10 Sept 2013 ~ Good Morning Singapore!
Central Execution Team - The Excellence of Execution
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Global Flash: While You Were Sleeping
Source: Marketwatch
Quote for the day :I like criticism. It makes you strong.
- LEBRON JAMES
Singapore: The Day AheadSINGAPORE DAYBOOK :US: Wall St jumps, Nasdaq ends at highest since Sept 2000. [NEW YORK] US stocks closed sharply higher on Monday, with the Nasdaq ending at its highest level since September 2000, as upbeat data from China boosted optimism about the health of the global economy.
Sentiment was also lifted by merger activity and easing concerns about a potential Western-led strike on Syria.
The S&P 500 closed higher for a fifth straight sessions, posting its best daily performance since Aug 1, while all 10 S&P sectors ended higher. More than 70 per cent of companies that trade on both the New York Stock Exchange and Nasdaq rose.
Basic materials shares led the day's gains, rising 1.5 per cent, after China's August exports handily beat market expectations while consumer inflation held steady. US Steel Corp jumped 3.5 per cent to $19.53 while Alcoa Inc rose 2 per cent to $8.08.
(Source: The Business Times)
MARKET SCOOP
China Minzhong's Ba3 rating on review for upgrade: Moody's
LTA unveils changes to COE system,adds engine power to categories
China downturn would hit Singaporeless than the 2008 global financial crisis: Moody's Analytics
Neo's half-year net profit jumps on higher food catering revenue
Jaya conducting review to enhance shareholder value
China Minzhong says only has one set of books for audit
Centurion launches S$300m MTN programme
(Source: The Business Times) DBS Securities says... OUE HOSPITALITY TRUST | NOT RATED | TP: S$0.93
OUE HT is a Singapore-based REIT with an initial portfolio of two properties in prime locations - the 1051-room Mandarin Orchard Hotel, and the accompanying Mandarin Gallery retail mall
The properties are collectively worth S$1.7bn as of 31 Mar13
OUE HT derives its rental income through a 15-year master lease structure which comprises of a fixed and variable income component pegged to the underlying performance of Orchard Hotel, while the Mandarin Gallery continues to enjoy robust occupancies of close to 100%
We estimate that close to 66% of its income is backed by fixed rents, which is one of the highest among the Hospitality S-REITs
Immediate earnings drivers will come from the Manager optimizing the performance of Mandarin Orchard through a push towards higher yielding segments like the corporate market, an additional 26 new hotel rooms and the phased refurbishment of close to 430 hotel rooms, which should lead to higher RevPAR growth in the medium term
In addition, there is a visible pipeline of acquisitions targets in Singapore and China, which when acquired could potentially double its current number of rooms
We have a DCF-based fair value of S$0.93, based on a WACC of 6.9%, offering potential upside of 8%
Better than expected operational performance and or acquisitions is expected to be re-rating catalysts
In addition, yields of 7.6%-8.0% are higher than S-REIT peers
While earnings are sensitive to RevPAR changes, we expect earnings volatility to RevPAR changes to be limited given a high % of income pegged to fixed rates
CIMB Securities says ...
FIRST RESOURCES LTD | OUTPERFORM | TP: S$2.22
We estimate every 5% depreciation in the rupiah could boost FY13 net profit by 1.5%
We maintain our EPS and target price of S$2.22, still based on a CY14 P/E of 12.3x (1 s.d. above its mean)
We continue to like First Resources for its young and well-managed estates as well as its attractive P/E valuation
It also stands to benefit if the rupiah stays weak relative to the US$
Hence, our Outperform call is intact
First Resources posted a 28% mom jump in FFB output in July 13, thanks to better FFB yields - in line with seasonal trends
This brings its 7M13 FFB production to 1.05m tonnes, a 1.1% improvement from last year
However, July and 7M13 FFB yields are 22% lower yoy, due to biological tree stress and dilution from newly acquired and mature estates
The July production statistics are broadly in line with our forecast of 6% FFB output growth for FY13 and the group's guidance of 0-5% growth from its nucleus estates
Even if output is slightly disappointing, we believe that the Indonesian rupiah's current weakness vs. the US$ will partially offset this
This is due to the fact that the group's revenue is mainly denominated in US$, while a substantial portion of its cost is denominated in rupiah
We estimate that the sensitivity of our FY13 earnings to every 5% change in the rupiah is 1.5%
This is based on the assumption that 42% of the group's cost of production for CPO (mainly labour), which is denominated in rupiah, will be lower in US$ terms
In terms of debt, 96% of the group's borrowings are effectively US$ debt, as the group has swapped its medium-term notes (MTNs) in ringgit to US$
We are advising investors to add to their positions in First Resources as we expect 2H earnings to benefit from higher production, while the weaker rupiah may temper the yoy rise in labour costs in US$ terms
The group is also relatively sheltered from a rising interest-rate scenario as we estimate that 96% of its debt are on fixed rate CREDIT SUISSE Securities says... CAPITAMALLS ASIA | OUTPERFORM | TP: S$2.58
We visited CMA's malls in Xi'an and Beijing over the weekend
We spent three days visiting CapitaMall Xindicheng in Xi'an, CapitaMall Tiangongyuan site and the recently acquired Grand Canyon Mall in Beijing, as well as a few of its competitor malls in the vicinity, including VivoCity Xi'an and Intime, Lotte Mart and BHG Mall near Fengtai district, Beijing
We have also included some feedback from our visit to Poly RE group's Daxing development (South Beijing) and CAPL:Henderson Land JV township development in Xi'an, La Botanica in this report
Key highlights from the visit
(1) Despite having only one mall in Xi'an, we believe management is likely to increase its presence there on the back of strong government initiatives on the city's economic and social development
Management likens Xi'an to Chengdu five years ago
(2) In line with the Beijing government's efforts to develop South Beijing, CMA has bought two malls in the past 1.5 years in Fengtai and Daxing
(3) Key challenges to the China retail sector still remain - staffing, competition, etc
However, CMA hopes to play on scale and its track record to mitigate some competition pressures
We expect earnings momentum to improve in the coming quarters led by: (1) China, with a higher percentage (70% of China NAV) of malls opened; and
(2) Singapore, with the opening of Westgate and Bedok Mall in 4Q13 (>75% and >90% pre-leased, respectively)
The stock has fallen 4.9% YTD, underperforming the STI index by 1.1%. At 1.04x P/B, CMA is trading below its historical P/B average of 1.15x
We reiterate our OUTPERFORM rating on CMA as we like its exposure to the more defensive retail sector, yet we expect core earnings growth to be fairly attractive (three-year CAGR of 27%) with downside risk supported by a strong recurring fee income base |
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