SG: MARKET PULSE: A-REIT, M1, CCT (17 Jul 2013)

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.45

Stock Name: M1
Company Name: M1 LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.10

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

MARKET PULSE: A-REIT, M1, CCT

17 Jul 2013

KEY IDEA Ascendas REIT: Apparent growth drivers Ascendas REIT (A-REIT) reported NPI of S$108.0m and amount available for distribution of S$85.2m, up 6.8% and 11.3% YoY respectively. The increase was driven mainly by contribution from its newly-acquired The Galen and positive rental reversions. On the operational front, A-REIT continued to deliver as well. Despite starting FY14 with 21.4% of its revenue due for renewal, A-REIT has managed to reduce the figure significantly to 14.8%, thanks to its proactive portfolio management. Moreover, positive rental reversions averaging 9.6% were achieved across all its property segments. During the quarter, A-REIT also announced three new asset enhancement works to optimize its yield. In addition, we understand that A-REIT has completed the purchase of its second property in China in Jul, and is actively working to fill the spaces. These efforts, together with continued higher renewal rents and vacancies at its existing portfolio, are likely to provide further upside in its NPI. We are keeping our FY14 forecasts unchanged as the 1Q performance was within view. Maintain BUY and S$2.45 fair value on A-REIT. (Kevin Tan) MORE REPORTS M1: 1H13 results mostly in line - HOLD M1 Ltd saw its 2Q13 revenue +5.3% YoY (+0.6% QoQ) at S$244.5m, and was just 1.4% shy of our forecast, as smartphone customers and usage continue to drive revenue growth. Net profit climbed 11.2% YoY (-4.5% QoQ) to S$39.2m, or about 3% ahead of our estimate. 1H13 revenue slipped 1.5% to S$487.5m, meeting 42.7% of our full-year forecast (due to lower handset sales in 1Q13), but net profit rose 6.1% to S$80.2m, or 51.8% of our FY13 estimate. M1 declared an interim dividend of S$0.068/share, versus S$0.066 last year. With only very minor adjustments (<0.5%) to our FY13 and FY14 earnings forecasts, our DCF-based fair value remains at S$3.10; we have already factored higher interest rate assumptions in our model. Maintain HOLD for decent dividend yield of 4.7%. (Carey Wong) CapitaCommercial Trust: 2Q13 results within expectations CapitaCommercial Trust (CCT) reported 2Q13 distributable income of S$59.6m - 1.9% higher YoY. This cumulates to a 1H13 distributable income of S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast. 2Q13 DPU is 2.07 S-cents which translates to a 5.4% distribution yield based on the last closing price of S$1.50. The growth in distributable income was mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and lower finance costs which dipped S$3.4m QoQ due to reduced interest costs. Portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. As a result of continued rental reversions, CCT's average committed office portfolio rentals increased from S$7.83 to S$7.96. We will be speaking further with management regarding these results and, in the meantime, put our Buy rating and fair value estimate of S$1.80 UNDER REVIEW. (Eli Lee)

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

NEWS HEADLINES - US stocks declined on Tue, with the S&P 500 breaking an eight-session winning streak after a Federal Reserve member urged reduced stimulus and Coca-Cola Co.'s profit fell. - The Monetary Authority of Singapore said the local banks are not at risk and regular stress tests have shown that adequate buffers are in place to cope with the upturn in interest rates. - United Overseas Bank has successfully sold a new bank debt with a loss absorption feature, in compliance with stricter Basel III rules on capital, the first Asian bank to do so. - United Fiber System has gone forward with its plan to acquire coal miner PT Golden Energy Mines (Gems) for S$1.88b in a reverse takeover deal with PT Dian Swastatika Sentosa (DSS).