SG: MARKET PULSE: Suntec, Midas (18 Nov 2013)

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.90

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.67

MARKET PULSE: Suntec, Midas

18 Nov 2013

KEY IDEA Suntec REIT: Foray into overseas market Summary: Suntec REIT announced last Fri that it is seeking to acquire a 100% interest in 177-199 Pacific Highway for A$413.19m (~S$483.4m). While we are surprised by the timing of the acquisition and Suntec REIT's move into the overseas market, we see several positives in the investment. First, as the transaction is expected to be earning accretive, this may reduce/eliminate the need to dip into CHIJMES sales proceeds to mitigate the temporary decline in DPU due to Suntec City asset enhancement. Second, the property is 100% pre-committed with the Leighton Group taking a head lease of 76% of the NLA for an average lease term of ~10 years. As such, the arrangement provides income certainty and stability to Suntec REIT. Lastly, the acquisition will be fully funded by a S$500m five-year unsecured loan facility. This dispels market fears of an equity fund raising. We raise our fair value to S$1.90 from S$1.85 after factoring the acquisition. Maintain BUY on Suntec REIT. (Kevin Tan) MORE REPORTS Midas Holdings: Recovery under way Summary: Midas Holdings' 3Q13 results exceeded our expectations, with revenue jumping 48.5% YoY to CNY301.0m, or 15.8% above our forecast. While gross margin of 20.8% (-10.7 ppt YoY) disappointed, bottomline reversed from a CNY6.1m net loss in 3Q12 to a PATMI of CNY16.4m and beat our projection of CNY13.3m. Looking ahead, we expect contribution from its recent CNY167.5m high-speed railway (HSR) contract to be recognised in 4Q13 and 1Q14. We also expect Midas to secure more HSR train car related contracts in late Dec or early Jan 2014 from the second round of tender exercise by the China Railway Corporation. Our fair value estimate is increased marginally from S$0.65 to S$0.67 as we roll forward our valuations to 1.3x FY14F P/B. Maintain BUY on Midas. (Wong Teck Ching Andy)

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NEWS HEADLINES - US stocks stepped higher on Fri, lifting the S&P 500 and Dow to record closes again, as investors continued to find encouragement in Janet Yellen's support for Fed's stimulus efforts. - The Singapore economy could expand up to 3.7% in 2013, according to findings from the latest Business Times-UniSIM Business Climate Survey. - Singapore's non-oil domestic exports probably fell YoY for a ninth straight month in Oct, albeit at a slower pace, according to economists polled by Reuters. - Retail sales slipped 5.9% in Sep from a year ago as sales of motor vehicles and telecommunications apparatus and computers suffered double-digit declines. - Developers' sales of private homes are poised to rebound in Nov, after slipping 19% in Oct to 1,009 units from 1,246 units in Sep, according to Savills Singapore. - LionGold Corp said it plans to place 98.2m new shares at 18.3 S cents each to raise net proceeds of about S$17.1m for its gold mining operations and working capital. - China Environment plans to place out 31m new shares at S$0.55/each to Havenport Asset Management to raise S$17.05m for working capital needs.