SG: MARKET PULSE: Ezion, Healthcare REITs (20 Aug 2013)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.90

MARKET PULSE: Ezion, Healthcare REITs

20 Aug 2013

KEY IDEA Ezion Holdings: Raising funds for the right reasons Further to an earlier announcement that a subsidiary of Ezion had entered into a letter agreement for a proposed issue of redeemable exchangeable preference shares, the subsidiary has now entered into a subscription agreement for the issue, raising net proceeds of about S$29.5m. Any dilutive impact will only be from Jul/Aug 2014 onwards, and is also small at 1.43% of the existing share capital. YTD, the group has raised close to S$290m of funds and most of the proceeds are for the acquisition of assets, due to the promising pipeline of opportunities that the group sees ahead. Maintain BUY with S$2.90 fair value estimate, which would drop to S$2.42 after adjusting for a proposed bonus share issue (details in 7 Aug 2013 report). (Low Pei Han) MORE REPORTS Healthcare REITs: Expecting growth in 2H13 Within the healthcare REITs space, both First REIT (FREIT) and Parkway Life REIT (PLREIT) recently reported 2Q13 results which were in-line with market expectations. Looking ahead, we expect their 2H13 DPU to be boosted by new properties acquired over the past 1-3 months. Despite the volatility in the IDR and JPY vis-à-vis the SGD, there has been minimal impact on FREIT and PLREIT due to a favourable lease structure and hedging strategies adopted, respectively. Both healthcare REITs are also seeking to mitigate their interest rate risks. But we maintain NEUTRAL on the healthcare REITs sub-sector given its pricey valuations and negative sentiment surrounding interest rate sensitive instruments. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks dropped on Mon after a choppy trading session, with the energy and financial sectors leading the S&P 500 lower, as Treasury yields hit fresh two-year highs. - Proposed reduction of standard share size traded on SGX from 1k to 0.1k would benefit retail investors as they have another avenue to buy blue chip stocks at lower entry prices. - The business community welcomed plans to offer more support to cope with economic restructuring, though their concerns about tightening of foreign labour and rising costs remain. - China Mining International's mandate to pursue metal mining businesses in China is given a new lease of life with a reverse takeover deal set to transform the property development firm into a pure mining company. - Cedar Strategic Holdings says that it is now looking to raise up to S$14.7m in a rights issue. It has also signed up a unit of an internationally renowned construction player to further its plans to become a regional real-estate player.