SG: MARKET PULSE: Genting Singapore, ART (5 Nov 2013)

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: OCBC

Price Call: HOLD

Target Price: 1.47

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.39

MARKET PULSE: Genting Singapore, ART

5 Nov 2013

KEY IDEA Genting Singapore: 3Q13 as expected; but limited upside Genting Singapore (GS) reported 3Q13 earnings (attributable to shareholders) of S$193.0m, versus our S$190m forecast, as both gaming and non-gaming segments performed better. Going forward, management has turned slightly more positive, as compared to the previous quarter, after seeing a better spread of VIP customers coming from SE Asia and not just China. It is also seriously exploring gaming and non-gaming opportunities in the region; and expects to announce something in the next 12 months. In line with the continued margin improvement, we up our DCF-based fair value from S$1.41 to S$1.47. But given the limited upside, we maintain our HOLD rating and would be buyers closer to S$1.40. (Carey Wong) MORE REPORTS Ascott Residence Trust: S$253.7m underwritten rights issue ART has launched an underwritten renounceable rights issue to raise approximately S$253.7m. Existing unitholders can subscribe for one right unit at S$1 each for every existing five units held. This represents a discount of approximately 22.5% to the closing price of S$1.29 per unit as at 4 Nov. The Ascott Limited, which owns 45.3% of ART, has undertaken to subscribe in full its allotment of rights units. Those who do not wish to subscribe for the rights units may sell their rights entitlements during the nil-paid rights trading period. Approximately S$204.9m (or 80.8% of the gross proceeds) will be used to pay down debt (bringing gearing from 41.1% to ~35%) and S$45.0m (17.7% of gross proceeds) will be used for capex and AEI, etc. Management has indicated that the chief motivation of the rights issue is to ensure financial flexibility, particularly for potential acquisitions in Asia that it hopes to close in 1H14. Management is comfortable bringing gearing back up to low 40s in percentage terms. We maintain our BUY rating on ART and FV of S$1.39 (pre-rights FV; ex-rights FV of S$1.325 from 12 Nov). (Sarah Ong)

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

NEWS HEADLINES - US stocks settled with modest gains on Mon as investors took a cue from upbeat earnings and shook off fears the market is overdue for a correction. - Fraser and Neave will not enforce a non-compete agreement that would have banned Heineken International from selling soft drinks in Singapore until Nov 2014. - Yongmao Holdings reported a net profit of RMB14.9m (S$3m) for its 2QFY14, up 76.4% YoY. - Superbowl Holdings posted a 61.3% plunge in 3Q13 net profit to S$1.1m. - Progressive revenue recognition from three residential projects helped property group Hiap Hoe to more than double its 3Q13 net profit to S$33.3m. - Sky One Holdings posted a smaller 1H14 net loss as its old businesses suffer from weak demand. - Kreuz Holdings yesterday posted a 60.3% YoY surge in 3Q13 net profit to US$16.6m. - Viking Offshore & Marine has entered into separate strategic agreements with two co-founders of Labroy Marine in a move to venture into the mainstream offshore rig-building and rig charter market.