SG: MARKET PULSE: Soilbuild REIT, DBS, Wilmar, Dyna-Mac (4 Nov 2013)

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 18.28

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.33

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.44

MARKET PULSE: Soilbuild REIT, DBS, Wilmar, Dyna-Mac

4 Nov 2013

KEY IDEA Soilbuild REIT: Strong maiden results Summary: Soilbuild Business Space REIT (Soilbuild REIT) reported a stronger-than-expected set of 3Q13 results. As at 30 Sep, portfolio occupancy inched up to 99.8% from 99.7% (at listing date) due to expansion by an exiting tenant at Eightrium. We also understand that Soilbuild REIT has achieved 100% retention rate for its leases since listing, and has fully addressed its lease expiries for the year by renewing three leases at rental rates 7.9% higher than the preceding average passing rents. This reflects the keen leasing demand at Soilbuild REIT's portfolio assets, in our view. While we maintain our view that the industrial market may potentially face downward pressures in rental and occupancy rates going forward, we note that only 17.3% of Soilbuild REIT's portfolio NLA is due for renewal in 2014. As such, we believe its financial performance is likely to stay firm. Maintain BUY with unchanged S$0.82 fair value. (Kevin Tan) MORE REPORTS DBS: Remains our top pick in the sector Summary: DBS posted 3Q13 net earnings of S$862m which were slightly better than market expectations. Net Interest Income touched a new high of S$1.41b. Loans grew 19% to S$242b as of Sep 2013. Net Interest Margin (NIM) eased off 2bp from the last quarter to 1.60% in 3Q13. Non-interest Income increased 11% YoY to S$744m. The positive uptrend for several growth units remained intact; namely Wealth Management, Trade and Transaction Services and Treasury customer flows. Cost/income came off from 45% in FY12 to 43% in 9M13. Despite the muted outlook for the global economic, management remains generally positive and expects its loans book to grow 8-10% in 2014. We are leaving our FY13 and FY14 net earnings largely intact, with some minor line adjustments. We are also keeping our fair value estimate of S$18.28. DBS remains our top pick in the sector. BUY. (Carmen Lee)

Wilmar: Forms AKD JV in China Summary: Wilmar International Limited (WIL) and Kemira Oyj (global chemical company serving customers in water-intensive industries) has signed a JV agreement to make AKD (Alkyl Ketene Dimer) wax in China in two JVs. The 50-50 JV entities will integrate the current Kemira facilities in Yanzhou and the relevant WIL facilities in Lianyungang. According to WIL, the move will be an expansion down the oleo-chemicals value chain, which capitalizes on WIL's advantage in sourcing of raw materials and also cost efficiencies from its integrated manufacturing operations. While we view the move as a long-term positive for WIL, we note that the current valuation looks fair. As such, we continue to maintain our HOLD rating on the stock with an unchanged S$3.33 fair value (still based on 12.5x blended FY13/FY14F EPS). (Carey Wong) Dyna-Mac Holdings: Secures new fabrication orders worth US$117m Summary: Dyna-Mac Holdings announced that it has won new fabrication orders for a provisional sum of US$117m. These orders were awarded by Daewoo Shipbuilding & Marine Engineering Co Ltd and OneSubsea Malaysia Systems Sdn Bhd. The former involves the fabrication of 14 units of pre-assembled modules which are due for delivery in 3Q16; while the latter's order is scheduled for completion by end 2013. These latest contracts win has boosted Dyna-Mac's net order book to ~S$392.3m (not taking into account the portion that is recognised as revenue in 3Q13). Pending a change in analyst coverage, our Hold rating and S$0.44 fair value estimate is under review. (Wong Teck Ching Andy) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks gained on Fri after a solid manufacturing report, leading to a fourth straight weekly gain for the S&P 500 and Dow industrials. - Two surveys showed China's manufacturing sector expanded in Oct, though mixed readings from key indicators point to what will at best be a gradual economic recovery. - United Industrial Corporation booked a net profit attributable to equity-holders of S$43.4m, up 8% from a year ago. - China Aviation Oil's net profit rose 65% to US$21.8m for 3Q13 from a year ago, thanks to an increase in its share of associate companies' results. - CH Offshore yesterday posted a 19.7% decline in its net profit for 1QFY14 as revenue fell a steep 40.3%. - Olam International has sold its Dirranbandi cotton gin in Queensland to Cubbie Ginnery for A$20m (S$23.5m). - Oxley Holdings has proposed to acquire East London's 40-acre Royal Wharf development site for ~S$397.4m.