SG: MARKET PULSE: GPH, SingPost, NOL, Soilbuild REIT, CapitaLand (31 Oct 2013)

Stock Name: GP Hotels
Company Name: GLOBAL PREMIUM HOTELS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.33

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.32

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.95

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.77

MARKET PULSE: GPH, SingPost, NOL, Soilbuild REIT, CapitaLand

31 Oct 2013

KEY IDEA Global Premium Hotels: Solid performance in 3Q13 as expected The 3Q13 results for Global Premium Hotels (GPH) were in-line with our expectations. The 3Q13 results for Global Premium Hotels (GPH) were generally in-line with our expectations. Total revenue climbed 5.7% YoY to S$15.7m and gross profit rose 5.7% to S$13.6m. Finance costs declined 13.6% to S$2.0m due to partial repayment of term loans and lower average interest rate. 3Q13 net profit climbed 18.7% to S$4.9m. 9M13 revenue and EPS came to 75% and 77% of our prior respective full-year estimates. RevPAR was flat at YoY at S$97.1. Average occupancy rate was up 1 ppt YoY to 91.6%. Using a 15% discount to RNAV, we maintain our fair value of S$0.33 and BUY rating on GPH. (Sarah Ong) MORE REPORTS Singapore Post: Still delivering on rainy days Singapore Post (SingPost) reported a 32.6% YoY rise in revenue to S$203.8m and a 8.5% increase in net profit to S$35.6m in 2QFY14, such that 1HFY14 net profit accounted for 49.4% of our full year estimates. Underlying net profit increased 13.8% to S$37.3m in the quarter, in line with our expectations. We are seeing good topline growth with contributions from organic and inorganic initiatives, driven by e-commerce and regional growth via M&As. However, margins are expected to remain pressured in the medium term. As expected, the group has proposed an interim quarterly dividend of 1.25 S cents/share. Despite a challenging business environment, SingPost is still delivering a good ROE of about 43%. We also like its consistent dividends which are backed by stable operating cash flows, but see few re-rating catalysts for now. Maintain HOLD with S$1.32 fair value estimate. (Low Pei Han) Neptune Orient Lines: No surprise over weak results Neptune Orient Lines's (NOL) 3Q13 results confirmed our expectations of an absent peak season. Weaker freight rates caused a larger-than-expected drop-off in revenue (-10.4% to US$2.06b) and negated cost savings from its efficiency initiatives and efforts to manage capacity (headhaul utilisation rates remained at ~90%). As a result, 3Q13 core EBIT declined by 72.1% YoY to US$18.0m. Looking ahead, 4Q13 is likely to remain weak given the historical tendency for rates to fall QoQ (average drop of 8.8% for past three years). In addition, collective industry action remains far from ideal. With a lacklustre medium-term outlook over freight rates, we adjusting our projections downwards and our FY14F PATMI falls to a US$22m loss (+US$64m previously). Maintain our SELL on NOL with an unchanged fair value estimate of S$0.95. (Lim Siyi) Soilbuild REIT: Strong maiden results Soilbuild Business Space REIT (Soilbuild REIT) reported a stronger-than-expected set of 3Q13 (period from listing date on 16 Aug to 30 Sep) results last evening. NPI came in at S$6.9m, 2.0% higher than its prospectus forecast of S$6.8m due to higher income contribution and lower property expenses from Eightrium and Tuas Connection. Distributable income of S$6.1m and DPU of 0.76 S cents were also 3.1% and 3.0% above the respective prospectus forecasts due to higher net income and lower finance expenses. We note that Soilbuild REIT has achieved 100% retention rate for its leases, and has fully addressed its lease expiries for the year by renewing three leases (2.2% of portfolio NLA) at rental rates 7.9% higher than the preceding average passing rents. In addition, portfolio occupancy inched up to 99.8% from 99.7% as at listing date. We will be speaking to management later for more details on its outlook. In the meantime, we maintain our BUY rating and S$0.82 fair value on Soilbuild REIT. (Kevin Tan) CapitaLand Limited: Continuing strong run in residential sales CapitaLand (CAPL) reported 3Q13 PATMI of S$135.5m which decreased 8.7% YoY mostly due to lower portfolio gains recognized over the quarter. We judge this to be mostly within expectations as 9M13 PATMI now cumulates to S$706.9m which constitutes 80.3% of our full year forecast. 3Q13 topline came in at S$1047.1m, up 52.5% YoY mainly due to stronger contributions from development projects and higher rental revenue from retail malls, which is again broadly in line with our forecast; 9M13 revenues of S$2892.3m form 73.0% of our FY13 estimates. The group sold an impressive 1151 residential home units in Singapore over 9M13 versus 329 units in 9M12, and we continue to be positive on management's focus on realistic pricing and moving units in the pipeline. Residential sales in China continued the firm rate of sales seen over the year so far with 2398 homes sold in 9M13 versus 1978 homes in 9M12. Maintain BUYwith an unchanged fair value estimate of S$3.77. (Eli Lee)

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

NEWS HEADLINES - US stocks retreated from records Wed as investors assessed a Fed statement that largely matched forecasts, but also had some Fed watchers saying a policy change could come sooner than expected. - Two major overseas property investments were announced by Singapore groups yesterday - one by Pontiac Land Group in New York City and the other by GIC's property arm in Jakarta. - China Minzhong posted a 60% plunge in net profit to 48.4m yuan (S$9.8m) for 1QFY14. - Indofood Agri Resources' earnings dived 52% in 3Q13 due to the twin pressures of lower selling prices and higher production cost. - Second Chance Properties reported a record net profit of S$57m for the year ended 31 Aug, thanks mainly to profit booked on revaluation of its properties. - Eu Yan Sang International chalked up a net profit of S$1.43m for 1QFY14, up from a net profit of S$341,000 in the corresponding quarter a year earlier. - Asiasons Capital plans to take a S$25m convertible loan facility from two of its key directors as a source of standby capital.