S$4.1m increase in administrative expenses. Tee reported that these expenses were incurred for marketing property development projects and also included administrative expenses for its newly acquired integrated turnkey material handling subsidiary. FY13 PATMI cumulates to S$13.1m which we judge to be somewhat below our full year expectations. We note, however, that FY13 topline increased 51% YoY to S$21.6m as the group recognized higher levels of contributions from engineering and property development projects. We would speak with TEE later regarding these results and, in the meantime, put our rating and fair value estimate under review. (Eli Lee)

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NEWS HEADLINES - Japan's consumer prices rose the most since 2008 in June; consumer prices excluding fresh food increased 0.4% YoY. - Mapletree Industrial Trust reported 1Q14 distributable income of S$40.2m, up 9.0% YoY. - Oxley Holdings has issued S$25m fixed rate notes due 2018 under its S$300m multicurrency MTN programme. - Singapore Shipping reported 1Q14 net profit of US$1.95m, up 56% YoY; revenue had climbed 83% YoY to US$9.1m. - Ziwo Holdings expects to report operating loss for 2Q13 due to slowdown in sales.