SG: MARKET PULSE: Starhill Global, Cache, FCOT, CapitaLand, YZJ (25 Jul 2013)

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.95

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.40

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.60

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.77

MARKET PULSE: Starhill Global, Cache, FCOT, CapitaLand, YZJ

25 Jul 2013

KEY IDEA Starhill Global REIT: Poised for further upside Starhill Global REIT (SGREIT) announced 2Q13 DPU of 1.19 S cents, up 10.2% YoY. 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, well within expectations. The positive performance was mainly due to strong contribution from its Singapore and Australia portfolios. For 2Q, we note that SGREIT's Singapore portfolio contributed 63.7% of total revenue, largely unchanged from 66.3% in 1Q. Overall occupancy also stayed stable at 99.6%, compared to 99.7% seen in previous quarter. Looking ahead, management believes the new renewal rate (+6.7%) for Toshin lease, 7.2% rental uplift from the Malaysia master leases, and continued repositioning of Wisma Atria will help to bolster SGREIT's income in 2H13. On its capital management front, SGREIT also expects its debt duration to improve from 1.2 years to 3.5 years and the percentage of its debts fixed/hedged to increase from 81% to over 90%, having secured loan facilities to refinance all its debts due in 2013. We maintain BUYwith unchanged fair value of S$0.95 on SGREIT. (Kevin Tan) MORE REPORTS Cache Logistics Trust: Solid 2Q13 scorecard Cache Logistics Trust (CACHE) turned in a firm set of 2Q13 results last evening. NPI grew 17.0% YoY to S$19.6m and distributable income increased 19.8% to S$16.6m. DPU for the quarter came in at 2.147 S cents, representing a rise of 8.4% YoY. This brings the 1H13 DPU to 4.381 S cents (+7.7% YoY), meeting 52.0%/50.9% of our/consensus FY13 DPU projections. As at 30 Jun, the overall portfolio occupancy was maintained at 100%, with a weighted average lease to expiry of 3.6 years. CACHE's aggregate leverage also held steady at 29.2% compared to 1Q. This, we note, is the second lowest gearing level among the industrial REITs listed in Singapore. While CACHE has kept mum on any likely acquisition asset, we judge that its robust financial position will put it in good stead for any attractive opportunities. Management also reiterated that there is no debt refinancing needs in the next two years, as its term loans will mature only in 2015 and 2016. In addition, 70% of its debts is hedged, thereby giving CACHE considerable certainty over its financing costs. We maintain BUY with unchanged fair value of S$1.40 on CACHE. (Kevin Tan) Frasers Commercial Trust: 28.8% jump in 3QFY13 DPU Frasers Commercial Trust (FCOT) reported 3QFY13 gross revenue of S$30.0m and NPI of S$23.1m, down 16.1% and 13.4% YoY respectively due to the divestments of KeyPoint and Japan properties. However, income available for distribution to unitholders rose by 31.2% to S$14.4m as a result of lower interest costs and savings in the Series A Convertible Perpetual Preferred Unit (CPPU) distribution post redemption of 319.7m CPPUs this year. This has led to a similar jump of 28.8% in the quarterly DPU to 2.19 S cents. For 9MFY13, DPU tallied 5.76 S cents (+16.6%), meeting 78.9% of our FY13 DPU forecast (consensus: 73.8%). As at 30 Jun, the portfolio occupancy remained strong at 98.1%, while weighted average lease to expiry was long at 4.6 years. FCOT also announced that it has completed the Precinct Master Plan and asset enhancement works at China Square Central, which should enhance portfolio and position FCOT for further growth in future. We will be speaking to management later and in the meanwhile, we maintain BUY on FCOT but put our S$1.60 fair value under review. (Kevin Tan) CapitaLand Limited: 2Q13 figures within expectations CapitaLand's 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations and 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. 1H13 topline is S$1,844.6m, up 22.7% YoY mostly due to higher recognitions from residential projects in Singapore and China and stronger contributions from CMA and Ascott. Over 1H13, we saw 683 residential units sold in Singapore - up significantly YoY versus the 259 units sold in 1H12 - and Chinese residential sales also grew a healthy 58% YoY to 1,619 units in the first half of the year. The group reports that it foresees headwinds for the private residential market in Singapore over the near term due to recent curbs but remains positive about its businesses in China, which is underpinned by urbanization, growing affluence and increasing domestic consumption. Maintain BUY with our fair value estimate of S$3.77 under review.(Eli Lee) Yangzijiang Shipbuilding: First company on the SGX to trade in RMB The SGX has announced that Yangzijiang Shipbuilding (YZJ) will be the first company to have trading of its shares in Chinese Renminbi (RMB) on SGX's dual currency trading platform. The group's RMB-denominated shares will start trading on 5 Aug 2013. This move gives existing and potential investors the flexibility to buy and sell YZJ shares in yuan, gaining direct exposure to exchange rate fluctuations in the currency. We currently have a HOLD rating on YZJ with a fair value estimate of S$0.95, mainly due to the bleak outlook of the shipbuilding industry as well as uncertainties in China's credit and financing business.(Low Pei Han)

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NEWS HEADLINES - US equities retreated on Wednesday on mixed earnings and increasing borrowing costs. The DJIA fell from the prior day's record close. - MTQ's 1Q14 PATMI rose 38% to S$6.5m; revenue had climbed 146% to S$94.4m. - Hisaka Holdings has announced an MoU in relation to the proposed very substantial acquisition of Temasek Regal Capital Sdn Bhd. - Sysma Holdings has completed the purchase of a 60% equity stake in GCAP Properties. - Banyan Tree is issuing S$70m of 5.75% notes due 2018.