SG: MARKET PULSE: CCT, MLT, ART (21 Oct 2013)

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.61

MARKET PULSE: CCT, MLT, ART

21 Oct 2013

KEY IDEA CapitaCommercial Trust: Resilient to absence of OGS income support Distributable income for 3Q13 increased 1.6% YoY to S$58.8m mostly due to lower interest expenses and the distribution of S$1.7m in tax-exempt income from Quill Capita Trust (QCT), which offset the loss of income support from One George St (OGS). Note that, going forward, CCT can still draw from S$10.9m of retained tax-exempt income from QCT, and also S$0.9m of retained taxable income from RCS Trust to be released in 4Q13. 9M13 distributable income cumulated to S$174.0m, up 2.2% YoY, which made up 75.9% of our FY13 forecast and is judged to be mostly within expectations. 3Q13 DPU is 2.04 S-cents which translates to a 5.7% distribution yield based on the last closing price of S$1.42. We expect CCT to benefit from an improving Grade A office market in FY14 as rental levels reach a turning point in an environment of resilient absorption and limited supply, with only CapitaGreen (~700k sq ft NLA) coming online in FY14 in the Core CBD sub-segment. Maintain BUY with an unchanged fair value estimate of S$1.61. (Eli Lee) MORE REPORTS Mapletree Logistics Trust: Delivering steady growth Mapletree Logistics Trust (MLT) reported 2QFY14 DPU of 1.82 S cents, representing a 6.4% growth YoY. We deem the results to be in line with our expectations, as 1HFY14 DPU of 3.62 S cents have met 49.9% of our full-year DPU forecasts. While the global economic outlook remains murky, leasing demand at MLT's logistics facilities has held firm. Going forward, MLT reiterated that it will continue to optimize the portfolio yield through repositioning, enhancement and redevelopment opportunities. We understand that the redevelopment of Mapletree Benoi Logistics is on track for completion in 3QFY14, and that MLT will be embarking on its next redevelopment project at 5B Toh Guan Road in early FY15. We make minor adjustments to our forecasts but lower our fair value marginally to S$1.11 (S$1.15 previously) on higher risk-free rate assumptions. Maintain HOLD. (Kevin Tan) Ascott Residence Trust: Strata sale of units in Somerset Grand Fortune Garden ART has announced that it has entered into a strata sale for the divestment of 81 units in Somerset Grand Fortune Garden, which is located in Chaoyang District, Beijing. The sale consideration for the Somerset Grand Fortune Garden units, when fully sold, is estimated to be RMB628.0m (approximately S$128.1m), as derived from the independent valuation. The amount of excess over book value of the Somerset Grand Fortune Garden units is approximately S$79.9m. It should be noted that the sale consideration for each Somerset Grand Fortune Garden unit will be negotiated on a willing-buyer and willing-seller basis. A third-party owner who owns a total of 100 units in Somerset Grand Fortune Garden had earlier commenced a separate strata sale of the 100 units, resulting in increasing difficulty for ART to continue operating the property. We maintain our FV of S$1.37 and BUY rating on ART. (Sarah Ong)

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NEWS HEADLINES - US stocks rose on Fri, with the S&P 500 index continuing its record run and posting its best weekly gain since mid-July, as investors applauded quarterly results from Google Inc and Morgan Stanley. - DBS Bank has successfully sold S$200m of five-year bonds securitised on a condominium project and based on progress payments, a first since 2008. - Asiasons Capital, Blumont Group and LionGold Corp will have their trading curbs removed on Mon, two weeks after SGX declared them as designated stocks. - UPP Holdings has terminated its proposed investment in the Myanmar project. - DBS Group Holdings is among banks that have advanced in bidding for Societe-Generale's private banking assets in Asia, said three people with knowledge of the matter. - Sembcorp Industries will be investing RMB932m (S$190m) to develop the first total water management plant to support a coal-to-diesel project in China. - Singapore Airlines Cargo and Etihad Cargo have agreed to exchange capacity on services operated by both airlines from Abu Dhabi to London and Frankfurt.

SG: MARKET PULSE: Keppel Corp, CCT, MLT (18 Oct 2013)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.87

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.61

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.15

MARKET PULSE: Keppel Corp, CCT, MLT

18 Oct 2013

KEY IDEA Keppel Corporation: O&M margin continues to rise Keppel Corporation (KEP) reported a 8.4% YoY fall in revenue to S$2.95b but saw a 32.1% increase in net profit to S$457.6m in 3Q13, such that 9M13 net profit accounted for 77% of our full year estimates. Stripping out one-off items, we estimate recurring net profit at S$396m, in line with expectations. Operating margin in the O&M segment was strong at 16.5% in 3Q13, much higher than 2Q13's 14.2%. Order flow YTD has also been healthy, with KEP securing about S$5b new orders so far vs our full year estimate of S$6b. The net order book stood at a record S$13.6b as at end Sep. We continue to see good prospects in the O&M sector with the healthy rig demand, and expect the group to continue with its Near Market, Near Customer strategy. Maintain BUY with S$12.87 fair value estimate. (Low Pei Han) CapitaCommercial Trust: Average portfolio rent continues uptrend CapitaCommercial Trust (CCT) reported 3Q13 distributable income of S$58.8m - 1.6% higher YoY. This cumulates to a 9M13 distributable income of S$174.4m, up 2.2% YoY, which is within expectations and make up 75.9% of our FY13 forecast. 3Q13 DPU is 2.04 S-cents which translates to a 5.7% distribution yield based on the last closing price of S$1.42. The growth in 3Q13 distributable income was mainly due to lower interest expenses and the distribution of S$1.7m in tax-exempt distributable income from Quill Capita Trust, which offset the impact from the loss of income support from One George St. Portfolio occupancy edged up to 97.6% as at end 3Q13, versus 95.8% in the previous quarter. In addition, as a result of continued rental reversions, CCT's average committed office portfolio rentals increased to S$8.03psf from S$7.96psf. We would speak further with management regarding these results and, in the meantime, maintainBUY with our fair value estimate of S$1.61 under review. (Eli Lee) Mapletree Logistics Trust: Delivering steady growth Mapletree Logistics Trust (MLT) reported a 1.3% YoY drop in 2QFY14 NPI to S$66.6m, as its Japan portfolio saw lower translated income on weaker JPY. Stripping out the forex impact, NPI would have increased by 3.4% due to positive rental reversions and contributions from its past three acquisitions. Total amount distributable to unitholders grew at a faster pace of 7.5% to S$44.5m, as MLT substantially hedged its income streams from Japan, benefitted from lower financing costs, and distributed S$0.6m in divestment gains from 30 Woodlands Loop. For the quarter, DPU came in at 1.82 S cents, representing a 6.4% growth YoY. We deem the results to be in line with our expectations, as 1HFY14 DPU of 3.62 S cents have met 49.9% of our full-year DPU forecasts (consensus: 51.0%). Looking ahead, MLT reiterated that it will continue to optimize the portfolio yield through repositioning, enhancement and redevelopment opportunities. We will be attending MLT's analyst briefing later in the morning. For now, we put our HOLD rating and S$1.15 fair value estimate under review. (Kevin Tan)

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NEWS HEADLINES - US stocks ended mostly higher on Thu, lifting the S&P 500 to a record finish, as Wall Street turned from the latest fiscal drama on Capitol Hill to corporate earnings. - Singapore's non-oil domestic exports fell YoY for an eighth consecutive month in Sep, though the contraction was narrower than market forecasts. - SGX said its 1QFY14 earnings rose 24% as revenue from securities and derivatives trading grew. - Qian Hu Corporation reported a net profit of S$88k for its 3Q13, reversing from a S$10.1m loss the same period a year ago caused by the disposal of its Malaysian subsidiary. - OUE Commercial Trust, a property trust controlled by OUE Ltd, will buy an office and shopping complex in Shanghai ahead of a listing that is likely to take place early next year. - A subsidiary of Cosco Shipyard Group has secured two contracts worth US$233.31m. - ISDN Holdings is embarking on a round of financing that will see it raise S$100m to S$150m via convertible bonds.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 5.11

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: DBS Vickers

Price Call: HOLD

Target Price: 1.62

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 4.75

Market Compass

19 July 2013~ Good Morning Singapore!

Singapore Idea Snippets:

19 July 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 : Mothers all want their sons to grow up to be president, but they don't want them to become politicians in the process. - JOHN F. KENNEDY Singapore: The Day Ahead SINGAPORE DAYBOOK :CFO to take over the helm at Keppel Corp [SINGAPORE] Keppel Corporation's incoming head honcho will not be a shipyard man. Instead, the Singapore- headquartered conglomerate will next be led by its current chief financial officer Loh Chin Hua, who has picked up over 25 years of real estate investing and fund management experience. Mr Loh will take over on Jan 1, 2014, from 65-year- old group chief executive officer Choo Chiau Beng, who began his 42-year career at Keppel as a ship repair management trainee at Keppel Shipyard. Mr Choo, who has been CEO since 2009, announced the leadership renewal yesterday at the group's second-quarter financial results briefing. (Source: The Business Times) MARKET SCOOP MLT posts DPU of 1.80 cents, up 5.9% Keppel Corp Q2 profit down 33% Oxley in move for China projects F&Ngets final extension to restore float by Dec 31 Ezion gets LOI to provide service rig for 5 years OUE's US$476m hospitality trust IPO priced at bottom of range: sources CRCT posts 1.2% fall in Q2 DPU Keppel Land hits 5-week high on strong China sales (Source: The Business Times) UOB KAY HIAN says... KEPPEL LAND | BUY | TP: S$5.11 Keppel Land reported 2Q13 net profit of S$94.7m, down 2.5% yoy due to the lower bumper contributions from Reflections at Keppel Bay, offset by contributions from The Lakefront Residences and The Luxurie 1H13 results were in line with our expectations accounting for 46% of our full-year forecast of S$417m Net profit from property investment was up 32% yoy to S$24.5m with improved performance from Keppel REIT (KREIT) and higher contribution from Marina Bay Financial Centre (MBFC) Tower 3 Earnings from property fund management fell 39% yoy to S$9m due to the absence of KREIT acquisition fees earned in 2Q12 Geographically, Singapore accounted for the bulk 74% of profit contributions in 1H13, due to contribution from associates MBFC Tower 3, KREIT and development properties such as Marina Bay Suites, with the remaining largely from China residential projects Keppel Land has deployed S$1b from its balance sheet to acquire three sites in 1H13 This includes a residential site in Tiong Bahru opposite the MRT (S$550m/S$1,163psf ppr), a 34% stake in a retail development in Shanghai Lifehub @ Jinqiao (S$157m) and a prime landed residential site in Sheshan, Shanghai (S$266m) Keppel Land's net debt-to-equity ratio currently stands at comfortable levels of 0.4x, up from 0.22x in end-12 Keppel Land has a healthy debt headroom of S$1.4b for further acquisitions if gearing were to expand to a still comfortable 0.6x Management noted that they will continue to selectively acquire prime residential and commercial sites in key gateway cities, especially in the focus markets of Singapore and China Management noted that the home sales momentum remained strong in 1H13 despite cooling measures in Singapore and China Management highlighted that the demand for Grade A office space remains resilient with Marina Bay Financial Centre Tower 3 pre-commitments increasing to about 90%, up from 79% as at end-12 We retain our earnings estimates Maintain BUY with unchanged target price of S$5.11/share, pegged at 5% discount to its RNAV of S$5.37/share Key catalysts include acquisitions, divestment of its office assets and sustained recovery in China sales DBS VICKERS Securities says ... CAPITACOMMERCIAL TRUST | HOLD | TP: S$1.62 CCT announced 2Q13 gross revenue of S$97.5m (+1.8% y-o-y), NPI of c.S$75m (-0.5%) and distributable income of S$59.6m (+1.9%) This translates to a quarterly DPU of 2.07Scts and 1H DPU of 4.01scts (+1.3% y-o-y) The slight uptick in gross revenue was attributable to better performances from Six Battery Road and higher rental contribution from HSBC Building CCT signed c.192k sqft of office space commitment, of which c.40% were new tenants Management reported an unweighted average reversion rate of S$9.93 psf pm, higher than the market rate of S$9.55 psf pm (as provided by CBRE) Management guided that they expect the loss of yield protection income for 2H13 to be c.S$8.0m However, they have indicated a willingness to utilise a portion of their retained distributable income from Quill Capita Trust (amounting to c.S$11m) in order to stabilise the DPU going forward As plans are still tentative at this point, we have not factored any additional payout in our DPU projections In addition, the decline should also be mitigated by an improvement in our portfolio occupancy assumption to 95-98% from the present 95.8% Looking ahead, we expect office rents to be rather flat over the next 12 months as new demand remains bite-sized CCT will also be conducting S$40m worth of AEI works at Capital Tower which will focus on the upgrading of common areas and certain technical specifications of the building, with a target of achieving a ROI of 7.8%, upon completion by 2Q15 We made slight downward adjustments to our rental assumptions for CapitaGreen to $12psf/mth as well as raised our risk free rate assumptions to c.2.7% from 1.8%, to reflect the higher rate expectations going forward The stock is offering of 5.4% for FY13 and FY14, at the lower end of peers' comparison range With relatively minimal DPU growth to act as share price catalyst, we maintain our HOLD call NOMURA Securities says... KEPPEL LAND | BUY | TP: S$4.75 KPLD reported its 2Q13 results on 17 July after the market closed 2Q PATMI of SGD95.5mn (+0.9%y-y; -1.1%q-q) brought the total PATMI booked during 1H13 to SGD192.1mn (-18.8%y-y), which met 52.5% of our full year forecast of SGD366mn We judge the performance to be broadly in line with our expectation KPLD's net debt to equity was 0.4x as of end-June 2013 (up from 0.3x as of end-March), with a cash balance of c.SGD1bn KPLD sold a total of 210 units in Singapore during 1H13, of which 141 units were sold at Corals at Keppel Bay (total 366 units) Our estimates suggest another 59 units were sold at Reflections at Keppel Bay (total 1,129 units, including 154 units set aside for leasing) during 1H and there were another 46 for-sale units that were still unsold as of June KPLD plans to launch the The Glades at Tanah Merah (total 726 units) in 3Q We expect KPLD to target an ASP of c.SGD1,300psf for this project Commitment at Marina Bay Financial Centre (MBFC) Tower 3 improved to 90% during the quarter (from 86% as of end-March and 79% as of end-December). Considering: KPLD's gearing is now at the highest level since 3Q11 [i.e. just before the sale of Ocean Financial Centre (OFC) to 46%-owned KREIT (KREIT SP, Reduce) was announced] MBFC Tower 3 is now substantially committed, KREIT has been one of the best performing S-REITs YTD, And potential opportunities to recycle capital into China could start to surface in the near term, We believe the probability of the sale of Tower 3 has increased KPLD sold 1,090 units in its China projects during 2Q13 (vs. 850 units in 1Q13 and 490 units in 2Q12), of which c.75% were sold in The Springdale in Shanghai and The Botanica in Chengdu Phases 4 and 5 (total 260 units) at 8 Park Avenue in Shanghai were launched in 2Q13 at an ASP of RMB70,000psm with 54 units sold Park Avenue Heights in Chengdu also made its debut during the quarter at an ASP of RMB14,500psm with 120 units sold Trading at a discount of 43% to our NAV estimate of SGD6.26/share, we believe KPLD's current valuation is attractive, notwithstanding concerns on China could continue to cap the stock's near term performance Potential asset divestment/capital recycling could be a positive catalyst for the stock Maintain Buy

SG: MARKET PULSE: KepLand, CCT, CRCT (18 Jul 2013)

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.09

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.61

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.58

MARKET PULSE: KepLand, CCT, CRCT

18 Jul 2013

KEY IDEA Keppel Land: Steady as she goes KPLD reported 2Q13 PATMI of S$95.6m which increased 0.9% YoY. 1H13 PATMI now cumulates to S$192.1m, forming 42% of our FY13 forecast which we judge to be within expectations. Looking ahead to 3Q13, the group expects to launch a 726-unit development, The Glades, located beside the Tanah Merah MRT station. KPLD also reported that MBFC T3's commitment level is ~90% as at end Jun 2013, versus ~79% as at end FY12. Maintain BUY with a lower fair value estimate of S$4.09 (30% RNAV disc.), versus S$4.59 previously, as we update our model and increase our RNAV discount marginally from 25% to 30% to reflect increased residential uncertainty following incremental curbs in Singapore and heightened macro-economic risks in China. (Eli Lee) MORE REPORTS CapitaCommercial Trust: Positive rental reversions in place CCT reported 2Q13 distributable income of S$59.6m, up 1.9% YoY mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and reduced finance costs which dipped S$3.4m QoQ. Total distributable income in 1H13 cumulates to S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast. Overall portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. Due to positive rental reversions, CCT's average committed office portfolio rentals increased QoQ from S$7.83 psf to S$7.96 psf. We estimate a negative impact of S$8.0m - S$8.5m from the absence of yield protection income at OGS in 2H13 but expect this to be offset by positive rental reversions, reduced interest costs and some distribution of retained income (S$10.8m) from Quill Capita Trust. Maintain BUY on CCT. Our fair value estimate, however, falls to S$1.61, versus S$1.80 previously, due to higher discount rates now employed in our valuation model. (Eli Lee) CapitaRetail China Trust: 2Q13 results in line CRCT's 2Q13 results were in line with ours and the street's expectations. Gross revenue climbed by 4.9% YoY to S$40.0m, net property income rose by 6.0% to S$26.4m and income available for distribution was 7.5% higher at S$17.9m. DPU fell 1.2% YoY to 2.38 S cents, however, excluding the 57m units issued through private placement in Oct 2012, 2Q13 DPU would have been 2.58 cents, up 7.1%. The portfolio valuation rose 4.4% from Dec 2012 to RMB7.9b as at 30 Jun. The REIT manager has elected to apply the Distribution Reinvestment Plan (DRP) established on 21 Mar 2013 to the distribution for 1H13. The plan provides unitholders with the opportunity to receive distributions in the form of fully-paid new units in CRCT, instead of cash. To encourage participation in this first DRP roll-out, CRCT will offer a 4.0% discount to the volume-weighted average trade price per unit of 10 market days up to the Books Closure Date on 12 Au 2013. We maintain our BUY rating but place our fair value of S$1.58 under review. (Sarah Ong)

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

NEWS HEADLINES - US stocks posted tepid gains on Wed, with the S&P 500 up for a ninth session in ten after Federal Reserve Chairman Ben Bernanke said the rate of bond purchases is flexible. - Singapore's non-oil domestic exports extended its fall in Jun with a steeper-than-expected 8.8% tumble from a year ago. - Global fund managers have become cautious about equities, and their emerging market allocations are the lowest in 12 years, according to a Bank of America Merrill Lynch survey. - Sabana REIT posted a DPU of 2.40 S cents for 2Q13, a 5.7% improvement from 2.27 S cents a year earlier. - Cosco Corporation's subsidiary, Cosco (Nantong) Shipyard, secured a US$200m contract to build a harsh-environment semi-submersible accommodation vessel from Mexico-incorporated Cotemar SA de CV. - Local construction firm Ley Choon Group Holdings has secured new contracts in Brunei worth S$29.6m.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.74

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.50

Stock Name: M1
Company Name: M1 LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 3.18

Market Compass

18 July 2013~ Good Morning Singapore!

Singapore Idea Snippets:

18 July 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 : Losers live in the past. Winners learn from the past and enjoy working in the present toward the future. - DENIS WAITLEY Singapore: The Day Ahead SINGAPORE DAYBOOK : Falling exports may scupper GDP growth SINGAPORE] Singapore's miserable run on the exports front has continued and the advance official estimate of strong GDP growth in the last quarter may turn out to be overly optimistic. There are also questions over whether key non-oil domestic exports (NODX) will pick up steam in the second half after they wrapped up the April-June quarter with the longest run of declines since the global financial crisis. The NODX extended its fall in June with a steeper-than-expected 8.8 per cent tumble from a year ago, the fifth drop in as many months, according to the latest trade figures released yesterday by the government's trade promotion agency International Enterprise Singapore. Last month's decline followed a 4.6 per cent decrease in May and exceeded the 5.8 per cent drop which the market was looking at. Chua Hak Bin, an economist at Bank of America Merrill Lynch, calculated that the decline brought the full second quarter (Q2)'s NODX down 4.9 per cent, against a 12.5 per cent fall in the first quarter (Q1). (Source: The Business Times) MARKET SCOOP Singapore yards benefit from China shipbuilding woes Keppel Land Q2 profit up 0.9% Singaporeand Barbados sign open skies agreement SPH Reit priced at 90 cts, sees strong institutional interest Unifiberto place 74.56m new shares at S$0.02322 each CCT'sQ2 DPU at 2.07 cts, embarks on S$40m upgrade of Capital Tower Singapore's non-oil domestic exports fall 8.8% y/y in June One in 10 Singapore firms settle trade in yuan: HSBC (Source: The Business Times) UOB KAY HIAN says... CAPITACOMMERCIAL TRUST | BUY | TP: S$1.74 CapitaCommercial Trust (CCT) reported a 2Q13 distributable income of S$59.6m (+1.9% yoy, +7.0%qoq) and a DPU of 2.07 cents (+0.5% yoy, +5.6% qoq) The 1H13 DPU is in-line with our expectations, accounting for 50.1% of our full year DPU estimate of 8.0 cents 1Q13 revenues improved 1.8%yoy to S$97.5m while Net Property Income dipped 0.5%yoy to S$74.9m, due to better performance at 6 Battery Road and higher rental contribution from HSBC Building offset by lower occupancy at Capital Tower and higher property tax and operating expenses Occupancy rate rose 0.5ppt to 95.8% in 2Q13, helped by rising occupancies at 6 Battery Road and One George Street CCT signed and renewed 191,700sf of leases in 2Q13, with about 58% renewals and 42% new leases New and renewed tenants include CBRE, Mitsubishi UFJ Lease, Noonday Asset Management, AAPC Singapore and Bryan Cave Intl. Consulting Committed occupancy at 6 Battery Road rose to 1ppt qoq to 94.2% while occupancy at 1 George St rose 2.8ppt to 97.2% S$40m AEI announced for Capital Tower for the upgrading of common areas and technical specifications, with a projected return on investment of 7.8% (incremental NPI of S$3.1m) upon completion in 2Q15 Revaluation gain of S$85.3m from mid-year revaluation of properties With cap rates unchanged at 3.75% for Grade-A offices, gains were achieved primarily from higher signing rentals at CCT's properties and lower cap rates at Raffles City (down 15-20bps for retail and hotel components) Gearing fell 1.5ppt to 28.9%, due to higher asset valuations and lower borrowings, while average cost of debt also fell 0.2ppt to 2.8% as CCT adopted a 76% fixed/24% floating rate for its borrowing Sensitivity to a rise in the interest rate remains low as a 50bps increase in interest rate will impact DPU by -1% Average debt maturity fell 0.2 years to 2.8 years CCT has a debt headroom of S$1.2b for acquisitions before reaching a gearing of 40% Expiry of yield protection may be mitigated by retained earnings from Quill Management anticipates that estimated impact from the loss of yield protection at One George Street from July 2013 will be S$8m for 2H13 (7% of 1H13 distributable income) However, this will be mitigated by better portfolio occupancies, positive rental reversions and savings on interest expense In addition, CCT has retained S$10.8m of distributable income from Quill Capita Trust, which may be used for potential distribution to unitholders Positive rental reversions with average portfolio rents up 1.7% qoq to S$7.96 psf pm in 2Q13 from S$7.83 psf pm in the previous quarter AEI and redevelopment works remain on track, with CapitaGreen due to be completed in 4Q14, and the asset enhancement works (AEI) at Raffles City also due to be completed in 2Q14 AEI works at 6 Battery Road are due to be completed by 4Q13 We have a BUY on CCT with a target price of S$1.74 based on DDM (required rate of return: 7.2%, terminal growth: 2.2%) DBS VICKERS Securities says ... ASCENDAS REIT | BUY | TP: S$2.50 A-REIT's 1Q14 results were in line, with gross revenues and net property income growing 6% and 7% to S$150.9m and S$108.0m, respectively This was largely due to the acquisition of The Galen, supported by an organic uplift in rents Rental reversions remained positive at c9.6% compared to previously contracted rents while occupancy rates dipped slightly to 93.6% due to conversion of certain single-tenanted properties into multi- tenanted properties Weighted all-in cost declined slightly to 3.09% (vs 3.32%) but is expected to remain stable going forward Distributable income came in 11.3% higher at S$85.2m, translating to a DPU of 3.55 Scts for the quarter (+0.6% due to an enlarged share base) The recent completion of Unilever Four Aces Singapore (a built-to-suit facility) and the acquisition of A-REIT City @ Jinqiao are expected to start kicking in from 2Q14 We note that there is a S$13.5m rental guarantee on the latter, which will mitigate any earnings downside REIT has commenced leasing of the space, which is currently 3% leased with a further 20% of the space under negotiation A-REIT has an active good pipeline of development and asset enhancement projects (AEI), with an additional 3 AEIs at Techquest, LogisTech and Corporation Place unveiled, costing cS$25.4m and will complete in 2Q14 Together with its other developments, A-REIT has an additional S$190.8m in investments (new and uncompleted projects) that have yet to be funded Growth momentum will pick up from end of FY14F as these projects are progressively completed from 2HCY13. Amongst the development projects, Nexus@one-north, the largest development project in its pipeline (completing in 3QCY13), is seeing improving take-up rates, with reported occupancy of close to 58% Our TP is revised to S$2.50 as we raised our risk free rate assumption (2.6% vs 1.8%) We continue to like A-REIT for its stability and attractive yield of c6.1-6.5%. Upside to earnings will be acquisitions, which the manager is currently reviewing NOMURA Securities says... M1 | BUY | TP: S$3.18 A steady performance from M1 with service revenue 2% ahead of our expectations while EBITDA came slightly below due to mix change in handset sales Service revenue grew 9%, EBITDA grew 6% with 37% margin, and NPAT grew 11% y-y Management reaffirmed its FY13 guidance for moderate NPAT growth Key takeaways from the result to highlight: Some sequential improvement in postpaid ARPUs from data re-pricing Postpaid ARPU rose 2% q-q compared to a flat to 2% q-q decline for the past four quarters This, however, has a long way to go still as only 26% of postpaid customers are on tiered data plans now and only around 15% of subs appear to be exceeding data allowances M1 is also in discussion with OTT players for revenue sharing arrangements to protect ARPU\ Handsets continue to create margin volatilities Service margin fell from 39% in 1Q to 37% due to a rising mix of Android devices and accounting of these devices (expensed up front) Android handsets are now at 75% of the mix, from 60% in 1Q and 40% a year ago M1 has 67k fibre subs now with net adds of 7k This is around 3% of its total wireless base - improving this ratio is key to improving churn We estimate M1's fibre revenue contribution is SGD9mn, vs wholesale fixed cost of SGD7mn (excluding and advertising and other costs) FY13 capex guidance is now for SGD130mn, or at the lower end of its initial guidance This excludes payment for recently won spectrum, which will occur in end 2014 (SGD40mn) and 2016 (SGD64mn) We maintain Buy M1 has declared a 6.8sen dividend. Its 5% yield remains appealing and the stock is now trading at 17x FY13F P/E

SG: MARKET PULSE: A-REIT, M1, CCT (17 Jul 2013)

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.45

Stock Name: M1
Company Name: M1 LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.10

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

MARKET PULSE: A-REIT, M1, CCT

17 Jul 2013

KEY IDEA Ascendas REIT: Apparent growth drivers Ascendas REIT (A-REIT) reported NPI of S$108.0m and amount available for distribution of S$85.2m, up 6.8% and 11.3% YoY respectively. The increase was driven mainly by contribution from its newly-acquired The Galen and positive rental reversions. On the operational front, A-REIT continued to deliver as well. Despite starting FY14 with 21.4% of its revenue due for renewal, A-REIT has managed to reduce the figure significantly to 14.8%, thanks to its proactive portfolio management. Moreover, positive rental reversions averaging 9.6% were achieved across all its property segments. During the quarter, A-REIT also announced three new asset enhancement works to optimize its yield. In addition, we understand that A-REIT has completed the purchase of its second property in China in Jul, and is actively working to fill the spaces. These efforts, together with continued higher renewal rents and vacancies at its existing portfolio, are likely to provide further upside in its NPI. We are keeping our FY14 forecasts unchanged as the 1Q performance was within view. Maintain BUY and S$2.45 fair value on A-REIT. (Kevin Tan) MORE REPORTS M1: 1H13 results mostly in line - HOLD M1 Ltd saw its 2Q13 revenue +5.3% YoY (+0.6% QoQ) at S$244.5m, and was just 1.4% shy of our forecast, as smartphone customers and usage continue to drive revenue growth. Net profit climbed 11.2% YoY (-4.5% QoQ) to S$39.2m, or about 3% ahead of our estimate. 1H13 revenue slipped 1.5% to S$487.5m, meeting 42.7% of our full-year forecast (due to lower handset sales in 1Q13), but net profit rose 6.1% to S$80.2m, or 51.8% of our FY13 estimate. M1 declared an interim dividend of S$0.068/share, versus S$0.066 last year. With only very minor adjustments (<0.5%) to our FY13 and FY14 earnings forecasts, our DCF-based fair value remains at S$3.10; we have already factored higher interest rate assumptions in our model. Maintain HOLD for decent dividend yield of 4.7%. (Carey Wong) CapitaCommercial Trust: 2Q13 results within expectations CapitaCommercial Trust (CCT) reported 2Q13 distributable income of S$59.6m - 1.9% higher YoY. This cumulates to a 1H13 distributable income of S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast. 2Q13 DPU is 2.07 S-cents which translates to a 5.4% distribution yield based on the last closing price of S$1.50. The growth in distributable income was mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and lower finance costs which dipped S$3.4m QoQ due to reduced interest costs. Portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. As a result of continued rental reversions, CCT's average committed office portfolio rentals increased from S$7.83 to S$7.96. We will be speaking further with management regarding these results and, in the meantime, put our Buy rating and fair value estimate of S$1.80 UNDER REVIEW. (Eli Lee)

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

NEWS HEADLINES - US stocks declined on Tue, with the S&P 500 breaking an eight-session winning streak after a Federal Reserve member urged reduced stimulus and Coca-Cola Co.'s profit fell. - The Monetary Authority of Singapore said the local banks are not at risk and regular stress tests have shown that adequate buffers are in place to cope with the upturn in interest rates. - United Overseas Bank has successfully sold a new bank debt with a loss absorption feature, in compliance with stricter Basel III rules on capital, the first Asian bank to do so. - United Fiber System has gone forward with its plan to acquire coal miner PT Golden Energy Mines (Gems) for S$1.88b in a reverse takeover deal with PT Dian Swastatika Sentosa (DSS).

SG: MARKET PULSE: S-REITs, Nam Cheong (4 Jun 2013)

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 1.05

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 8.64

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.35

MARKET PULSE: S-REITs, Nam Cheong

4 Jun 2013

KEY IDEA Singapore REITs: Capitalize on over-reaction We see two key factors driving the S-REITs price correction over the last two weeks. First, increased expectations that the Federal Reserve could taper its bond purchases as early as 2H13; and secondly, opportunistic profit-taking on the back of a strong performance over 2012-13. At this juncture, however, we see the selling to be overdone. In our view, the odds of the Fed tapering bond purchases in 2H13 are roughly 50-50 and we see fundamental valuations for the S-REITs sector (370bp against the 10Y government bonds) to be undemanding currently. In addition, S-REITs sector would likely continue to deliver, in 2013, firm earnings from asset enhancement initiatives/development projects, yield-accretive acquisitions and active leasing efforts. Maintain our OVERWEIGHT rating on the S-REITs sector. Starhill Global REIT [BUY, S$1.05 FV] is our top pick in the sector due to its growth potential, strong fundamentals and compelling valuations. We also like CapitaCommercial Trust [BUY, S$1.80 FV] and Fortune REIT [BUY, HK$8.64 FV] for the quality of their portfolio assets, positive rental reversion profiles and low gearing. (S-REITs Team) MORE REPORTS Nam Cheong: Ride the upcycle! Nam Cheong Limited recently announced that its Executive Director, Mr. Leong Seng Keat, has been re-designated as the CEO. Mr. Leong, also the son-in-law of ex-CEO Datuk Tiong Su Kouk, has been with the group since 2005. We expect the leadership transition to be smooth. Meanwhile, we continue to like Nam Cheong for its market leadership in the increasingly active Malaysia oil & gas industry. Having seen a healthy pick-up in order wins, Nam Cheong recently expanded its shipbuilding programme to 28 vessels for FY14F (FY13: 19 vessels). Its large order-book of MYR1.3b, for 26 vessels delivered over FY13-15F, helps to mitigate its risk by providing a base level of earnings. Maintain BUY with a higher FV of S$0.35 (previously S$0.30). (Chia Jiunyang)

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

NEWS HEADLINES - Datapluse Technology posted a 23.2% increase in net profit to S$2.19m for its 3QFY13 ended 30 Apr. - NH Ceramics entered into a purchase agreement to buy BlackGold Asia Resources Pte Ltd and BlackGold Energy Limited for US$150m. The two BlackGold firms control about 53,000 hectares of coal concessions in Indonesia. - Asian Micro Holdings is planning to acquire Oxley Global Limited in a proposed RTO deal. - Halcyon Agri announced that it would acquire Malaysian rubber processor Chip Lam Seng for RM63m (S$25.7m). - According to the latest purchasing managers' index, Singapore's industrial activity grew at a faster pace in May, also signalling a fourth consecutive month of growth for the electronics sector.

Barclays tips accumulating S-REITs on dips

Stock Name: Kep REIT
Company Name: KEPPEL REIT

Research House: Barclays

Price Call: BUY

Target Price: 1.70

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: Barclays

Price Call: BUY

Target Price: 1.87

Barclays notes that markets concerns about the end of QE3 or the Fed 'tapering' with long-dated government bond yields spiking up has resulted in both high-yield credit and high-yield equities, in particular S-REITs, being sold off.

The house believes "the concern is premature and we do not expect the Fed to cut back its bond purchases until 2014 vs the market's expectation of 2H13."

With that in mind, Barclays continues to believe that S-REITs' valuations are not expensive -- still above normalised average yield spread with the office sector having bottomed.

It prefers REITs that could grow faster even when interest rates gradually move up due to sustainable growth in the US. "We would accumulate on dips," it says noting that Keppel REIT (K71U.SG) and CapitaCommercial Trust (C61U.SG), both rated Overweight with respective $1.70 and $1.87 targets, are its top picks among S-REITs.

Shares are down 1.4% at $1.42 and down 1.3% at $1.53, respectively.


 

SG: MARKET PULSE: S-REIT, Bumi Armada (22 May 2013)

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 8.64

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 1.05

MARKET PULSE: S-REIT, Bumi Armada

22 May 2013

KEY IDEA Singapore REITs: The burgeoning market In our latest assessment of the S-REITs sector, we continue to see familiar trends. REIT managers have generally maintained firm growth in their trusts' rental income, on the back of contributions from past investments and improved operational performance. For 2013, we are maintaining our view that S-REITs are likely to continue to deliver firm performance. Nevertheless, the S-REIT index has been enjoying a good run-up, raking up 36.7% gain in 2012 and another 12.7% increase YTD. Given that the S-REITs are now trading at a 24% premium to book value on average, we feel that it is prudent to be selective on S-REITs. We continue to prefer S-REITs with good growth potential, strong financial position and compelling valuations. In this respect, we continue to pick CapitaCommercial Trust [BUY, S$1.80 FV], Fortune REIT [BUY, HK$8.64 FV] and Starhill Global REIT [BUY, S$1.05 FV] as our preferred BUYs. Reiterate our OVERWEIGHTview on the broader S-REITs sector. (S-REITs Team) MORE REPORTS Bumi Armada Berhad: A good start to FY13F Bumi Armada Berhad's 1Q revenue jumped 46% YoY to MYR489m and net profit to shareholders increased by 22% YoY to MYR110m. The results were roughly in-line with ours and the consensus' estimates. Segment results were mixed. Although the FPSO, OSV and T&I segments had YoY increases in revenue, only FPSO and OSV showed segment profit improvements. The OFS segment reported no activity for 1Q13. The group also benefited from disposal gain of a subsidiary of MYR9.4m, write-back of doubtful debt of MYR2.0m and a net foreign exchange gain of MYR3.0m. We tweaked our models slightly to reflect 1Q13 results and roll forward our estimates to FY13/14. Accordingly, our fair value increases slightly to MYR3.56 (previously MYR3.74) on 21x PER. Maintain HOLD. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks closed higher on Tuesday after a strong earnings report from Home Depot and also due to market anticipation of Wednesday's testimony by Ben Bernanke in Congress. - Boustead Singapore's FY13 PATMI rose 46% YoY on the back of a 26% increase in revenue YoY. It announced a final dividend of 3 cents and a special dividend of 2 cents. - RELIGARE Health Trust (RHT) registered DPU of 3.55 S cents for the period spanning 19 Oct 2012 to 31 Mar 2013, missing its projected DPU of 3.61 S cents. - The Asian prime brokerage unit of Credit Suisse has replaced Morgan Stanley as the second largest firm servicing the region's US$148 billion hedge funds industry, a survey shows. - Fashion group Giorgio Armani's sales revenue rose over €2.0b (US$2.6b) in 2012, a 16% rise YoY. It saw a 11% jump in sales in crisis-hit Europe. - British luxury group Burberry posted a 14% rise in full-year pretax profit but forecasts declining profit in 1H13 due to reduction in wholesale markets in favor of retail markets.

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.

MARKET PULSE: KepLand, ART, CCT, FCT, PARD, First REIT, Tiger Airways (24 Jan 2013)

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.53

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.37

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.13

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.98

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

MARKET PULSE: KepLand, ART, CCT, FCT, PARD, First REIT, Tiger Airways

24 Jan 2012

KEY IDEA Keppel Land: Well positioned for FY13; upgrade to BUY Keppel Land (KPLD) announced 4Q12 PATMI of S$527.3m, down 55.4% mostly due to the S$480.3m gain from the sale of stake in Ocean Financial Center in 2011. Excluding divestment gains and revaluation gains, we estimate FY12 PATMI to be S$451.5m - up 61.4% YoY and mostly within expectations. We see KPLD to be well positioned for FY13 given its strong balance sheet (S$1.6b cash, 22% net gearing), significant exposure to the Chinese property sector (35% asset exposure as of end FY12) and potential divestment gains from MBFC T3 as the asset stabilizes. Upgrade to BUY with a higher fair value estimate of S$4.53, versus S$3.49 previously, as we lower the RNAV discount to 25% to reflect a mid-cycle valuation and incorporate the latest valuations of Keppel REIT. (Eli Lee) MORE REPORTS Ascott Residence Trust: Compressed margins in 4Q12 Ascott Residence Trust registered 4Q12 DPU of 2.00 S cents, above consensus but slightly lower than our estimate. 4Q12 revenue climbed 1% YoY to S$75.9m, with contributions from acquisitions (partially offset by decrease from divestments). Notably, gross profit fell by 4% YoY to S$38.5m. Management attributed the compression in gross profit margin to higher expenses in China, the Philippines and Vietnam (staff cost, and also utilities cost in the Philippines), and expects these cost pressures to persist. Currency movements led to a S$4m drop at the FY12 gross profit level to S$159.1m (~2.5% negative effect, 4Q12 displayed a similar percentage). We maintain our fair value of S$1.37 and downgrade ART to a HOLD. (Sarah Ong) CapitaCommercial Trust: Potential for more growth ahead CapitaCommercial Trust (CCT) reported 4Q12 distributable income of S$58.3m - 7.0% higher YoY. This cumulates to a FY12 distributable income of S$228.5m, up 7.4% YoY, which is within expectations and make up 101% of our forecast. FY12 DPU is 8.04 S-cents; distribution yield is 4.7% based on last closing price. With net gearing at a relatively low 30.1%, we note that CCT has significant debt headroom of ~S$1bn for acquisitions and asset enhancements. Though management would likely be cautious on the acquisitions front due to the criteria for yield accretion, with financing costs at low levels currently and CCT trading at 4.7% yield, we believe that acquisitions are workable in current conditions and that there is meaningful growth potential ahead. Maintain BUY with a higher fair value estimate of S$1.80, versus S$1.75 previously, as we update our model for firmer cap rates. (Eli Lee) Frasers Centrepoint Trust: Still benefitting from AEI Frasers Centrepoint Trust (FCT) reported DPU of 2.40 S cents for 1QFY13, representing a YoY growth of 9.1%. This is largely in line with expectations, given that the quarterly DPU met 22% of both our and consensus FY13F DPU estimates. Causeway Point (CWP) and Northpoint remained the key drivers for the quarter, generating 12.3% and 6.7% YoY increase in NPI. Operationally, we note the overall portfolio occupancy improved from 93.6% in prior quarter to 97.2%. This was boosted by an 8.7ppt QoQ improvement in occupancy at CWP to 96.4% following the completion of its AEI. Management revealed that several new tenants are still in the process of fitting out at CWP and expects the occupancy to trend up further when more tenants commence their operations from Jan onwards. FCT currently boasts a strong aggregate leverage of circa 30.9% and extended debt maturity of 3.6 years following the recent issue of S$70m MTN. This is likely to put it in good stead to take any attractive acquisition opportunities as they arise. Maintain BUY with an unchanged fair value of S$2.13 on FCT. (Kevin Tan) Pacific Andes: Ceasing coverage Pacific Andes Resources Development (PARD) has underperformed the market despite the recent rally in the equity market. Its share price has stayed below its pre-FY12 results level in Nov 2012 when it posted a disappointing set of 4Q and FY12 results. As a recap, it also slashed its dividend payout from 1.08 S cents (about one-third of its earnings) to 0.3 S cent (14.5% of earnings). PARD's earnings growth trend is now limited by several key challenges ahead, including growing its fishing operations and ensuring increases in catch volumes/entitlements in all its fishing grounds for the near to medium term. We projected flat FY13 earnings of HK$638m, which is a decline from the recent high of HK$773m in FY10. As such, we are CEASING COVERAGE on the stock due to the lack of medium-term price drivers and muted earnings outlook. (Carmen Lee) First REIT: FY12 results in line with expectations First REIT (FREIT) reported 4Q12 results which were within our expectations. Gross revenue increased 10.7% YoY to S$15.4m, driven by maiden contributions from two new properties which were acquired in Nov 2012 and higher rental income from its remaining portfolio. Distributable amount to unitholders declined 8.7% YoY to S$11.1m, but this was due to a special distribution of S$2.2m in 4Q11. Excluding this, distributable amount to unitholders would have increased by 11.3% instead. For FY12, gross revenue rose 6.7% to S$57.6m and was just 0.2% below our full-year projection. Distributable income to unitholders rose 4.8% to S$46.0m, and formed 98.8% of our FY12 forecast. DPU for FY12 was 7.26 S cents, versus 7.01 S cents in FY11, which translates into a yield of 6.8%. Looking ahead, we expect FREIT to seek further acquisition opportunities in Indonesia given the nation's robust healthcare dynamics. We will provide more details after the analyst briefing. We maintain our HOLD rating but our S$0.98 fair value estimate is under review. (Wong Teck Ching Andy) Tiger Airways: Finally a profit Tiger Airways (TGR) finally turned in a profitable quarter, after reporting six consecutive quarters of losses. For 3Q13, the group saw revenue jump 47.1% YoY (+25.9% QoQ) to S$247.7m following increases in passenger demand, outpacing the growth in operating expenses, which grew 26.7% YoY to S$229.8m (+12.4% QoQ). This led to an adjusted operating profit of S$20.8m for the quarter versus a loss of S$9.8m and S$7.9m for 3Q12 and 2Q13 respectively. The turnaround for the Group was largely attributed to the stellar performance by Tiger Singapore during the quarter as Tiger Australia continued to suffer yield deterioration from intense competition. We view this set of results favourably as revenue growth met our expectations, and TGR's first net profit validates our turnaround view for 2H13. We will be speaking to management later this morning but raise our fair value from S$0.81 to S$0.86 in the meantime. Maintain BUY. (Lim Siyi)

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

NEWS HEADLINES - US stocks rose on Wed, on news that lawmakers had agreed to extend the country's debt limit to 19 May. The Dow increased 0.5% to 13,779.33, the S&P 500 index gained 0.2% to 1,494.81 and the Nasdaq ended 0.3% higher at 3,153.67. Apple shares, which rose before the market close, slumped 10% in after-hours trading on disappointing earnings. - Consumer prices in Singapore rose a faster-than-expected 4.3% YoY in Dec, driven by higher accommodation and private road transport costs. - Businesses are pessimistic about the business outlook for 1Q13 and expect sales, profits and inventories to decline from 4Q12, a survey by Dun & Bradstreet showed. - The government is standing firm on the rule that all units in property projects with any foreign ownership must be sold within two years of the project receiving its temporary occupation permit, despite developers' efforts to lobby the government to extend the timeframe.

MARKET PULSE: KSH, Suntec, SGX, CCT, FCT, TEE (23 Jan 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.50

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

Research House: OCBC

Price Call: BUY

Target Price: 1.94

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 6.80

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.13

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.28

MARKET PULSE: KSH, Suntec, SGX, CCT, FCT, TEE

23 Jan 2013

KEY IDEA KSH Holdings: Secures Q Bay contract; order book up 45% KSH reported that it has received the LOA for the main contract works for Q Bay Residences. This contract win - worth a hefty S$142.3m - is one of the largest awarded to KSH in recent years, and would boost its construction order book by ~45% to more than S$460m. Construction for the project would commence in Apr 2013 for a total length of 33 months and, with an anticipated net profit margin above 10%, would contribute more than S$14m of net profits, adding significant incremental visibility to construction earnings ahead. With a good track record of execution from management and a solid earnings growth profile (YoY earnings growth forecasted at 68% in FY13 and 73% in FY14), KSH remains one of our top value picks in the small-cap universe. Potential catalysts ahead include new contract wins and the anticipated launch of Hong Leong Gardens in 1H13. Maintain BUY with an unchanged fair value estimate of S$0.50. (Eli Lee) MORE REPORTS Suntec REIT: Positioning well for growth Suntec REIT posted an encouraging set of 4Q12 results last evening. Despite registering a 41.3% YoY decline in NPI to S$30.6m, DPU for the quarter came in at 2.326 S cents, down only 6.2%. Office segment continued to perform during the quarter, raking up 11.1% growth in revenue amid positive rental reversions and consistently high occupancy of 99.7%. This helped to cushion the softness at its retail segment, which experienced a 27.6% decline in revenue. Suntec City Phase 1 AEI is on track for completion by 2Q13 and 83% of its NLA had been pre-committed (71.2% in 3Q), Phase 2 AEI will commence on Mar and 37% pre-commitment had already been secured. Based on the timeline, we believe that 2Q may face the largest impact on its rental income, thereby prompting the REIT to utilise the Chijmes sales proceeds to mitigate the fall in DPU. We now tweak our model assumptions to factor in the better-than-expected results and a possible S$10m distribution from the divestment proceeds in FY13. Our fair value in turn is raised from S$1.70 to S$1.94. Maintain BUY.(Kevin Tan) Singapore Exchange: Limited price drivers ahead Singapore Exchange (SGX) posted 2QFY13 net earnings of S$76.3m, up 16.7% YoY, supported by better securities and derivatives income. For the Securities business, daily average traded value rose 8% YoY to S$1.2b. For the Derivatives business, daily average volume hit a record of 358,532 contracts, up 30% YoY. Its clearing house, the Singapore Exchange Derivatives Clearing (SGX-DC), has become a qualifying Central Counterparties (CCP) since 14 Jan 2013. The positive momentum in early 3QFY13 means that 2HFY13 is likely to be better than 1HFY13, and we raised our full year net earnings to S$317m. SGX's share price has done well since our last report, up 10%, but we see limited upside from current level. As such, we advocate locking in some profits and re-entering at lower price levels. Maintain HOLD with fair value estimate of S$6.80. (Carmen Lee) CapitaCommercial Trust: FY12 results within expectations CapitaCommercial Trust (CCT) reported 4Q12 distributable income of S$58.3m - 7.0% higher YoY. This cumulates to a FY12 distributable income of S$228.5m, up 7.4% YoY, which is within expectations and make up 101% of our forecast. (FY12 DPU is 8.04 S-cents; 4.7% distribution yield based on last closing price.) The growth in distributable income was mainly due to higher contributions from HSBC Building and the 20 Anson acquisition, partially off-set by negative reversions at 6 Battery Rd and the redevelopment of the Market St Car Park. Portfolio occupancy remained stable at 97.2% as of end 4Q12, versus 97.1% in the previous quarter. Average rentals of remaining leases expiring in 2013 are at S$7.48 - significantly lower than current Grade A levels of S$9.58 - and we expect continued positive rental reversions over FY13. We would speak further with management regarding these results and, in the meantime, put our Buy rating and fair value estimate of S$1.75 UNDER REVIEW. (Eli Lee) Frasers Centrepoint Trust: Continued growth in 1QFY13 Frasers Centrepoint Trust (FCT) delivered 1QFY13 NPI of S$27.1m and distributable income of S$21.8m, up 9.1% and 10.8% YoY respectively. The strong performance was driven mainly by Causeway Point (+9.1% YoY) and Northpoint (+5.2%). DPU for the quarter came in at 2.40 S cents, representing a YoY growth of 9.1%. This meets 22% of both our and consensus FY13F DPU estimates. Operationally, we note that a total of 62,341 sqft of NLA (7.1% of total portfolio NLA) was renewed at an average rental reversion of 5.2% in 1Q. In addition, portfolio occupancy improved from 93.6% in prior quarter to 97.2%, boosted by a 8.7ppt QoQ improvement in occupancy at Causeway Point to 96.4%. Management expects occupancy at the mall to trend up further when more tenants commence their operations from Jan onwards. We will be tuning into the results teleconference this morning. For now, we maintain our BUY rating but place our S$2.13 fair value under review. (Kevin Tan) TEE International: Thai associate buys industrial land for THB46.5m TEE International's 49%-owned Thai associate, Chewathai Ltd, has acquired a 450,922 sq ft piece of freehold industrial land in Thailand's Rayong Province for THB46.5m (S$1.9m). TEE intends to build factories on the property for leasing purposes, at an estimated cost of THB200m, and construction is expected to be completed in Sep 2013. The acquisition of the land will be financed by internal funds and bank borrowings and is not expected to have any material impact on the company's earnings or assets for FY13 (ending 31 May). We maintain our HOLD rating on TEE and fair value estimate of S$0.28. (Conrad Tan)

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

NEWS HEADLINES - US stocks rose on Tue as investors cheered positive earnings reports from Travelers and other companies. The Dow rose 0.5% to 13,712.21, the S&P 500 index gained 0.4% to 1,492.56 and the Nasdaq ended 0.3% higher at 3,143.18. - Foreigners' share of private home purchases in Singapore is expected to decline further in 1H13, from 6.3% last year, given the higher additional buyer stamp duty rates imposed on them under the recent property cooling measures, property consultants say. - Mapletree Industrial Trust's 3Q13 distributable income rose 6.9% YoY to S$37.7m, supported by a 7.7% increase in net property income to S$49.1m. Its distribution per unit rose 7.4% to 2.32 S cents.

MARKET PULSE: Residential Sector, S-REITs, CDL, Nam Cheong, Ezra (14 Jan 2013)

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 4.04

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.17

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.84

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 7.28

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.30

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 13.01

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.30

MARKET PULSE: Residential Sector, S-REITs, CDL, Nam Cheong, Ezra

14 Jan 2013

KEY IDEA Singapore Residential Property: Barrage of measures could crack the market Summary: Authorities have implemented their most comprehensive set of property cooling measures since Sep 2009. The new measures would impact the private residential segment, public housing, ECs, and industrial property as well. We believe the latest private residential curbs, consisting of more ABSDs, tighter LTVs and higher cash down-payments, are amongst the most onerous seen thus far, and would likely crimp buyer demand significantly. We see developer stocks showing knee jerk reactions of 3%-7% price dips on these curbs but caution against buying on weakness for two reasons: 1) the latest set of cooling measures would likely have a deep and sustained impact on demand fundamentals, and 2) these curbs point to a strong political will to soften property prices and possibly more aggressive measures ahead. We downgrade the Singapore residential property sector to NEUTRAL. Our top sector picks are currently CapitaLand [BUY, FV: S$4.04] and CapitaMalls Asia [BUY, FV: S$2.17]. MORE REPORTS Singapore REITs: Still offering superior gains Summary: Since our S-REIT strategy report ("Foundation laid for growth", dated 18 Dec 2012) highlighted an expected continued interest in S-REITs, the FTSE ST REIT Index has risen by 3.8% versus STI's gain of 1.8% over the same period. Most of our preferred picks, we note, have also fared very well. In the week ahead, S-REITs will commence the results reporting period for 4QCY12. We expect majority of the S-REITs to showcase sturdy financial performance and balance sheets, aided by contributions from their investments, healthy operating metrics and active capital management. For 2013, we believe that S-REITs will continue to retain their shine in 2013, underpinned by comparatively higher yield spreads against its peers in other geographical markets, continued interest in lower-beta yield plays by investors and a generally positive sector outlook. As such, we reiterate our OVERWEIGHT view on the S-REIT sector. Our sector top picks are still Starhill Global REIT[BUY, FV: S$0.84], Fortune REIT [BUY, FV: HK$7.28], CapitaCommercial Trust [BUY, FV: S$1.75] and Cache Logistics Trust [BUY, FV: S$1.30]. (S-REITs Team) City Developments Limited: Hit by latest cooling measures Summary: We believe that City Developments (CDL) would be unfavorably affected by the most comprehensive set of property cooling measures implemented by Singapore authorities since Sep 2009. The latest private residential curbs, consisting of more ABSDs, tighter LTVs and higher cash down-payments, are amongst the most onerous seen thus far, and would likely crimp residential buyer demand significantly. Though CDL management continues to execute well on its residential strategy, we expect headwinds for the group ahead as these measures affect demand fundamentals meaningfully. We downgrade CDL to HOLD with a lower fair value estimate of S$13.01 (15% RNAV disc.), versus S$14.05 previously, as we raise the RNAV discount and incorporate lower ASPs into our model to reflect softer sector fundamentals after the latest measures. (Eli Lee) Nam Cheong Limited: Gearing up for faster growth Summary: Nam Cheong has proposed an ordinary share placement to raise S$47m. If successful, its ordinary share capital will be enlarged by about 10%. This placement comes right after its S$110m MTN issuance in Nov 2012. Taken together (and assuming the placement shares are fully taken up), the group would have raised close to S$160m. We believe this is mainly to fund a rapid expansion in its FY14F shipbuilding programme. In our view, there is still plenty of upside for shareholders despite a dilution of their interests post-placement. We also prefer to keep our BUY rating and S$0.30 FV unchanged ahead of its FY12F results next month. (Chia Jiunyang) Ezra Holdings: Soft 1QFY13 results Summary: Ezra Holdings (Ezra) reported a 54% YoY rise in revenue to US$278.7m and a 44% rise in gross profit to US$49.9m in 1QFY13. Higher administrative expenses, a lower share of profit of associated companies, and a higher tax rate led to a 49% fall in net profit to US$6.8m. Stripping out exceptional items such as fair value changes of financial instruments and forex changes, we estimate core net profit to be around US$4.3m, 16% lower than 1QFY12. This represents only about 13% of our full year core net profit estimate of US$33m, which is already one of the lowest in the street. Still, we expect better performance in 2HFY13 as the subsea division continues to grow. Ezra's share price has run up by about 23.7% since our last report on 3 Dec 2012. Pending more details from management, we put our Buy rating and fair value estimate of S$1.30 under review. (Low Pei Han)

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

NEWS HEADLINES - US stocks ended largely unchanged on Fri as investors stayed on the sidelines ahead of more company earnings releases this week. The Dow rose 0.1% to 13,488.43, the S&P 500 index ended flat at 1,472.05 and the Nasdaq ended 0.1% higher at 3,125.63. - Showflats in Singapore were quiet yesterday, after the government announced on Fri a sweeping package of property cooling measures which kicked in on Sat. - The mandatory unconditional cash offer for developer SingXpress Land closed on Fri with offerer Haiyi Holdings receiving acceptances amounting to 6.96m shares, or about 0.05% of the company, giving it a 62.23% stake in the firm.