SG: MARKET PULSE: CapitaMall, CapitaCommercial, CapitaRetail China (22 Apr 2013)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.43

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.76

MARKET PULSE: CapitaMall, CapitaCommercial, CapitaRetail China

22 Apr 2013

KEY IDEA CapitaMall Trust: Results from AEIs now apparent Summary: CapitaMall Trust (CMT) turned in a strong set of 1Q13 results last Friday. DPU increased by 7.0% YoY to 2.46 S cents, despite a retention of S$8.4m in income for the quarter. This is slightly ahead of our expectations, as S$6.6m in taxable income may be distributed in FY13 (1Q DPU already formed 25.2% of our FY13F DPU). Operationally, we note that CMT continued to deliver on various fronts. CMT also updated that the repositioning of IMM Building has been gaining traction, while the space vacated by Carrefour in 4Q12 at Plaza Singapore has been leased to Cold Storage and John Little and British retailer George. As previously guided, CMT announced a new AEI at Bugis Junction, which is expected to last from 2Q13 to 3Q14. We remain positive on CMT's performance going forward, in view of these positive developments. We maintain BUYon CMT with a higher fair value of S$2.43 (previously S$2.32). (Kevin Tan) MORE REPORTS CapitaCommercial Trust: 1Q13 DPU up 3.2% YoY Summary: CapitaCommercial Trust (CCT) reported 1Q13 distributable income of S$55.7m - up 3.3% YoY. This translates to a 1Q13 DPU of 1.96 S-cents, which is 3.2% above the 1.90 S-cents paid in 1Q12. We see this to be in line with expectations and 1Q13 distributable income now makes up 24% of our full year forecast. The growth in distributable income was mainly due to a full contribution from 20 Anson (acquired in Mar-12) and higher rentals at HSBC Building. CCT's portfolio occupancy remained fairly stable at 95.3% in 1Q13, down marginally from 97.2% in 4Q12, mainly due to Cisco's relocation from Capital Tower. We continue to see positive rental reversion in the portfolio - average monthly portfolio rents increased from $7.64 psf in 4Q12 to $7.83 psf in 1Q13. In addition, CapitaGreen remains on track for completion in 4Q14. Maintain BUY with a fair value estimate of S$1.80. (Eli Lee) CapitaRetail China Trust: 1Q13 in-line Summary: CRCT's 1Q13 results were generally in line with ours and the street's expectations. Gross revenue climbed 3.7% YoY to S$39.3m and net property income rose 1.8% YoY to S$25.9m. On a QoQ basis, NPI at CapitaMall Minzhongleyuan (MZLY) fell 32% to RMB4.7m. We expect NPI from MZLY to dip further in the coming quarters since the AEI there is being fast-tracked, with temporary closure of the mall from Jul 2013 to 2Q14. According to management, CRCT has secured offers at favorable terms to refinance S$150.5m due in Jun 2013. Adjusting our estimates slightly, we increase our fair value from S$1.72 to S$1.76 but we maintain our HOLDrating on CRCT on valuation grounds. (Sarah Ong)

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

NEWS HEADLINES - Shares of Fraser and Neave (F&N) will resume trading on Monday, and the company will have three months, or until July 19, to restore its public float to above 10 per cent. - Sembcorp Industries will be developing new energy from a waste facility in Teeside, Britain, the group's first energy-producing waste facility outside of Singapore. Total investment for facility is expected to cost S$473.5m - Power company, SP AusNet, has won approval from The Australian Energy Regulator (AER) to apply to recover costs from customers for all insured events. - Elektromotive Group has resolved its dispute with the final vendor involved in the reverse takeover deal that saw the failed share transfer of 80m shares of the mainboard-listed firm. - Entry-level salaries for Singaporeans have been stagnant over the past five years and this cannot continue, Acting Manpower Minister Tan Chuan-Jin said.

CIMB tips Frasers Centrepoint on resilience

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: CIMB

Price Call: BUY

Target Price: 2.31

Frasers Centrepoint Trust's (J69U.SG) fiscal 2Q and 1H DPUs were broadly in line with expectations, CIMB says, noting 2Q13 NPI rose 10% on-year as higher NPI margins added to an 8% revenue increase.

"Causeway Point and NorthPoint remain the key drivers of FCT's performance. We continue to like FCT for its resilient retail exposure, and see catalysts from the accretive acquisition of a larger Changi City Point, which should provide FCT with its next prong of growth."

It raises its target to $2.31 from $2.29, keeping an Outperform call. The stock is down 0.5% at $2.23.
 

HPHT faces concerns on labour flexibility: Citi

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: Citigroup

Price Call: SELL

Target Price: 0.71

The labour disruptions at HPHT’s Hong Kong port are spurring concerns over the impact on labour flexibility and likely wage-rate pressure, Citigroup says, noting wage rates could be pressured upward by 10% this year on an annual basis, above the 5% the house originally considered.

“More important, we believe that the notable flexibility that HIT enjoys regarding its current subcontractor labor structure (pertaining to roughly two-thirds of its operational staff) could also be in jeopardy, particularly in the current volume environment and what we believe to be structural longer-term headwinds for export growth out of South China/HK.” It cuts its target to US$0.71 ($0.91) from US$0.74 to reflect the selloff in Cosco Pacific and China Merchants, resulting in lower peer P/E multiples of 14.4X and 9X respectively, compared with HPHT’s 23.8X. It keeps a Sell call.

“While we do appreciate the relatively higher dividend/distribution yield, uninspiring fundamentals (and now a labor disruption) will weigh on the name.” The stock is down 3.6% at US$0.81.

SGX may face weaker fiscal-4Q: OSK-DMG

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OSK

Price Call: SELL

Target Price: 6.80

Singapore Exchange's (S68.SG) fiscal-3Q13 showed a good pickup, with net profit of $98 million, up 26% on-year, at the upper end of the estimate range, led by stronger securities and derivatives, OSK-DMG says.

The house raises its FY13-14 net profit forecast by 4% each after lowering operating cost projections as the company continued to show good cost discipline and maintained its operating expense guidance.

It raises its fair value to $6.80 from $6.50. But it adds, while the stock's current 24.5x 2013 PER isn't particularly expensive, it prefers Bursa Malaysia (1818.KU) on its cheaper 22x 2013 PER valuation and stronger earnings growth.

"Furthermore, we note that April's average daily turnover has softened to around $1.26 billion, potentially suggesting a weaker 4Q13 is in store. Thus, despite the commendable results, we have maintained our Sell call." The stock is up 1.0% at $7.78.
 

SG: MARKET PULSE: CWT, Rigbuilders, SGX, M1, FCT, KepLand (17 Apr 2013)

Stock Name: CWT
Company Name: CWT LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.08

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 6.80

Stock Name: M1
Company Name: M1 LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.10

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.64

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 2.13

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.53

MARKET PULSE: CWT, Rigbuilders, SGX, M1, FCT, KepLand

17 Apr 2013

KEY IDEA CWT: Growth from warehouse assets and Commodity SCM CWT is a leading provider of logistics solutions for worldwide customers in the commodities, chemical, petrochemical, marine, oil & gas, defense and industrial sectors. A competitive edge is its global logistics network which connects customers to around 200 direct ports and 1,500 inland destinations. The group is currently developing two large warehouses, estimated to add another 50% to its owned warehouse space in Singapore. In total, we estimate its entire warehouse portfolio to be worth about S$800m. Meanwhile, the recently acquired Commodity SCM business is also expected to scale up quickly, taking advantage of the group's strong global logistics network and reputation as an established commodity collateral manager. Our SOTP fair value estimate for CWT is S$2.08 per share. Given the ample upside, we initiate coverage with BUY.(Chia Jiunyang) MORE REPORTS Singapore Exchange: Strong 3Q, but likely QoQ slowdown in 4Q Singapore Exchange (SGX) generated above market expectation 3QFY13 net earnings of S$97.7m, up 25.6% YoY. The strong performance came from several units, especially its core Securities and Derivatives businesses. A 3Q dividend of 4 cents has been declared and is payable on 2 May 2013. The final quarter is likely to see some slowdown, largely due to prevailing macro economic uncertainties, and we expect volatility to come back again as sentiment is likely to turn more cautious especially after the good gains for the key equity indices since the start of the year. We have raised our fair value estimate slightly from S$6.80 to S$7.16 based on the same 23x blended earnings. With an estimated dividend yield of 3.5%, total return is -3.5% and we are buyers only at S$6.80 or lower. Maintain HOLD. (Carmen Lee) M1: 1Q13 results in line; downgrade to HOLD M1 Ltd reported its 1Q13 revenue of S$243.0m (-7.4% YoY, -25.8% QoQ) which met just 21.3% of our full-year forecast, mainly due to lower handset sales and also the mix of handsets (Android now makes up >50% of its postpaid subscriber base). Nevertheless, net profit grew 1.7% YoY and 8.2% QoQ to S$41.0m, meeting 26.5% of our FY13 forecast. It may have also gotten a one-off boost from recognizing the unused credit in expired pre-paid cards that were periodically terminated. While we are not making any chances to our FY13 estimates as 1Q13 results were largely in line, our DCF-based fair value improves to S$3.10 (from S$2.89) as we tweak our interest rate expectations slightly lower in view of the still sluggish global economic performance. But as there is now <10% total return from here, we downgrade the stock to HOLD. (Carey Wong) Rigbuilders: Who has been ordering from the Chinese yards? There have been recent reports on Chinese yards surpassing Singapore yards in terms of jack-up rig orders YTD. Indeed, we find that jack-up orders for the former have totaled ~US$2.3b so far, compared to ~US$2.1b for the latter. However, we note that many of the contracts that Chinese yards have won so far are mostly from newcomers in the offshore industry, including speculators who sell the rigs later for a profit. Meanwhile, Keppel Corp (KEP) and Sembcorp Marine (SMM) have been diversifying their product range and innovating to stay ahead in certain niche areas. Maintain BUY on both KEP [FV: S$12.68] and SMM [FV: S$5.64]; we note that markets may be increasingly volatile ahead, providing an opportune time to enter such quality stocks. (Low Pei Han) Frasers Centrepoint Trust: 2QFY13 results broadly in line Frasers Centrepoint Trust (FCT) announced its 2QFY13 results this morning. NPI and distributable income grew by 9.7% YoY and 10.4% YoY to S$28.7m and S$23.5m respectively. DPU for the quarter came in at 2.7 S cents, up by a slightly slower 8.0% YoY due to retention of S$1.2m in distributable income. For 1HFY13, DPU rose by 8.5% YoY to 5.1 S cents. This is broadly in line with both ours and consensus expectation, with 1HFY13 DPU forming ~47% of our full-year DPU forecasts. FCT's portfolio assets continued to exhibit resilience. Average occupancy improved to 98.2% as at 31 Mar from 97.2% in the prior quarter, and positive rental reversion of 6.6% was achieved for 1HFY13. We will be speaking to management during the analyst briefing scheduled later in the morning. For now, we keep our S$2.13 fair value and HOLD rating on FCT unchanged. (Kevin Tan) Keppel Land: Diversifying stake in Tanah Merah site Keppel Land (KPLD) announced yesterday that it would join China Vanke (Vanke) in a strategic alliance to develop property in China and Singapore. In addition, Vanke would take a 30% interest in a KPLD's Tanah Merah GLS site for S$135.5m. Recall that KPLD had won this site with a S$434.6m bid last Oct and Vanke's entry price is only marginally above that of KPLD's cost. We believe this price is reasonable and, all considered, expect a neutral market reaction to this transaction. In our view, the potential loss of accretion to KPLD's RNAV from this divestment is limited and mostly offset by the benefits of diversification in an increasingly uncertain domestic residential space. Maintain BUYwith an unchanged fair value estimate of S$4.53. (Eli Lee)

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

NEWS HEADLINES - US equities rallied Tuesday, on the back of optimism from a bounce in gold prices, good corporate earnings and positive housing data. - Moody's has cut its outlook for China's credit rating from stable to progressive, citing risk from local government debt and credit growth from shadow banking. - From Jun 24, commuters who exit MRT stations in the city area before 7.45am on weekdays will travel for free. - Grand Banks Yachts is on track to complete five luxury yachts for buyers from Singapore, Japan and Micronesia in FY13 (ending Jun 2013). This marks the highest-ever sales to the region since the 2008-2009 global financial crisis. - The payable consideration by Europtronic Group for the proposed acquisition of Gold Impact is S$160m. - Sabana REIT has established a S$500m Multicurrency Islamic Trust Certificates Issuance Programme.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.31

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 3.80

Market Compass

17 April 2013~ Good Morning Singapore!

Singapore Idea Snippets:

17 April 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 :I've failed over and over and over again in my life and that is why I succeed. - MICHAEL JORDAN Singapore: The Day Ahead SINGAPORE DAYBOOK:Free MRT rides to city before morning rush hour. One-year trial will start from June 24; programme likely to cost govt $10m. [SINGAPORE] Commuters who travel early into the city area by train will pay nothing at all from June 24. The Land Transport Authority (LTA) announced yesterday that it is embarking on a one-year trial to offer completely free trips to those who end their weekday journeys at any of the 16 designated MRT city stations before 7.45am. Commuters who exit these stations just slightly after 7.45am will also not be left out. Those who alight between 7.45am to 8am can still enjoy a discount of up to 50 cents off their train fares. This pilot programme, which will be fully funded by the government, is likely to cost $10 million, said Minister for Transport Lui Tuck Yew during a visit to Raffles Place MRT Station during the pre-peak period yesterday morning. He added that the LTA hopes to see 10 to 20 per cent of commuters make changes to their daily schedules to travel into the city earlier. Currently, the SMRT Early Travel Discount scheme only offers a reduction of up to 50 cents for commuters arriving at 14 designated SMRT stations in the city area before 7.45am. This discount is limited to travel on SMRT lines only. MARKET SCOOP Keppel Land and China Vanke enter strategic partnership Singapore Exchange Q3 net profit surges as trading volume jumps Perennial consortium gets S$1.4b Beijing Tongzhou Phase 2 proj M1's Q1 profit up 1.8% S'pore Index edges up; Keppel REIT jumps to 5-yr high AIMS AMP Reit Q4 DPU up 16.3% Breadtalk invests S$14.5m in Beijing property JV OCBC Securities says... FIRST REIT | HOLD | TP: S$1.31 News agency Reuters reported that Lippo Karawaci (Lippo), which is First REIT's (FREIT) sponsor, is seeking to raise at least US$200m in an IPO of its Siloam Hospitals healthcare division1 Should this IPO materialise, we believe that proceeds would be used to fund Lippo's aggressive healthcare expansion plans, which includes the construction of a large number of hospitals We also expect Lippo to retain a strong majority of the controlling stake of the listed entity, given that it has earmarked its healthcare division as one of its core growth drivers As the Siloam Hospitals entity would likely continue to be consolidated in Lippo's financial statements, we believe that future hospitals will still be injected into FREIT Lippo also has a deemed interest of ~28.7% in FREIT An EGM has been scheduled on 29 Apr to obtain unitholders' approval for the forementioned acquisitions, issuance of new units to Lippo as partial payment for SHTS and proposed whitewash resolution for a waiver of a mandatory offer from Lippo As we expect the acquisitions to be DPU accretive and value-enhancing to unitholders, we expect unit-holders to vote in favour of the proposed conditions Meanwhile, we retain our HOLD rating and S$1.31 fair value estimate on FREIT UOB KAY HIAN says... WILMAR INTERNATIONAL | BUY | TP: S$3.80 Wilmar International is acquiring a 27.5% equity stake in Cosumar SA (Cosumar) from Societe Nationale d'Investissement (SNI) for a total cash consideration of MAD2.3b (US$263m) Cosumar is the sole sugar supplier in Morocco, one of the largest sugar producers in Northern Africa and third largest sugar producer in Africa With this, Wilmar will have sugar operation in Australia, New Zealand, Indonesia and Africa Wilmar is paying about MAD 2.3b (US$263m) for the 27.5% stake in Cosumar, representing 11.5x 2012 PE and 2.6x 2012 P/NTA Wilmar has about US$8.56b cash on hands to fund the acquisition and adjusted net gearing of 0.36x In line with company strategy to expand in Africa. Africa region contributed 3.3% of Wilmar's revenue in 2012 Also, sugar business is the fifth largest business in Wilmar and contributed about 7% of 2012's total PBT Maintain BUY and SOTP target price of S$3.80 based on sum-of-the-parts (SOTP) methodology, implying a blended PE of 13.6x 2013F, below its historical mean of 14.8x 1-year forward PE DBS VICKERS Securities says... FAR EAST HOSPITALITY TRUST | BUY | TP: S$1.13 Far East Hospitality Trust (FEHT) announced that they have signed a conditional sales and purchase agreement with Straits Trading Company limited (STC) for the acquisition of Rendezvous Grand Hotel Singapore and Rendezvous Gallery The agreed acquisition price for the property is S$264.5m, which is a 2-5% discount to appraised values from 2 appointed valuers (Colliers: S$277m, JLL : S$268.5m) Upon completion of this acquisition, the property will be master leased to the sponsor, Far East Organization, under a management contract as the operator of the hotel for a initial period of 20 years, with an option to renew for another 20 years We estimate the hotel component to be valued at close to S$225m (after attributing S$40m for the gallery wing based on S$1,600 psf) which works out to a valuation/key of close to S$755,000/key The purchase will be funded through a combination of debt and newly issued equity (to STC and sponsor Far East Organization) Based on the above funding scenario, this acquisition is expected to result in a net accretion of c1.5% for distributions We expect further upside to our TP as we have not factored in this acquisition in our numbers.

Wilmar's Moroccan sugar acquisition positive: CIMB

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 3.74

CIMB is positive on Wilmar’s  Moroccan sugar acquisition. “Wilmar’s acquisition of a strategic 27.5% stake in Cosumar gives the group exposure to the regulated Moroccan sugar industry and access to Africa’s structurally sugar-deficient market.

It can add value by introducing better techniques for farming and procuring raw sugar.” It views the asset valuations are fair, estimating the deal values Cosumar at US$956 million ($1.05 billion), representing a historical P/E of 11X, below the 14X-17X historical P/E for leading Malaysian sugar refiner MSM Malaysia.

It expects the deal to enhance Wilmar’s future earnings base by around 1% in FY14. It keeps the stock at Outperform with $3.74 target. The stock is up 0.6% at $3.29.