OCBC cuts CapitaLand target price

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.21

OCBC Investment Research has cut its target price for property developer CapitaLand to $3.21 from $3.40 and kept its buy rating, citing lower average selling prices for its residential developments.

CapitaLand shares fell 0.3% to $2.93, but have gained 33% since the start of the year.

CapitaLand, Southeast Asia’s largest property developer, on Monday reported a 31% climb in first-quarter net profit to $133.2 million, helped by higher operating income and larger portfolio gains.

Poor sales from its residential units in China continued to weigh on CapitaLand’s overall sales in the first quarter, OCBC said. The company sold only 189 units in China in January-March.

However, broking house Maybank Kim Eng said in a report that CapitaLand may benefit from some policy loosening in tier 2 and 3 cities in China, and raised its target price to $4.00 from $3.96.

A loosening could help developers maintain strong contracted sales momentum into the middle of the year, and sales could recover strongly in May, said Kim Eng, which kept its buy rating.   

Mapletree Commercial Trust rated ' buy' by DBS

Stock Name: MapletreeCom
Company Name: MAPLETREE COMMERCIAL TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.11

DBS Vickers Securities in an Apr 27 research report says: "4Q12 gross revenues and NPI was c.10.9% and 16.1% y-o-y higher respectively, largely due to Vivocity's strong positive rental reversions, as well as the progressive opening of Alexandra Retail Centre (ARC).

"On a q-o-q basis, NPI also rose by a healthy 6% despite a seasonally-weak quarter on the back of lower property and maintenance expenses. Consequently, 4Q DPU came in at 1.554 cents. Full year DPU beat our forecast by c.5%. Gearing dipped marginally to 37.6% with no major refinancing in FY2012. Average cost of borrowings remains low at 1.96%.

"We have nudged target price up by 1.8% to $1.11 to account for its better-than-expected performance at VivoCity. FY2013/2014 yields are at 6.8/7.2 % and our revised target price of S$1.11 offers a total upside of close to 30%. MAINTAIN BUY."

Sheng Siong Group rated 'neutral' by DMG

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: DMG

Price Call: HOLD

Target Price: 0.46

DMG & Partners Research in an Apr 27 research report says: "Sheng Siong reported a 74% growth in net earnings to $16.8 million, backed by revenue growth of 4% to $159.8 million. Earnings were boosted by a $10.5 million gain from the sale of its old warehouse at Marsiling Road.

"Stripping off the one-off gains, core net earnings declined by 35% to $6.3 million, accounting for 20% of our FY2012F and below our expectations.

"As we expect current competitive pressures to remain, we cut our gross profit margin assumptions from 22.3%/22.5% to 22% in FY2012/2013F respectively which lowers our core earnings by 4-8% for FY2012/2013F and in turn lowers our target price from 46 cents to 45 cents. At current price, the stock still offers a decent 5.5% yield based on a 90% committed payout. MAINTAIN NEUTRAL.

Starhill Global REIT rated 'buy' by OCBC

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.70

OCBC Investment Research in an Apr 27 research report says: "Starhill Global REIT (SGREIT) reported 1Q12 NPI of $37.3 million and DPU of 1.07 cents. The results were in line with both our and consensus expectations, with headline numbers forming 24.7-25.5% of our/consensus full-year forecasts.

"Singapore portfolio contributed $22.2 million (59.4%) to 1Q12 NPI, up 1.0% y-o-y. Growth in NPI was also registered at its assets in other geographical locations such as Japan and Australia. Management intends to embark on a series of tenancy works over next two quarters to enhance the property’s retail offerings and boost its advertising activities.

"SGREIT also maintains that Wisma Atria redevelopment is on track for completion in 3Q. SGREIT’s aggregate leverage is at a healthy 30.4%, while average lease term is strong at 6.6 years (99.0% overall occupancy). Unchanged fair value of 70 cents. MAINTAIN BUY."

MARKET PULSE: NOL, SingPost, LMIRT, Raffles Med, MMH (30 Apr 2012)

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.45

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.29

MARKET PULSE: NOL, SingPost, LMIRT, Raffles Med, MMH

30 Apr 2012

KEY IDEA Neptune Orient Lines: Shanghai-Europe rates up again; upgrade to BUY Summary: The Shanghai (Export) Containerised Freight Index (SCFI) climbed 4% WoW in the week ended 27 Apr 2012. Shanghai to Europe freight rates gained 11% WoW, while Shanghai to Mediterranean rose 13% WoW, ahead of major shipping liners' announced general rate increase in Asia-Europe freight rates on 1 May 2012. Neptune Orient Lines' (NOL) share price has fallen 17% from its recent high of S$1.45/share on 3 Apr 2012 but the correction does not seem warranted. The SCFI is currently 43% higher than this time last year and shipping liners, including NOL, are profitable at current freight rates. Although there are concerns over increasing container shipping capacity, shipping liners seem to have learnt their lesson and are now using slow steaming to manage shipping capacity and refraining from price wars. We upgrade our rating on NOL to BUYand maintain our fair value estimate of S$1.38/share. (Eric Teo) MORE REPORTS Singapore Post: Dividends likely to remain intact despite transformation Summary: Singapore Post (SingPost) reported a 2.2% rise in revenue to S$578.5m but a 11.8% fall in net profit to S$142.0m in FY12, which were within our expectations. The logistics and retail divisions posted improved revenues in 4QFY12, while mail turnover remained steady. The group is pursuing a transformation programme for its future but we do not see this impacting the group's dividend payouts. Similar to last year, SingPost has declared a final dividend of 2.5 S cents per share, bringing the total dividend for the year to 6.25 S cents. The stock price has risen by about 9.0% since we upgraded it from Hold on 5 Jan, but we still see an upside potential of 17.3% (includes forecasted dividend yield of 6.1%) based on our DDM-derived fair value estimate of S$1.14. Maintain BUY. (Low Pei Han) Lippo Malls Indo Retail Trust: NPI boosted by acquisitions Summary: Lippo Malls Indonesia Retail Trust (LMIRT) reported 1Q12 NPI of S$30.9m and distributable income of S$15.0m, up 38.0% and 18.5% YoY. The strong performance was due primarily to a full-quarter contribution from the acquisition of two retail malls in 4Q11. DPU for the quarter was at 0.69 S cents (18.6% of our full-year forecast), lower than the DPU of 1.17 S cents registered a year ago due to a 1-for-1 rights issue in 4Q11. However, on a QoQ basis, it represents a significant improvement of 30.2%. As at 31 Mar, LMIRT's portfolio occupancy stood at 94.5% (94.1% in prior quarter), well above Indonesia's retail industry average occupancy rate of ~87.6%. In addition, its aggregate leverage was also healthy at 9.2%, with no refinancing requirements until Jun 2014. We are putting our BUY rating and fair value of S$0.45 under reviewas we adjust our estimates to incorporate the results. (Kevin Tan) Raffles Medical Group: 1Q12 earnings slightly below expectations Summary: Raffles Medical Group (RMG) reported its 1Q12 results this morning. Revenue was within our expectations but PATMI was slightly below. Revenue increased 13.2% YoY and 0.9% QoQ to S$72.9m, forming 23.2% of our full-year estimates. EBIT improved 11.0% YoY but fell 20.6% QoQ to S$14.2m, while PATMI was up 10.9% YoY but declined 29.6% QoQ to S$11.6m, meeting 19.6% of our FY12 forecasts. 1Q is typically RMG's weakest quarter, which explains the significant sequential drop in its earnings. We note also that approximately 15,000 sf of 'newly created' medical space at its Raffles Hospital would begin contributing from 2Q12, and hence we are expecting a stronger 2H (versus 1H). Both its Hospital Services and Healthcare Services divisions contributed positively, with revenue growth of 15.3% and 7.4%, respectively. This was driven largely by a higher patient load and acuity. We will provide more details on the outlook of RMG after the analyst briefing today. Until then, we place our BUY rating and S$2.66 fair value estimate (24x FY12F EPS) under review. (Wong Teck Ching Andy) Micro-Mechanics: 3QFY12 results within expectations Summary: Micro-Mechanics Holdings (MMH) reported its 3QFY12 results which were in line with our expectations. Revenue declined 15.8% YoY to S$9.4m, or 2.9% higher than our forecast. Net profit slumped 47.8% YoY to S$0.9m and was just 0.4% above our projections due largely to higher-than-estimated effective tax rate. Sequentially, revenue and net profit rose 7.2% and 16.7%, respectively, despite 3Q being a seasonally weaker quarter. We believe this provides a positive signal that MMH could experience gradual improvement moving forward, in line with the recovery in the semiconductor industry. For 9MFY12, topline fell 16.8% to S$28.4m, while bottomline dipped 47.6% to S$2.9m. On a segmental basis, sales for MMH's Semiconductor Tooling (SET) and Custom Machining & Assembly (CMA) divisions decreased 13.8% YoY (+5.1% QoQ) and 24.1% YoY (+18.4% QoQ), respectively. Nevertheless, MMH managed to maintain its gross margin for its SET segment at 53.1%. Although gross margin for its CMA segment slid from 12.8% in 3QFY11 to 12.0% in 3QFY12, there was an encouraging improvement of 11.9ppt on a sequential basis. We will provide more details after the analyst briefing. Meanwhile, our HOLD rating and S$0.29 fair value estimate is under review. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks climbed on Friday and posted their best weekly gains in a month after better-than-expected earnings from Amazon.com and Expedia Inc boosted confidence in corporate performance. - Ho Bee's 1Q12 revenue fell 51% YoY to S$38.7m, while PATMI declined 71% to S$15.8m. - Sino Grandness posted 1Q12 revenue of RMB285.5m, up 61% YoY. PATMI increased by 81% to RMB56.7m. - Treasury China Trust reported 1Q12 revenue of S$26.0m, up 33.5% YoY. Earnings per unit increased 11% YoY to 3.0 S-cents. - Serial System's sales for 1Q12 declined 4% YoY to S$182m. PATMI declined by 43% YoY to S$1.8m.

OCBC upgrades NOL to buy

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

OCBC Investment Research upgraded container shipping firm Neptune Orient Lines to buy from hold but maintained its target price of S$1.38, citing a recent share price fall despite increasing freight rates.

NOL shares were up 0.4% at $1.21. The stock has fallen about 17% from its recent high of $1.45 on April 3, much further than a 1.5% fall in the broader market. “The correction in NOL’s share price does not seem warranted,” OCBC said.

The Shanghai (Export) Containerised Freight Index was currently 43% higher than last year, with Shanghai to Europe freight rates more than doubling, OCBC said. It added that transpacific freight rates were significantly higher than a year ago.

OCBC said shipping liners, including NOL, are profitable at current freight rates. After collectively losing at least US$6 billion ($7.4 billion) in 2011, liners are more disciplined in managing shipping capacity and refraining from price wars, it added.

UOB raises target on DBS to $19.50

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 19.50

UOB Kay Hian raised its target price on DBS Group Holdings, Southeast Asia’s largest bank, to S$19.50 from S$16.20 and maintained its buy rating.

As of 10:25 a.m. on Monday, DBS shares were down 0.4% at $13.94, but have risen more than 21% this year.

UOB Kay Hian raised its 2012 net profit forecast for DBS by 18.8%, citing net interest margin (NIM) improvements and lower credit costs, and projected its non-performing loan ratio to reach 1.4%, down from 1.8%, by year-end.

UOB Kay Hian said DBS planned to deploy surplus deposits in Singapore to expand consumer and small and medium-sized enterprise businesses to bolster loan growth and NIM.

Higher interest rates would also give DBS a huge boost because of its significant exposure to interbank lending and huge base of low-cost current and savings accounts, UOB added.