SG: MARKET PULSE: KepLand, CCT, CRCT (18 Jul 2013)

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.09

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.61

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.58

MARKET PULSE: KepLand, CCT, CRCT

18 Jul 2013

KEY IDEA Keppel Land: Steady as she goes KPLD reported 2Q13 PATMI of S$95.6m which increased 0.9% YoY. 1H13 PATMI now cumulates to S$192.1m, forming 42% of our FY13 forecast which we judge to be within expectations. Looking ahead to 3Q13, the group expects to launch a 726-unit development, The Glades, located beside the Tanah Merah MRT station. KPLD also reported that MBFC T3's commitment level is ~90% as at end Jun 2013, versus ~79% as at end FY12. Maintain BUY with a lower fair value estimate of S$4.09 (30% RNAV disc.), versus S$4.59 previously, as we update our model and increase our RNAV discount marginally from 25% to 30% to reflect increased residential uncertainty following incremental curbs in Singapore and heightened macro-economic risks in China. (Eli Lee) MORE REPORTS CapitaCommercial Trust: Positive rental reversions in place CCT reported 2Q13 distributable income of S$59.6m, up 1.9% YoY mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and reduced finance costs which dipped S$3.4m QoQ. Total distributable income in 1H13 cumulates to S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast. Overall portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. Due to positive rental reversions, CCT's average committed office portfolio rentals increased QoQ from S$7.83 psf to S$7.96 psf. We estimate a negative impact of S$8.0m - S$8.5m from the absence of yield protection income at OGS in 2H13 but expect this to be offset by positive rental reversions, reduced interest costs and some distribution of retained income (S$10.8m) from Quill Capita Trust. Maintain BUY on CCT. Our fair value estimate, however, falls to S$1.61, versus S$1.80 previously, due to higher discount rates now employed in our valuation model. (Eli Lee) CapitaRetail China Trust: 2Q13 results in line CRCT's 2Q13 results were in line with ours and the street's expectations. Gross revenue climbed by 4.9% YoY to S$40.0m, net property income rose by 6.0% to S$26.4m and income available for distribution was 7.5% higher at S$17.9m. DPU fell 1.2% YoY to 2.38 S cents, however, excluding the 57m units issued through private placement in Oct 2012, 2Q13 DPU would have been 2.58 cents, up 7.1%. The portfolio valuation rose 4.4% from Dec 2012 to RMB7.9b as at 30 Jun. The REIT manager has elected to apply the Distribution Reinvestment Plan (DRP) established on 21 Mar 2013 to the distribution for 1H13. The plan provides unitholders with the opportunity to receive distributions in the form of fully-paid new units in CRCT, instead of cash. To encourage participation in this first DRP roll-out, CRCT will offer a 4.0% discount to the volume-weighted average trade price per unit of 10 market days up to the Books Closure Date on 12 Au 2013. We maintain our BUY rating but place our fair value of S$1.58 under review. (Sarah Ong)

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NEWS HEADLINES - US stocks posted tepid gains on Wed, with the S&P 500 up for a ninth session in ten after Federal Reserve Chairman Ben Bernanke said the rate of bond purchases is flexible. - Singapore's non-oil domestic exports extended its fall in Jun with a steeper-than-expected 8.8% tumble from a year ago. - Global fund managers have become cautious about equities, and their emerging market allocations are the lowest in 12 years, according to a Bank of America Merrill Lynch survey. - Sabana REIT posted a DPU of 2.40 S cents for 2Q13, a 5.7% improvement from 2.27 S cents a year earlier. - Cosco Corporation's subsidiary, Cosco (Nantong) Shipyard, secured a US$200m contract to build a harsh-environment semi-submersible accommodation vessel from Mexico-incorporated Cotemar SA de CV. - Local construction firm Ley Choon Group Holdings has secured new contracts in Brunei worth S$29.6m.