SG: MARKET PULSE: Mapletree Log, Vard (2 Jul 2013)

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.15

Stock Name: Vard Holdings
Company Name: VARD HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.93

MARKET PULSE: Mapletree Log, Vard

2 Jul 2013

KEY IDEA Mapletree Logistics Trust: Strong take-up rates at MBLH Mapletree Logistics Trust (MLT) announced that Menlo Worldwide Logistics has signed a binding commitment to lease 48,700sqm at MLT's Mapletree Benoi Logistics Hub (MBLH) for a period of 10 years. Together with Menlo's commitment which accounts for 55% of MBLH's NLA, we understand the property is now 75% pre-leased, with the balance in the advanced stage of negotiation. We are positive on this development as it reflects continued healthy leasing demand and strong interest from major third-party logistics service providers. Judging from the strong pre-commitment levels, we believe that MLT will be able to meet its estimated yield-on-cost of 8-9%. In addition, we expect the long lease to further enhance MLT's already resilient lease structure. However, as we have previously factored in the redevelopment project, we make no change to our forecasts. We maintain HOLD on MLT with an unchanged fair value of S$1.15. (Kevin Tan) MORE REPORTS Vard Holdings: Lower profit guidance Vard Holdings warned that its 2Q2013 financial results (due 11/7/2013) are likely to be below current consensus estimates due to difficulties in its operations in Brazil. After a recent assessment, management found further delays, cost over-runs at its Niteroi yard due to lower-than-expected productivity, additional costs for outsourcing and higher start-up costs at the Promar yard. This comes as a surprise as the group had previously guided that its Brazil operations are coming under control and would stabilize by year-end, suggesting that the situation is more fluid than initially thought. In view of the poor earnings visibility, we switched our valuation methodology to PBR. We also cut our FY13F/14F net profit estimates by 20-25%. Downgrade to HOLD with lower FV estimate of S$0.93 (previously S$1.52) using 1.5x PBR (2 std dev below). (Chia Jiunyang)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Equity futures in Japan and Australia rose, following a rebound in US stocks on hints of improving manufacturing outlook for some of the world's biggest economies. - OKP Holdings says gross order book currently amounts to S$415.2m after it has secured an S$6.7m contract by the national water agency to carry out improvement works to Stamford Canal from Napier Road to Marina Reservoir. - CNA Group has announced and inked a Memorandum of Understanding (MOU) with TAMA Home to develop homes for the Japanese community in Thailand. - ISDN Holdings Limited has, through its 80 per cent ownership of PT Potensia Tomini Energi, been invited by the Governor of Central Sulawesi, Indonesia to develop a 126 MW hydropower plant at the Laa River in Central Sulawesi, Indonesia.