Phillip downgrades Wilmar to Neutral, ups target price

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: Phillip Securities

Price Call: HOLD

Target Price: 3.70

Phillip Securities downgrades Wilmar (F34.SG) to Neutral from Accumulate as the stock’s recent gains suggest limited upside. “Based on our estimates, Wilmar is trading at an estimated FY13E P/E of 14.5x, which is in line with its five-year average of 14.4x.”

The house raises its target to $3.70 from $3.47, based on 14.0x PER blended with DCF from the previous 13.0x FY13 PER.

Phillip expects CPO prices to continue gaining strength in 1Q13 before fading gradually heading into 2Q13 amid seasonally weak CPO demand, stronger CPO supply production in both Malaysia and Indonesia and the record high palm-oil stockpile at 2013’s start.

But while Wilmar’s revenue may fall, it doesn’t expect lower edible-oil prices to have much of a negative impact on the company as it is a significant downstream player, which may benefit from the lower feedstock prices. Wilmar is up 0.3% at $3.60.

DBS upgrades CDL Hospitality to 'buy'

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.11

DBS Vickers upgraded CDL Hospitality Trusts  to ‘buy’ from ‘hold’ and raised its target price to $2.11 from $2.01, citing benefits from its acquisition of a resort in
Maldives.

By 11:41 a.m., units of CDL Hospitality Trust were up 1.8% at $1.98. The units have gained 5.3% since the start of the year, compared to the FTSE ST Real Estate Industrial Trust’s 1% gain.

CDL Hospitality said it entered into an agreement with Banyan Tree Holdings to buy Angsana Velavaru in Maldives, which it will lease back to the operator for 10 years.

DBS said this will give the trust exposure to the robust growth in Maldives’ hospitality market, supported by growing popularity among Chinese tourists.

“While this is different from its current portfolio of largely city-hotels, we believe that the merits of this deal overweigh potential risks,” said DBS in a note.

The 10-year lease has rental payments pegged to gross operating profits and incentives motivates the operator to achieve the highest possible returns for the property, DBS said.

SIA down 0.2%; Offers captains unpaid leave

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: CIMB

Price Call: HOLD

Target Price: 10.95

Singapore Airlines (C6L.SG) is down 0.2% at $10.98, not reacting much to news it extended its voluntary unpaid leave offer to its pilot captains; it initially offered its first officers unpaid leave in March.

“It’s no surprise that they’re looking to reduce some capacity,” says Andrew Orchard, an analyst at CIMB. “That could be the reason why the market’s not reacting that dramatically to today’s news,” he says. “It’s most symptomatic of the fairly weak demand in the industry, rather than a specific problem to the company.”

He has a Neutral call on the stock. Orderbook quotes suggest the stock is unlikely to retest its $10.95 intraday low.

MARKET PULSE: Nam Cheong, CDLHT, CSE Global (7 Jan 2013)

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 1.93

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.99

MARKET PULSE: Nam Cheong, CDLHT, CSE Global

7 Jan 2013

KEY IDEA Nam Cheong: Strong vessel sales momentum Summary: Nam Cheong Limited's share price was up about 15% since our initiation report ("Dominant M'sian OSV Builder", 20/11/2012) less than two months ago. Last month, it sold one Platform Support Vessel (PSV) and two Anchor Handling Towing Supply (AHTS) vessels worth a combined US$56.4m, bringing its total number of vessel sold in 2012 to a record high of 21 (2011: 13 vessels). We believe this strong momentum will continue as Petronas catches up on its projected expenditures in the Malaysian oil and gas space. Meanwhile, as we adjust our model to take into account for the recent sales, our fair value estimate for the counter edges up to S$0.30 (previously S$0.28), still on 8x FY13F EPS. Maintain BUY. (Chia Jiunyang) MORE REPORTS CDL Hospitality Trusts: Proposed acquisition of Maldives resort Summary: CDLHT has announced the proposed acquisition of Angsana Velavaru in the Maldives from Banyan Tree (BT) for a total cost of US$72.4m. BT will lease back the property for 10 years and the rent payment will be GOP less management fees per annum, subject to a minimum rent and reserve of US$6m. Based on the pro forma annualised NPI for 9MCY12 of US$6.8m (after deducting outgoings of US$1.0m), as a percentage of the purchase price of US$71.0m, the NPI yield is 9.6%, versus the implied NPI yield of 6.0% for the existing portfolio. The transaction is subject to approval from a Maldivian ministry, which is likely to take over two weeks. Gearing post-acquisition will still be healthy at ~29%. Assuming the transaction is completed on 1 Feb, we raise our FV from S$1.91 to S$1.93 and maintain our HOLD rating on CDLHT. (Sarah Ong) CSE Global: Secures two contracts worth a combined S$26m Summary: CSE Global announced this morning that it has secured two contracts worth a combined S$26m. The first contract is a telecommunications project as part of the Inpex LNG project in Australia. The second is a full turnkey engineering project in the UK defense sector. As these contracts already form part of our S$600m new order estimate for FY13F, we are keeping our BUY rating and S$0.99 fair value estimate unchanged. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks rose on Fri to end with strong weekly gains, after data showed that the economy is continuing to add jobs at a moderate pace. The Dow rose 0.3% to 13,435.21 and the S&P 500 index gained 0.5% to 1,466.47, while the Nasdaq was flat at 3,101.66. - China Paper Holdings expects to report a loss for 4Q12 due to a drop in sales and selling prices for its paper products as a result of the slowdown in China's economy. It still expects a full-year profit for 2012. - Ocean Sky International plans to sell its main apparel business to a subsidiary of Hong Kong-listed apparel provider Luen Thai Holdings for US$55m cash. It intends to pay a special dividend of S$5.8m, or 1.6 S cents per share, on completion of the sale. - K-Green Trust has obtained a three-year term loan facility and revolving credit facility worth a total of S$100m.

MARKET PULSE: OSIM, LMIRT, Roxy-Pacific (4 Jan 2013)

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.14

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

Research House: OCBC

Price Call: BUY

Target Price: 0.52

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.54

MARKET PULSE: OSIM, Lippo Malls Indonesia Retail Trust, Roxy-Pacific

4 Jan 2013

KEY IDEA OSIM International: Weaving its magic for the new year We believe that OSIM International (OSIM) would be a key beneficiary of a recovery in economic conditions in China, which is its largest market. Looking ahead, we expect OSIM to continue its product innovation drive, with plans to launch two new massage chair models in 1H13 to augment its product portfolio. Management has also embarked on a nationwide media advertising campaign in China to increase its reach to new audiences. These initiatives, coupled with a focus on improving productivity, would help to drive its sales and profitability for FY13, in our view. Despite OSIM's recent strong share price run up, we see room for further re-rating given the improved market risk appetite and its attractive valuations versus its peers. We raise our fair value estimate on OSIM from S$1.87 to S$2.14 as we apply its peers' average forward PER of 16.4x to its FY13F EPS. Maintain BUY. (Wong Teck Ching Andy) MORE REPORTS Lippo Malls Indonesia Retail Trust: LT pipeline from Lippo Karawaci According to a Bloomberg article dated 21 Dec 2012, PT Lippo Karawaci, Indonesia's largest listed property company and LMIRT's sponsor, will have finished building about half of the 15 new malls it has plans for by 2015, in cities such as Semarang in north Java, Denpasar in Bali and Manado in north Sulawesi province. Starting from a lower base of development, we believe that some of these cities should see higher rates of retail growth than Jakarta. These malls could serve as a longer term pipeline for LMIRT. We maintain our fair value of S$0.52 and BUY rating on LMIRT. (Sarah Ong) Roxy-Pacific Holdings: Acquiring another site at Wilkie Terrace The group announced yesterday that it has agreed to acquire a freehold residential site at 13 and 15 Wilkie Terrace for S$24.5m. The land area is 9,324 sq ft; with a plot ratio of 2.1, this translates to a total GFA of 19581 sq ft and land cost of S$1,251 psf. Management indicates that it intends to amalgamate this site with a another site in its land-bank (7,9,11 Wilkie Terrace) for a residential development. We believe the price paid for the site is reasonable, especially given that the acquisition would give the group more flexibility in planning a larger scale project at the area. For this counter, however, we believe most positives are priced in at current price levels. Maintain HOLDwith an unchanged fair value estimate of S$0.54. (Eli Lee)

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

NEWS HEADLINES - US stocks fell on Thu after the Fed signalled a likely end in 2013 to its bond purchases, offsetting upbeat jobs data from the private sector. The Dow and S&P 500 index each fell 0.2% to 13,391.36 and 1,459.37, respectively, while the Nasdaq finished 0.4% lower at 3,100.57. - Singapore's manufacturing activity shrank for a sixth straight month in Dec due to further declines in new orders, new export orders and production output, as purchasing managers' index dipped to 48.6 from 48.8 in Nov. - Three plots of industrial land in Tuas released under the Industrial Government Land Sales programme in Nov drew keen interest and bids from multiple developers, suggesting that demand for industrial property remains robust. - Second Chance Properties' 1Q13 net profit fell 10% YoY to S$3.4m as revenue slid 0.2% to S$9.4m, due mainly to a decline in revenue at its gold business as a result of rising gold prices which deterred buyers.

MARKET PULSE: Ezion, Olam (3 Jan 2013)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.05

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.44

MARKET PULSE: Ezion, Olam

3 Jan 2013

KEY IDEA Ezion Holdings: Higher valuations are justified Since our last report on Ezion Holdings on 21 Nov 2012, its share price has appreciated by about 26%. There was hardly any major news on the company within this short period, except for the announcement in mid Dec that EDB Investments (EDBI) had invested S$19m in Ezion. This allows Ezion to leverage on EDBI's extensive network of resources, and also enhances Ezion's reputation in the global scene. With growing market recognition of Ezion's capabilities, we believe that the group has successfully graduated to the mid-cap league which generally enjoys higher valuations. We increase our peg to 12x FY13F earnings (prev. 9x), and also take into account a mild 1.6% dilution in the share base with EDBI's entry. As such, our fair value estimate rises from S$1.70 to S$2.05. Maintain BUY. (Low Pei Han) MORE REPORTS Olam Int'l: Temasek now owns 19% stake Olam International (Olam) recently revealed that Temasek Capital (Private) Limited has increased its deemed interest in the company to 19% as of 28 Dec 2012; this up from around 16% before the Muddy Waters allegation on 20 Nov 2012. However, we continue to believe that there are still several medium- to long-term issues that need addressing. We also foresee potential economic headwinds for the commodity sector as a whole. As such, we maintain our HOLD rating and S$1.44 fair value for now. (Carey Wong)

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

NEWS HEADLINES - US stocks surged on Wed after a budget deal to avoid the fiscal cliff was reached. The Dow rose 2.4% to 13,412.55, the S&P 500 index gained 2.5% to 1,462.42 and the Nasdaq finished 3.1% higher at 3,112.26. - Global Logistic Properties has leased ~112k sq ft of space at its GLP Park Jiashan logistic facility in Zhejiang Province in eastern China to supermarket giant Tesco. - Tritech Group has been awarded two contracts worth S$4.22m for site investigation works related to the proposed construction of a cable tunnel from the northwest of Jurong Island to Pioneer Road on mainland Singapore. - Jackspeed Corp has completed the sale of its leasehold property at Tampines Industrial Avenue 5.

MARKET PULSE: CityDev, Cache Logistics, Singapore Economy (2 Jan 2013)

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 14.05

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.30

MARKET PULSE: CityDev, Cache Logistics, Singapore Economy

2 Jan 2013

KEY IDEA City Developments Limited: Echelon launch performance above view We visited City Development's (CDL) latest launch, the 508-unit condominium project Echelon, over the weekend. The project near the Redhill MRT station put up a strong set of numbers in its first weekend of sales, with over 300 units sold at ASP of around S$1.7k psf. We believe this launch performance to be above view. We estimate breakeven ASP at $1.2k psf, which translates to an attractive gross profit margin around 40% for the project. To recap, CDL together with Hong Realty, put in the top bid (S$396m or S$754 psf GFA) for the 99-year GLS site at Alexandra Rd in Nov 2011. Maintain BUY with a higher fair value estimate of S$14.05 (10% RNAV discount), versus S$13.96 previously, as we update for firmer residential ASPs into our model. (Eli Lee) MORE REPORTS Cache Logistics Trust: FY12 to end on positive note Cache Logistics Trust (CACHE) announced that it will release its 4Q12 results after the market close on 21 Jan 2013. We expect CACHE to meet our 4Q NPI forecast of S$18.5m (+11.1% YoY) and distributable income projection of S$14.7m (+9.5%) comfortably, thanks to the contribution from its newly-acquired Pan Asia Logistics Centre and Pandan Logistics Hub. In the coming year, we believe CACHE's financial performance will remain sturdy, as it continues to benefit from upward rental adjustments and full-year contribution from its past acquisitions. A few industrial properties from its sponsor's pipeline assets are also ready for acquisition and may boost its income if CACHE injects any of these properties into its portfolio. We also continue to favour CACHE for its resilient portfolio. While the Singapore Purchasing Managers' Index (PMI) indicated that the manufacturing sector contracted for the fifth month in Nov, we expect CACHE's portfolio occupancy to maintain at 100% as the bulk of its leases are based on triple-net master lease structures. Maintain BUY and S$1.30 fair value on CACHE. (Kevin Tan) Singapore Economy: 1.2% growth in 2012 lower than forecast According to advance estimates from the MTI, the Singapore economy grew by 1.1% YoY in 4Q12, worse than the street's expectations of a 1.4% growth but better than the zero growth seen in 3Q12. On a seasonally-adjusted annualized basis, the economy expanded by 1.8% QoQ, compared to the 6.3% contraction in 3Q12. Manufacturing contracted by 10.8% QoQ, extending the 9.9% decline in 3Q12, largely due to continued weakness in the electronics cluster. Construction also contracted by 8.9% from 3Q12's 17.4% negative growth with lower private sector building activity. Services, however, grew by 7.0% QoQ, reversing the 3.9% fall in 3Q12. This was mainly due to a rebound in the wholesale & retail trade, finance and insurance sectors. All these factors brought 2012 growth to 1.2%, lower than MTI's growth forecast of 1.5%. For 2013, the official growth forecast is 1.0-3.0%, but key risks include the fiscal cutback in the US and the Eurozone debt crisis. (Low Pei Han)

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

NEWS HEADLINES - US stocks rallied on Mon, ending the year with gains as details emerged of a budget deal to avoid the fiscal cliff. The Dow rose 0.5% to 13,004.44, the S&P 500 index gained 0.8% to 1,414.26 and the Nasdaq finished 2% higher at 3,019.51. - China's manufacturing activity expanded for a third straight month in Dec, with the official purchasing managers' index staying at 50.6 - a signal that the economy is continuing to recover. - Advance SCT has raised S$0.8m in new funds from individual investors through the sale of 61.5m new shares at 1.3 S cents each. - Mercator Lines (Singapore) has agreed to pay US$9m in cash and at least US$6m in shares to the owners of two vessels as compensation for the early termination of the charters of the vessels.