OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.

Research House: UOB KayHian

Price Call: HOLD

Target Price: 3.86

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OSK

Price Call: HOLD

Target Price: 3.30

Market Compass

17 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

17 Dec 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Keep a cool head and maintain a low profile. Never take the lead - but aim to do something big. - DENG XIAOPING Singapore: The Day Ahead SINGAPORE DAYBOOK :November new home sales show buyers in charge [SINGAPORE] Sales figures for new private homes last month underline a new reality in which location and attractive pricing are the main draws for buyers who are becoming more selective, analysts believe. Data from the Urban Redevelopment Authority (URA) yesterday showed that excluding executive condominiums (ECs), developers moved 1,228 units in November, a 15 per cent increase from the 1,070 in October. This works out to a take-up rate of 95 per cent for the 1,293 new private homes launched last month, and is comparable to the previous month when 1,124 units was released. Buyers have turned more cautious following a total debt service ratio (TDSR) framework put in place in late June; developers sold just 481 private homes in July, less than a third of June's 1,806. But consultants believe that last month's tally shows that there is still interest for attractively priced and well-located projects. Said Christine Li, head of research and consultancy at OrangeTee: "This could imply that there is demand in the market, and investors are simply biding their time." November sales were boosted by strong demand for the Duo Residences in Bugis, where 600 units were sold at a median price of $1,999 per square foot (psf), and Alex Residences at Redhill, where 171 units were moved at a median price of $1,706 psf. The pricing for Duo Residences was seen as particularly attractive by analysts. Successful developers adjusted prices to match current buyer sentiment, said Mohamed Ismail, CEO of PropNex Realty. Alan Cheong, head of research at Savills Singapore, said that the November numbers affirm his belief that the TDSR won't cause a "slash and burn" in the market and will merely slow down the rate of sales. In terms of performance by region, Core Central Region (CCR) saw more homes sold than the Rest of Central Region (RCR) and Outside Central Region (OCR) combined last month. Only two new CCR projects were launched, Duo Residences and Clermont Residence at Tanjong Pagar, but the overall sales of 662 units made up 54 per cent of all transactions. But Nicholas Mak, executive director for research and consultancy at SLP International, said that this was an "unusual" event unlikely to repeat itself often in the near future, as there are not many projects like Duo Residences in the pipeline. RCR sales volume was up 29 per cent from October at 352 units, backed by sales at Alex Residences, while OCR transactions fell 70 per cent to 214 homes, primarily on the lack of new launches. Chia Siew Chuin, director of research and advisory at Colliers International said that homebuyers may be turning to reasonably priced homes in CCR and RCR given the narrowing price gaps between mid-to-high-end homes and mass market homes. She said that some 73 per cent of new homes sold last month were in the range of $1,500-2,500 psf. "This is a contrast from past trends, where the majority of new homes were transacted at below $1,500 psf." The lowest selling price on a psf basis in November was for a unit at The Inflora in Tampines sold at $723 psf, while the most expensive unit was one at Twin Peaks in Leonie Hill that transacted at $3,052 psf, SLP's Mr Mak said. Including ECs, 1,714 new homes were sold last month, 42 per cent higher than the month before. Sky Park Residences in Sembawang and Waterwoods in Punggol were the best sellers for ECs last month. For the first 11 months of the year, 14,678 new private homes (excluding ECs) were sold. Analysts are expecting total sales for this year to be close to 16,000, a significant dip from the record 22,197 last year. Desmond Sim, associate director at CBRE Research, believes that prices will see a "marginal rise of around 2 per cent" on the year. December should be fairly quiet due to the festive season, with sales below 1,000 units, analysts said, and with demand likely to pick up again after Chinese New Year as pending projects hit the market. "Going forward, pricing is key and developers have to price attractively to move units quickly," said Eugene Lim, key executive officer at ERA Realty. Projects that may be launched in the first half of next year include Marina One developed by M+S, City Development's South Beach Residences, The Panorama by Wheelock Properties and Keppel Land's project at Kim Tian Road. Sales could be anywhere from 10,000 to 16,000 units next year, with some consultants expecting prices to be flat or marginally lower. (Source: The Business Times) MARKET SCOOP GLP pre-leases 35,000 sqm in China to Haier Logistics GIC subscribes for US$35m of bonds in Green Dragon Gas M1 in exclusive partnership with music streaming service Deezer Developers sold 1,228 private homes in Nov: URA Singapore to "shape the taper" in public housing: Khaw China Airlines, Tigerair to set up Taiwan budget carrier Temasek redeems S$500m zero coupon exchangeable bonds due 2013 13 industrial sites for 1H2014, JTC takes over sales of new state land (Source: The Business Times) UOB KAY HIAN says ... SUPER GROUP | HOLD | TP: S$3.86 We spoke with management of Super Group (Super) recently This note highlights the key takeaways and our earnings and target price adjustments After the 3-10% price increases in Oct 13, the initial knee-jerk reaction was a 8% decline in sales volume However, we understand sales volume has stabilised in November Super remains the runaway leader in terms of market share (45-50%) and continues to enjoy early-mover advantages, such as a strong distribution network Nestle, which has been more active in promotions (particularly in Yangon and Mandalay) since 2Q13, has a market share of only 2-3% In terms of competition, we think the group will have a closer watch over local coffee brands, such as Premier (15-20% market share) and Sunday (8-10%) The Philippines remains a very competitive market Super's plan in this market is to focus on product innovation and development with partner San Miguel Otherwise, 4Q13 turnover could also be impacted by typhoon Haiyan which hit Philippines in early-November Consumer branded sales in core markets such as Thailand and Malaysia remained solid with 9M13 turnover up 8% yoy and 7% yoy respectively Singapore sales dipped 3% yoy, attributable to more keen competition in the form of promotions All things considered, management is targeting 2014 sales growth of up to 13% yoy for the consumer branded segment In our view, this should be achievable given its rebranding exercise in 2013 and the normalisation in markets, such as Myanmar We believe Super has had a promising start in China since the launch of its consumer branded segment in Aug 13 (estimated 30-40% yoy rise in 4Q13 sales up to November) Super's strategy in China will be to target the younger and "aspiration/lifestyle" coffee consumers From a low base, we think there is more upside as coffee consumption and Super's brand positioning gain momentum in China In our view, China could form part of its new growth trajectory in the coming years In the medium term, the group's focus for consumer branded will be rebranding and product innovation In our view, these two areas are critical in the face of dynamic consumer markets as well as markets with intensifying competition, such as Myanmar, Philippines and Indonesia For the food ingredient segment, a key area to focus on will be new markets and this has been promising with contributions from new markets, such as the Middle East and Europe In addition, the group's emphasis on product innovation would raise the entry to barrier in the segment We cut our 2013-15 net profit forecasts by 4-18% as we build in more conservative top-line growth in branded consumer (14-15% vs 19-22% previously) Key risks to our view are raw material prices, irrational competition and execution risks in China Maintain HOLD with a lower target price of S$3.86 (previously S$4.50), based on 1.3x PEG, a 20% discount to peers' given near-term challenges We would revisit our call when more positive datapoints from China emerge or if there is a substantial rebound in core markets like Myanmar Possible share price catalysts include recovering branded sales in key markets and positive datapoints from China branded segment OSK DMG Securities says ... RAFFLES MEDICAL | NEUTRAL | TP: S$3.30 Raffles Medical has announced the acquisition of a property at 100 Taman Warna, located at the junction of Taman Warna and Holland Avenue and within the Holland Village enclave, for a purchase consideration of SGD54.8m The 99-leasehold site sits on a land area of 1,942sqm and is adjacent to the Holland Village MRT Station Raffles Medical intends to redevelop the existing property into a 5-storey commercial building with a gross floor area of 67,720 sf On completion, it will lease 2 storeys of the revamped building for its outpatient medical and specialist clinics, while leasing out the remaining space to DBS Bank and other retail tenants With all-in development cost at SGD65m, the acquisition is reasonably priced at S$1036 psf ppr, enabling the group to secure its own medical premises on attractive terms while generating rental income from the excess space Raffles Medical is increasingly spreading its wings into overseas markets In China, it has secured joint venture agreements to develop 2 hospitals this year, the first in Shenzhen to develop a private hospital with the China Merchant Group, and the second one in Shanghai with the Shanghai government to develop an international hospital It owns a majority stake of 70% in both projects, which are expected to cost a total development cost of SGD400m Its Singapore operation, meanwhile, continues to grow steadily, underpinned by operating leverage from its hospital operation We expect robust healthcare demand in Singapore to translate into continuing earnings growth for the group Maintain Neutral with TP of SGD3.30 on valuation grounds