SG: MARKET PULSE: CMA, SGX, FCT, Sheng Siong, ART, Starhill Global REIT (24 Jul 2013)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.55

MARKET PULSE: CMA, SGX, FCT, Sheng Siong, ART, Starhill Global REIT

24 Jul 2013

KEY IDEA CapitaMalls Asia: Gaining good traction CMA's 2Q13 PATMI is S$245.6m, which increased 5.9% YoY mainly due to higher fair value gains for Chinese assets and ION Orchard and profit recognition at Bedok Residences, partially offset by a lower divestment gain. Excluding one-time items, we view the 2Q13 results to be mostly within expectations and YTD core PATMI now makes up 63% of our FY13 forecast. We continue to see relatively firm NPI statistics across the group's mall portfolio. In China (which makes up 51% exposure of total assets excl. cash), 1H13 tenants sales at CMA's malls grew at 9.5% YoY on a psf basis. In Singapore, shopper traffic and tenant sales are up a healthy 4.2% and 3.5% YoY, respectively. Looking ahead, CMA expects to open phase 2 of CapitaMall Jinniu in Chengdu, China in 3Q13, and Bedok Mall and Westgate in 4Q13. We rate the stock with a BUY rating and an unchanged fair value estimate of S$2.55. (Eli Lee) MORE REPORTS Singapore Exchange: Increased DPS by 1 cent Singapore Exchange (SGX) delivered FY13 net earnings of S$335.9m, exactly in line with market expectations. Securities Market saw Securities Daily Average Value (SDAV) of S$1.5b in FY13, up 10%, resulting in a 10% increase in turnover to S$363b. Derivatives Market enjoyed strong volume too, with 101m contracts traded, up 32% in FY13. Management has declared a FY13 full year dividend of 28 cents, up 1 cent from 27 cents (from FY2010-2012). This meant a final quarter payout of 16 cents (12 cents have already been paid out). Recent macro factors are pointing to uncertainty ahead, and this is likely to result in a quieter 1QFY14. In addition, this could potentially spillover into 2Q. Expenses are likely to stay high in FY14, largely from new product initiatives as well as its regulatory requirement related expenses. As we roll our estimates into FY14/15 and using the same blended 23x earnings, we are raising our fair value estimate slightly from S$7.16 to S$7.43. Dividend yield is 3.7% based on current price. Maintain HOLD. (Carmen Lee) Frasers Centrepoint Trust: Positive trends largely intact Frasers Centrepoint Trust (FCT) reported 3QFY13 DPU of 2.85 S cents, representing a YoY growth of 9.6%. This brings the 9MFY13 DPU to 7.95 S cents (+8.9%), forming 73.2% of our FY13F DPU. This is largely in line with our expectations, as we expect the remaining S$2.9m retained in 1H to be distributed in 4Q. Key drivers for 3Q performance remained Causeway Point (CWP) and Northpoint. However, pockets of weakness persisted at YewTee Point and Bedok Point. Looking ahead, FCT expects CWP and Northpoint to remain as the main engines for growth, as leases amounting to a substantial 75.6% of FCT's gross rent are up for renewal in FY14, and positive rental reversions are still expected. On its acquisition front, FCT believes that the injection of Changi City Point in FY13 now appear remote as the strata title division of One@Changi City is still ongoing. We are keeping our forecasts largely unchanged, but as we switch our valuation to dividend discount model and factor in higher risk free rates, our fair value drops from S$2.13 to S$1.96. Maintain HOLD on FCT. (Kevin Tan) Sheng Siong Group: 2Q13 results in-line Sheng Siong Group's (SSG) 2Q13 results came in within expectations with revenue and net profit increasing 8.7% and 20.8% YoY to S$159.8m and S$8.5m respectively. Gross profit and operating margins also improved YoY for the third straight quarter as an interim dividend of 1.2 S cents was declared (versus 1.0 S cent last year). In the coming quarters, the group could experience some pressures from lower same store sales and higher staff costs but we expect the impact to be minimal given the group's effective cost management initiatives and full-year contributions from new stores opened last year. In addition, the operating environment remains conducive for the group with resilient supermarket expenditure and lower inflation expectations. Reiterate BUY for SSG with a slightly lower fair value estimate of S$0.80 (S$0.82 previously). (Lim Siyi) Ascott Residence Trust: 2Q13 better than our expectations Ascott Residence Trust (ART) reported 2Q13 results that were better than our expectations but in line with the street. Revenue fell 2% YoY to S$77.4m and gross profit dropped 4% YoY to S$41.0m. However, unitholders' distribution grew 14% YoY to S$30.9m (including a reversal of over-provision of prior years' tax expense of S$2.7m), which led DPU up 3% YoY to 2.45 S cents. Average daily rates in Singapore are down ~3-7% in 2Q13. Assuming that exchange rates stay constant for the rest of the year, management believes that the whole portfolio's RevPAU for 2H13 will be flat or slightly higher than 1H13's. We adjust our earnings forecasts for FY13-14 upwards in our valuation model and, as a result, our FV moves up slightly from S$1.31 to S$1.37. Maintain a HOLDrating on ART. (Sarah Ong) Starhill Global REIT: 2Q13 DPU rose 10.2% YoY 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, income to unitholders was up 22.1% to S$25.6m, 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. The positive performance, we note, was mainly attributable to strong contribution from SGREIT's Singapore portfolio and incremental revenue from its recently acquired Plaza Arcade in Australia. As at 30 Jun, SGREIT's portfolio occupancy stood at 99.6%, largely unchanged compared to 99.7% in the Mar quarter. Financial position also remains strong, with gearing at 30.3% and interest cost at 3.03% (81% fixed/hedged). We will be attending SGREIT's analyst briefing later in the morning. For now, we maintain BUY on SGREIT but place our fair value of S$0.95 under review. (Kevin Tan)

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