SG: MARKET PULSE: Kep Corp, CRCT, CMT, MLT (19 Jul 2013)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.53

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.58

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.43

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.15

MARKET PULSE: Kep Corp, CRCT, CMT, MLT

19 Jul 2013

KEY IDEA Keppel Corporation: Group CEO and O&M CEO to retire in early 2014 Keppel Corporation (KEP) reported a 11.7% YoY decrease in revenue to S$3.08b and a 33.4% drop in net profit to S$346.8m in 2Q13. However, excluding the lumpy profits from the sale of Reflections at Keppel Bay and the one-time gain from sale of investment shares, net profit in 1H13 was in line with last year's results, within our expectations. Operating margin in the O&M segment continued to hold up. The group CEO as well as the CEO of Keppel O&M will be retiring early next year and successors have been identified. An interim cash dividend and in-specie distribution of Keppel REIT units brings the total interim distribution to S$0.208/share. Maintain BUY with a slightly lower fair value estimate of S$12.53 (prev. S$12.68). (Low Pei Han) MORE REPORTS CapitaRetail China Trust: Improved debt profile in 2Q13 CRCT's 2Q13 results were in line with ours and the street's expectations. Net property income rose by 6.0% to S$26.4m and income available for distribution was 7.5% higher at S$17.9m. NPI would have grown 9.5% YoY excluding CapitaMall Minzhongleyuan, which is undergoing AEI. CRCT has refinanced the S$150.5m due in June 2013 and significantly improved the average term to maturity of its debt to 2.52 years as at 30 June from 1.30 years as at 31 March. The fixed rate proportion of CRCT's debt is 78%. Apart from the CapitaMall Anzhen unsecured onshore loan maturing next year, all other loans are offshore, and the average cost of debt for 2Q13 was at 2.58%. Gearing stands at 23.5% and all assets are unencumbered. We maintain our BUY rating and fair value of S$1.58. (Sarah Ong) CapitaMall Trust: Robust growth in 2Q13 CapitaMall Trust (CMT) released its 2Q13 results this morning. NPI grew by 12.2% YoY to S$125.6m while distributable income to unitholders rose by 10.2% to S$87.7m. The completed asset enhancement works at JCube, Bugis+ and The Atrium@Orchard last year, together with the rental rates achieved from the portfolio's new and renewed leases, were the key drivers for the quarter. DPU was up 6.3% YoY to 2.53 S cents, and was consistent with our expectations given that 1H13 DPU of 4.99 S cents formed 50.9% of FY13F DPU. As at 30 Jun, CMT's portfolio occupancy stood at 99.1%, representing an improvement from 1Q occupancy of 98.3%. In addition, positive rental reversion of 6.4% was also slightly higher than last quarter's reversion of 6.2%. We will be attending CMT's analyst briefing later in the morning. For now, we maintain BUY on CMT but put our fair value of S$2.43 under review. (Kevin Tan) Mapletree Logistics Trust: 1QFY14 DPU gained 5.9% YoY Mapletree Logistics Trust (MLT) reported 1QFY14 gross revenue of S$75.4m and NPI of S$65.3m, down 2% and 3% respectively. The decline was mainly due to a weaker JPY against the SGD. Excluding the forex impact, gross revenue and NPI would have increased by 3% and 2%, respectively. The impact of the depreciating JPY on distributable income was mitigated by currency hedges. During the quarter, MLT also benefitted from lower borrowing costs and a partial distribution of the net gain from the divestment of 30 Woodlands Loop. As a result, amount distributable to unitholders rose 6.9% YoY to S$44.0m while DPU grew 5.9% to 1.80 S cents. Stripping out the divestment gains, DPU would be up 4.7% YoY. The results were in line with expectations, as 1Q DPU have met 24.8% and 25.4% of our and consensus full-year DPU projections. We will be attending the analyst briefing later this morning. In the meanwhile, we keep our HOLDrating but place our S$1.15 fair value under review. (Kevin Tan)

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NEWS HEADLINES - Singapore's office rents are expected to further improve at the end of 2014 after a "modest" rebound that started in the second quarter of this year, according to Lynette Leong, CEO of the manager for CapitaCommercial Trust. - UPP Holdings has announced a joint-venture with a Burmese industrial development company to develop an industrial park and jetty port in the Mandalay region of Myanmar. - Global Logistic Properties leases 24,000 sqm of space to one of the largest hypermarket operator in China. - Hoe Leong Corp. has announced that its associate company, Semua Shipping, has been awarded two 3 years charter contracts from Shell Malaysia Trading Sdn Bhd. - Oxley Holdings has inked a sale and purchase agreement for 10% of GD Capital Pte Ltd for S$7.3m, with the intent to be involved in development projects in an economic and technical development zone in China's Anhui province.