SG: MARKET PULSE: FCT, CRCT, Yoma (23 Oct 2013)

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.58

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.87

MARKET PULSE: FCT, CRCT, Yoma

23 Oct 2013

KEY IDEA Frasers Centrepoint Trust: Repeating its success Frasers Centrepoint Trust's (FCT) FY13 DPU came in at 10.93 S cents (+9.2%), spot on with our DPU projection. We note that overall performance has remained robust, with portfolio occupancy maintained at a high 98.4%, while positive rental reversion of 10.8% was achieved. We also understand ~2% of retail space at YewTee Point is expected to start operating in Oct, which is likely to improve the mall's occupancy. For Bedok Point, management also updated that it has successfully secured an electronics retailer as its anchor tenant for basement one. This may translate to a more stable performance at the mall. Looking forward, FCT reiterated CWP and Northpoint will continue to perform, as leases at the malls amounting to 75.5% of FCT's gross rent are due for renewal and positive reversions are still expected. FCT also revealed that the strata title division of One@Changi City is progressing well, and that the asset injection may take place in 2014. We are rolling our valuation to FY14, while keeping our forecasts largely intact. Our fair value is in turn raised to S$2.02 from S$1.96 previously. As upside now looks compelling, we upgrade FCT from Hold to BUY. (Kevin Tan) MORE REPORTS CapitaRetail China Trust: 3Q13 results in line CRCT reported 3Q13 results that were in line with ours and the street's expectations. Gross revenue climbed 2.2% YoY to S$39.5m. Property expenses rose 7.8% YoY to S$14.5m, chiefly due to higher property management fees and staff related costs. Net property income fell 0.8% YoY to S$25.0m. Total return for the period after tax stayed roughly flat YoY at S$15.2m. 3Q13 distributable income grew 2.1% YoY to S$17.1m. DPU, however, fell 6.6% YoY to 2.26 S cents due to a private placement last November. Rental reversion for the multi-tenanted malls, excluding CapitaMall Minzhongleyuan (which is undergoing AEI), is healthy at 10.0%. We maintain our BUY rating on CRCT but place our fair value of S$1.58 under review. (Sarah Ong) Yoma Strategic Holdings: To operate Volkswagen's first service center in Yangon Yoma reported that it will operate Volkswagen's first service center in Yangon, Myanmar, which is expected to begin operations in Oct 13. Yoma's 70% owned subsidiary, German Car Industries Company (CGI) will enter into a service partner agreement with Volkswagen Aktiengesellschaft (VW) to provide maintenance and repair services and sell genuine vehicle parts to VW automobile owners. We understand that the automotive market in Myanmar is currently dominated by Japanese cars and that VW currently has no manufacturing facilities or car show room in Myanmar, and hence this agreement is expected to have limited financial impact for Yoma over the near term. That said, we see this further strengthening the growth potential of the group's automotive division which, together with a similar service agreement with Mitsubishi earlier, is one that is steadily growing - particularly so given that VW is a significant global player with a strong brand. We maintain a HOLD rating on the counter with our fair value estimate of S$0.87 under review. (Eli Lee)

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

NEWS HEADLINES - US stocks gained on Tue, further propelling the S&P 500's record rise, as the Sep non-farm-payrolls report supported the notion that the Federal Reserve's monthly bond purchases would continue into next year. - Proposed changes in auditor reporting are expected to dramatically change the way external auditors reflect their opinions on companies' financial statements. - At least 8,700 shoebox units are expected to hit the resale market between now and 2017, as the Seller's Stamp Duty lock-in period approaches expiry. - Temasek Holdings has sold its entire direct stake in Keppel REIT in a share placement that started on Mon evening, sources close to the deal said yesterday.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.65

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.96

Market Compass

23 October 2013~ Good Morning Singapore!

Singapore Idea Snippets:

23 Oct 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 : Better to remain silent and be thought a fool than to speak out and remove all doubt. - ABRAHAM LINCOLN Singapore: The Day Ahead SINGAPORE DAYBOOK : S'pore banks embrace slew of China financial pacts [SINGAPORE] Singapore will be a big winner from the raft of financial cooperation agreements inked with China yesterday, bankers said. The asset management, foreign exchange and commodities sectors here will benefit from two investment initiatives - a 50 billion-yuan (S$10.1 billion) award for institutional investment into China's securities market; and another investment programme for Chinese investors to Singapore. Another initiative, one of four announced yesterday, involves direct currency trading between the yuan and Singapore dollar. This will promote transparency for corporates who are hesitant about converting to yuan. A SGD-CNY benchmark reference rate will be made available by the People's Bank of China on a daily basis, said Lum Yin Fong, DBS Bank's head of global product management, global transaction services. "This will benefit Singapore corporate customers hedging their RMB, as it will provide them with an official benchmark to refer to," she said. The most exciting development, bankers said, is facilitating cross-border yuan flows for Singapore companies operating in the Suzhou Industrial Park (SIP) and Tianjin Eco-City (TEC). The idea is similar to what has happened for Hong Kong and Taiwanese companies in the Qianhai special economic zone and Kunshan cross-strait industrial cooperation experimental zone respectively, said OCBC Bank economist Tommy Xie. Through these zones, Hong Kong and Taiwanese banks are lending offshore yuan or CNH loans to their compatriot companies. "It's the most exciting measure as it'll mean cheaper funding," said Mr Xie. By allowing cross-border flows between Singapore and SIP and TEC, "we believe it will be possible for companies operating in the two business zones to raise working capital in RMB directly from Singapore", said DBS' Ms Lum. Wee Wei Min, OCBC Bank's head of global treasury advisory, said: "CNH interest rates can be one to two percentage points lower than onshore CNY." "Among the four structural measures announced, the SIP and TEC are likely to have the most immediate impact as they could result in significant flow of RMB as long as it's related to specific projects," said Loh Boon Chye, Bank of America Merrill Lynch deputy president, Asia Pacific. "In some ways, this can be viewed as a controlled liberalisation of this currency," he added. The investment initiatives allow yuan deposits here to get access to the much bigger pool of China's securities markets via the 50 billion-yuan renminbi qualified foreign institutional investor (RQFII) programme. The complaint about yuan deposits is the lack of investible instruments. Singapore had 142 billion in yuan deposits as of August. The 50 billion yuan is significant given that London just got 80 billion yuan for its RFQII programme signed last week, said Lian Chia Liang, Western Asset Management head of investments, Asia. London also signed a direct currency link with China. "It enhances our FX centre role," he said. Singapore is the world's third-largest forex centre behind London and New York. Having an RQFII helps multinationals' corporate treasurers based in Singapore with their long-term financial planning as China "morphs from producer to consumer", said Mr Lian. "From our experience and conversations with clients in Singapore, there is great interest from individuals and companies to invest in China and the RMB," said Ray Ferguson, CEO of Standard Chartered Singapore. The RQFII programme removes currency risks for Chinese institutional investors, making offshore investments more attractive, said Beng Hong Lee, Deutsche Bank head of markets, China. Furthermore, financial institutions here will be able to attract Chinese capital, said Guy Harvey-Samuel, HSBC Singapore chief executive. "Capitalising on its position as a leading offshore hub for international and private banking, asset managers in Singapore will be able to advise customers in China on their investment strategy for onshore products here in Singapore," he said. (Source: The Business Times) MARKET SCOOP MIT Q2 DPU up 7.9% year on year Rickmers Maritime's Q3 net profit rises by 59% China, S'pore to allow direct trading between currencies China extends US$8.2b offshore yuan investment scheme to Singapore JTC achieves S$1.3b in net surplus for FY12, capex at S$1.6b Petra Foods in dispute with Barry Callebaut on cocoa unit sale (Source: The Business Times) OCBC Securities says ... MIDAS HOLDINGS | BUY | TP: S$0.65 Midas Holdings (Midas) announced last evening that it has secured contracts to supply aluminium alloy extrusion profiles and certain fabricated parts for the manufacture of high-speed trains in China The contracts are worth CNY167.5m in total and are awarded by CNR Changchun Railway Vehicle and CNR Tangshan Railway Vehicle This comes as a welcome relief for the shareholders of Midas given that the long wait for Midas to win high-speed train contracts in China is finally over The last time Midas secured a high speed train contract was in Feb 2011 (hiatus due to Minister of Railways corruption scandal and high-speed train crash in Wenzhou in Jul 2011) This positive development is largely within our expectations as we had highlighted in our 11 Sep 2013 report that we expected Midas to clinch high-speed contracts of an estimated CNY153m in value in 4Q13 Delivery of these supplies will take place from 2013 to 2014 Recently won international train and China metro contracts too Last week, Midas also clinched a number of international train and China metro contracts amounting to CNY221.8m (announced on 16 Oct) The former is for two main train projects in Europe and worth EUR17.7m (~CNY145.9m), with delivery expected between 2013 and 2017 The metro contracts from China have an aggregate value of CNY75.9m and were awarded by Midas' 32.5% owned joint-venture company, Nanjing SR Puzhen Rail Transport (NPRT), for a number of projects such as the Nanjing Metro Line 4 project Deliveries for the various projects are slated to occur between 2013 and 2016 As a result, Midas' YTD order wins has now hit ~CNY812.6m (FY12: CNY324.9m) We view Midas' latest high-speed train contract success as a strong rerating catalyst for its share price and believe that it may set the momentum for further such contract wins to come, given China's ambition to develop its rail transport sector Maintain BUY and S$0.65 fair value estimate on Midas, based on 1.3x blended FY13/14F P/B OCBC Securities says ... CHINA ENVIRONMENT | UNRATED | China Environment Ltd (CEL) is a provider of industrial waste gas treatment solutions in China Headquartered in Longyan City, Fujian Province, CEL designs, constructs industrial waste gas treatment systems Its key products include Electrostatic Precipitators (ESP), Electrostatic Lentoid Precipitators (ESLP), bag-houses, and hybrid dust collectors At the invitation of CEL, we visited their new facility in Bengbu, Anhui Province, China, which houses 12 production buildings We understand that it has started to use about six of them and when the facility swings into optimal capacity, CEL can process up to 350k tonnes of steel (which management believes is equivalent to RMB2b worth of sales) from the current 80k tones And with the completion of the facility, CEL will be able to use it as collateral to secure more bank borrowings (potentially looking at RMB200m) for working capital We also visited one of its customers - Shanghai-listed Nanjing Iron & Steel Co (NIS) - to have a look at four dust elimination machines currently deployed in one of its facilities CEL has built up to 15 such machines for NIS since 2004; but we understand that all these machines are due for upgrades to meet the increasingly higher discharge standards over the next few years CEL notes that this is just from one customer and other customers will also need to upgrade their machines as most, if not all, of them will not be able to meet the higher discharge standards Currently, CEL has an order book of RMB241m as of Sep 2013, up from RMB66.8m as of end-Jun, which it expects to deliver over the next few months Coupled with some RMB80m raised via a share placement recently, CEL adds that it has sufficient working capacity to take on bigger jobs We currently do not have a rating on the stock OCBC Securities says... FRASERS CENTREPOINT TRUST | HOLD | TP: S$1.96 Frasers Centrepoint Trust (FCT) released its 4QFY13 results last evening NPI fell 5.0% to S$27.3m due mainly to higher property taxes and maintenance costs However, distributable income was up 2.7% to S$21.7m as FCT benefited from lower borrowing costs and higher distribution from Hektar REIT In addition, S$2.9m of cash (0.35 S cents/unit) retained in 1HFY13 was distributed during the quarter As a result, DPU jumped 10.0% to 2.98 S cents For FY13, DPU came in at 10.93 S cents, up 9.2% This is spot on with our DPU projection We note that operational performance remained robust over the quarter, with portfolio occupancy maintained at a high 98.4%, while positive rental reversion of 10.8% was achieved Noteworthy was the S$195.7m revaluation gain of its portfolio properties, which led to a 14.9% QoQ improvement in its NAV to S$1.77 and 2.8ppt drop in its gearing level to 27.6% We will be attending FCT's analyst briefing later in the morning to get more colour on its outlook Given the recent weakness in FCT's unit price performance, we are placing our S$1.96 fair value and Hold rating under review

SG: MARKET PULSE: Midas, HPHT, FCT, China Environment (22 Oct 2013)

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.65

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

Research House: OCBC

Price Call: BUY

Target Price: 0.84

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.96

MARKET PULSE: Midas, HPHT, FCT, China Environment

22 Oct 2013

KEY IDEA Midas Holdings: Awaken the sleeping giant Following last week's CNY221.8m international train and China metro contract wins, Midas Holdings (Midas) announced last evening that it has secured contracts to supply aluminium alloy extrusion profiles and certain fabricated parts for the manufacture of high-speed trains in China. These contracts are worth CNY167.5m in total, with delivery expected from 2013 to 2014. Total YTD order wins for Midas has now hit ~CNY812.6m (FY12: CNY324.9m). We view Midas' latest high-speed train contract success as a strong re-rating catalyst for its share price given that its last high-speed contract win came in Feb 2011. We believe this may also set the momentum for further such contract wins to come, given China's ambition to develop its rail transport sector. Maintain BUY and S$0.65 fair value estimate on Midas, based on 1.3x blended FY13/14F P/B. (Wong Teck Ching Andy) MORE REPORTS Hutchison Port Holdings Trust: 3Q13 missed expectations Hutchison Port Holdings Trust (HPHT) reported 3Q13 results that were lower than ours and the street's expectations. Revenue climbed 1% YoY to HK$3.36b. Total operating expenses increased by 1.3% to HK$2.17b. Profit after tax fell 2.2% to HK$966m. Profit attributable to HPHT unitholders fell 8.4% to HK$539m. We lower our forecasts to -1% and 0% YoY change in 2013 throughput for HPHT's ports in Kwai Tsing, HK and Yantian, Shenzhen respectively. Our previous forecasts were 0% and 2% growth. Our revenue forecast for FY13 thus falls to HK$12.4b from HK$12.6b. Shipping lines' formation of alliances, e.g. P3, G6 and CKYH, should continue to put pressure on transshipment volumes, especially in HK. We trim our FV for HPHT to US$0.74 from US$0.84 and downgrade HPHT from Buy to HOLDon valuation grounds. HPHT is currently trading at a FY13F dividend yield of 6.8%. (Sarah Ong) Frasers Centrepoint Trust: Repeating its success Frasers Centrepoint Trust (FCT) released its 4QFY13 results last evening. NPI fell 5.0% to S$27.3m due mainly to higher property taxes and maintenance costs. However, distributable income was up 2.7% to S$21.7m as FCT benefited from lower borrowing costs and higher distribution from Hektar REIT. In addition, S$2.9m of cash (0.35 S cents/unit) retained in 1HFY13 was distributed during the quarter. As a result, DPU jumped 10.0% to 2.98 S cents. For FY13, DPU came in at 10.93 S cents, up 9.2%. This is spot on with our DPU projection. We note that operational performance remained robust over the quarter, with portfolio occupancy maintained at a high 98.4%, while positive rental reversion of 10.8% was achieved. Noteworthy was the S$195.7m revaluation gain of its portfolio properties, which led to a 14.9% QoQ improvement in its NAV to S$1.77 and 2.8ppt drop in its gearing level to 27.6%. We will be attending FCT's analyst briefing later in the morning to get more colour on its outlook. Given the recent weakness in FCT's unit price performance, we are placing our S$1.96 fair value and Hold rating under review. (Kevin Tan) China Environment: Gearing up for higher demand China Environment Ltd (CEL) is a provider of industrial waste gas treatment solutions in China, which is likely to benefit from the Chinese government's increased focus on cleaning up the environment in China. At the invitation of CEL, we visited their new facility in Bengbu, Anhui Province, China, which houses 12 production buildings. We also visited one of its customers - Shanghai-listed Nanjing Iron & Steel Co (NIS) - to have a look at four dust elimination machines currently deployed in one of its facilities. CEL has built up to 15 such machines for NIS since 2004; but we understand that all these machines are due for upgrades to meet the increasingly higher discharge standards over the next few years. Currently, CEL has an order book of RMB241m as of Sep 2013, up from RMB66.8m as of end-Jun, which it expects to deliver over the next few months. Coupled with some RMB80m raised via a share placement recently, CEL adds that it has sufficient working capacity to take on bigger jobs. We currently do not have a rating on the stock. (Carey Wong)

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

NEWS HEADLINES - US stocks finished little changed on Mon, with the S&P 500 adding a fraction to its record close and the Nasdaq Composite extending gains into a fourth session. - Share prices of Asiasons Capital, Blumont Group and LionGold Corp almost doubled in yesterday's trading after trading curbs were lifted. - PT Indofood Sukses Makmur plans to keep China Minzhong listed on the Mainboard of the Singapore Exchange, despite the public float falling to 4.4%. - ValueMax Group, Singapore's biggest pawnbroking chain by revenue, is seeking about S$70.4m in an IPO to expand its business. - TTJ Holdings has clinched new contracts worth S$41m for Downtown Line 2 jobs. - Civmec Ltd announced it had won S$210m worth of new contracts since its last announcement in end-Jul, boosting its order book to S$330m.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 2.00

Stock Name: Kep REIT
Company Name: KEPPEL REIT

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.46

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OSK-DMG

Price Call: HOLD

Target Price: 8.10

Market Compass

22 October 2013~ Good Morning Singapore!

Singapore Idea Snippets:

22 Oct 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 : Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway. - WARREN BUFFETT Singapore: The Day Ahead SINGAPORE DAYBOOK : Asiasons, Blumont, LionGold stocks soar. Their prices nearly double after SGX lifts trading curbs. [SINGAPORE] Share prices of Asiasons Capital, Blumont Group and LionGold Corp almost doubled in yesterday's no-holds-barred trading as the market sought to put a value on the stocks after trading curbs were ended. Traders The Business Times spoke to said the share prices of the three counters can now be "freely" determined by market forces after the Singapore Exchange (SGX) lifted trading restrictions on the stocks. Asiasons shares surged 91 per cent, Blumont stock rose 80 per cent and LionGold soared 93 per cent by the close of trading yesterday. They were among the top 10 actively traded stocks in early trade, with higher volumes than their 30-day full-day average. Asiasons, Blumont and LionGold shares finished at 24.5 cents, 24 cents and 29.5 cents respectively. "The lifting of the trading curbs levels the playing field for these three counters. Investors put off by the trading restrictions previously can now buy into these counters just as they can buy into other counters," said Liu Jinshu, an analyst at Voyage Research. SGX yesterday allowed the counters to be traded freely without the trading shackles that had banned investors from contra trading and short-selling them since Oct 6. Traders said the "pent-up" demand for Asiasons, Blumont and LionGold shares will continue to move their prices to an equilibrium level determined by a free market. "I feel (the increase) can be further sustained because the stocks have taken such a huge bashing. Now the market is trying to do a price discovery on them," said a broker who requested anonymity. Asiasons, Blumont and LionGold experienced strong run-ups in their stock prices this year, trading at around $2 before they were struck by a downward spiral on Oct 4, prompting SGX to suspend trading in the three counters. The suspension was lifted the next trading day on Monday but SGX labelled them as designated stocks, in a move aimed at reining in excessive speculation and possible disorderly trading. The stocks traded between 10 and 15 cents. "The $2 they were trading before the designation was unrealistic; the 10 to 15 cent range was also unrealistic because it was due to unusual measures," the broker said. He believes Asiasons' "true" value could settle in the region of 30 to 40 cents, while LionGold's could lie between 40 and 50 cents as it has a higher book value. Blumont shares might, however, come under pressure as its recent rights issue was under-subscribed, he said. "Blumont may be the weakest of the three." (Source: The Business Times) MARKET SCOOP HPH Trust Q3 profit down 8.4% SGX to develop commodity products with Shanghai Futures ValueMax plans to raise S$70.4m in IPO Indofood plans to keep China Minzhong listed Singapore inflation seen easing in September (Source: The Business Times) NOMURA Securities says ... OLAM INTERNATIONAL | BUY | TP: S$2.00 The last day of our trip was a ride through the ~USD200mn Special Economic Zone Olam is developing in partnership with government of Gabon (60:40 share) This is the first SEZ in Gabon, and among the few in West Africa (probably one of the largest) Spread over 1,200ha of land, phase 1 is developing 440ha, which is divided into commercial (19ha), industrial (240ha) and residential (via government) In our view, the locational advantage is connectivity through water, land and rail Besides receiving good tax breaks, other incentives for corporates/industrial houses for being based in Gabon include cheaper infra (power), trade incentives, access to forest land, government departmental access, etc. Industries that have stepped foot range from timber, pharma, retail, banking, etc Phase 1 infra is 99% complete and a significant portion has already been sold We believe this SEZ could contribute significant one-time income in the near term, although there is not much clarity yet on recurring income to Olam from this In our view, this is more of a strategic partnership venture to receive better co-operation from government in other key projects Key takeaways from the trip - With this, we wrap ~USD3bn worth of capex in Gabon/Nigeria (most of which is yet to be invested) Key takeaways from the trip include: ? Olam has considerable on-ground expertise in Africa - in terms of local regulations, management bandwidth, asset and infrastructure access, etc It seems that Olam has efficiently made the progression from supply chain manager to pan value chain presence Most of the investments already made are not fully gestating (CFM, rice farms, palm etc) and could contribute significantly over next few years if execution stays strong There is some material progress on the Fertilizer plant but we think the market should still be waiting for key milestones The assets which we saw could alone contribute to run rate of ~USD500mn+ EBITDA in next few years, per our estimates More than anything, this trip provides us with confidence in Olam's execution capabilities and management presence for key processing and upstream assets and that capex could bear returns over a period of time We stick to our Buy call, as valuations appear reasonable, there are option values in terms of fertilizer/palm and growth vs sector should remain better The catalysts may yet take time but long term value creation should happen UOB KAY HIAN says ... KEPPEL REIT | BUY | TP: S$1.46 Management is currently comfortable with the level of investments into Australia (at 12% of portfolio) and is increasingly looking at opportunities in Singapore, such as the acquisition of the one-third stake in MBFC Tower 3 from parent Keppel Land Asset sales increasingly likely to support the acquisition of MBFC The tantalising prospect of the acquisition of MBFC Tower 3 with minimal equity fund raising was discussed As part of their portfolio reconstitution strategy, management is exploring options including the sale of older assets to fund the acquisition In our view, a possible scenario for MBFC Tower 3 (~S$1.2b) could include a ~S$500m divestment of an older Singapore office building (Prudential Tower or Bugis Junction Office Tower) and perhaps one or two buildings in Australia (~S$200m-300m), supported by additional debt headroom from year-end revaluation gains for its portfolio However, management highlighted that timing the asset sales with the acquisition is challenging as DPU could be impacted in the short term if there is a gap between the asset sale and the acquisition Early refinancing to lock in interest rates KREIT completed the early refinancing of its debt maturing in 2014 and will not have any refinancing requirements over the next 24 months Management is also proactively refinancing debt due in 2015, with S$60m of 2015 borrowings already extended Financing rates achieved are still relatively attractive, with new debt pricing at a 10-20bps discount over the debt which was refinanced Income support at Ocean Financial Centre (OFC) continues to remain substantial (S$15.2m in 3Q13, down 2% qoq) as committed tenants have not fully moved into OFC and as rental contributions from the retail podium are not significant yet Also, management highlighted that over the next 1-2 years, rent reviews for key anchor tenants, such as ANZ and BNP, will improve passing rents, as some of these large leases were signed at the height of the great recession in 2008-09 8 Chifley Square, Sydney has managed to achieve 70% pre-commitments upon completion in July, and negotiations are ongoing to fill up the remaining space Management is confident that committed occupancy would soon reach 95%, although downside risk is protected by a 5-year rental guarantee from the seller, Mirvac Office leasing demand continues to be resilient supported by smaller financial institutions, legal firms and IT firms With occupancies essentially full at key buildings, KREIT is in discussions with larger tenants to extend leases prior to expiry DMG OSK Securities says... SINGAPORE EXCHANGE | NEUTRAL | TP: S$8.10 SGX had a decent start to the year with 1QFY14 net profit up 24% y-o-y (+5% q-o-q, based on reported net profit) to SGD92m Average daily turnover (ADT) in the securities market was stable y-o-y but down 16% q-o-q to SGD1.3bn Meanwhile, derivative volume posted strong y-o-y growth (+36% y-o-y) Our earnings forecasts and SGD8.10 FV (23x CY14EPS) are unchanged1QFY14 results in line SGX's 1QFY14 net profit of SGD92m (+24% yo-y; +5% q-o-q) was within our and consensus expectations, accounting for 25% of our and consensus full-year net profit estimates Higher clearing fee, better derivative volume drive y-o-y profit growth Y-o-y, while average daily turnover (ADT) in the securities market was broadly stable at SGD1.3bn, securities revenue rose 15% Average clearing fee increased to 3.2bps from 2.7bps a year ago, as the proportion of capped trades fell to 35% from 46% in 1QFY13, with institutions trading a broader range of stocks and retail participation rising Turnover velocity, however, was weaker at 47% (1QFY13: 51%; 4QFY13: 55%) Meanwhile, derivatives revenue was up 16% y-o-y as total traded volume jumped 36% y-o-y to 26.4m contracts, led by the FTSE China A50 futures, Nikkei 225 futures and options, and iron ore swaps Q-o-q, revenue fell 9% reflecting weaker ADT (-16% q-o-q) and derivative volume (-16% q-o-q) Expenses broadly under control (+6% y-o-y; -6% q-o-q) Management continued to guide for FY14 operating expenses of SGD320m-330m (FY13: SGD300m) Technology-related capital expenditure is expected be around SGD35m-40m As expected, SGX declared an interim DPS of 4 cents (1QFY13: 4 cents) We are forecasting FY14 total DPS of 31 cents (FY13: 28 cents), based on a net payout ratio of 90% We are maintaining our SGD8.10 FV, which is based on target CY14 P/E of 23x (a 10% discount to average P/E of 25x) Maintain NEUTRAL

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 12.90

Stock Name: Genting HK US$
Company Name: GENTING HONG KONG LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 0.49

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 12.50

Market Compass

21 October 2013~ Good Morning Singapore!

Singapore Idea Snippets:

21 Oct 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 : As a teenager you are at the last stage in your life when you will be happy to hear that the phone is for you. - FRAN LEBOWITZ Singapore: The Day Ahead SINGAPORE DAYBOOK : Singapore Exchange lifts trading curbs on three linked companies [SINGAPORE] Singapore Exchange Ltd (SGX) is to lift trading curbs on three inter-linked companies whose S$8.7 billion (US$7 billion)slump in combined market value in just two days earlier this month had sparked criticism of the SGX's market controls. SGX said on Friday it was lifting curbs on Blumont Group Ltd , Asiasons Capital Ltd and LionGold Corp Ltd, restoring their full access to the equity market. Trading in the three had been suspended on Oct 4 after their shares suffered dramatic reversals from massive increases built up earlier this year. SGX subsequently declared them "designated securities", meaning traders could not short-sell them and had to pay for any purchases with cash upfront. These trading curbs, the first to be imposed on any Singapore-listed stocks for five years, will be lifted on Monday, though SGX said on Friday it would continue to monitor trading of all three. (Source: The Business Times) MARKET SCOOP M-DAQ raises S$14.5m in Series B financing Noble Group invests in Australia's Cockatoo, sells stake in Blackwood Fosun to buy One Chase Manhattan Plaza in New York for US$725m CCT's Q3 DPU estimated at 2.04, sees positive rent flow in 2014 Sembcorp to build S$189.9m water facility in China (Source: The Business Times) DBS VICKERS Securities says ... KEPPEL CORPORATION | BUY | TP: S$12.90 Stripping out exceptional gains, Keppel's core net profit grew 17% q-o-q to S$403m in 3Q13, largely in line with expectations The key highlight was the stronger than expected O&M operating margin that expanded 2.3ppts q-o-q to 16.5%, attributable to more deliveries of KFELS B class jack ups and higher repair margins for certain projects However, this was offset by lower O&M revenue recognition resulting from slower orderbook drawdown Property income rose 70% q-o-q to S$201m, driven by home sales in Singapore and China 9M13 net profit amounted to S$1.08bn, forming 71% of our full year estimate We believe Keppel's order win momentum will continue to gather steam in the next few months, underpinned by robust potential orders in the pipeline: 1) PEMEX's six jack up orders totaling US$1.3bn; 2) Golar's FLNG projects following recent conclusion of FEED study; 3) Transocean's orders of up to 10 jack up rigs worth US$2bn to be awarded as early as end Oct and 4) Potential first drillship contract by end of 2013. YTD order wins stood at S$5.3bn, and looks set to exceed our full year expectation of S$6bn Keppel remains our preferred pick in the large cap O&M space Its solid execution track record, global yard network, and world-class proprietary designs are unrivalled We see near term price catalyst stemming from strong order win momentum Maintain BUY with unchanged SOTP-based target price S$12.90 UOB KAY HIAN says ... GENTING HONG KONG | BUY | TP: US$0.49 Travellers has priced its IPO at P11.28, raising about US$473m, and valuing the company at around US$4.2b Recall that Travellers is offering 1,573m new shares with an over-allotment option of 236m shares The international tranche was 5x oversubscribed, with 70% of international subscribers from Asia, 20% from Europe and 10% from the US The valuation is at around the mid-point of the indicative pricing range, and values GENHK's diluted 44% stake in the entity at about US$1.8b, significantly above our SOTP estimate of US$1.1b (50% stake pre-IPO), which had pegged the Philippine unit at about 9x EV/EBITDA At its IPO pricing, GENHK's SOTP would rise to US$0.64/share, and a higher US$0.68/share if we value GENHK's stake in NCL Holdings at its market value CREDIT SUISSE Securities says... KEPPEL CORPORATION | OUTPERFORM | TP: S$12.50 Keppel reported 3Q13 net profit of S$403 mn, in line with our and consensus expectation O&M operating margin continued to improve to 16.5% in 3Q13 from 14.2% in 2Q13, largely due to repeated delivery of jackups of similar design Margin was also boosted from improved mix effect with lower rigbuilding revenue, as O&M revenue fell to S$1.54 bn in 3Q13 from S$1.82 bn in 2Q13 Infrastructure net profit fell to S$34 mn in 3Q13 from S$36 mn in 2Q13 due to continued challenges for its EPC projects in Qatar and Manchester However, no further provisions were taken in 3Q13, and management expects both projects to be completed in 2014, in line with earlier guidance Property net profit surged to S$139 mn in 3Q13 from S$66 mn in 2Q13, driven by the start of profit recognition for Corals at Keppel Bay (158 out of 366 units sold) and strong contribution from China We maintain our OUTPERFORM rating and target price of S$12.50 Keppel is our preferred pick within the large cap offshore and marine sector

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)

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

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.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: PanUnited
Company Name: PAN-UNITED CORPORATION LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.21

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: UOB KayHian

Price Call: HOLD

Target Price: 11.50

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

Research House: Nomura

Price Call: BUY

Target Price: 2.61

Market Compass

18 October 2013~ Good Morning Singapore!

Singapore Idea Snippets:

18 Oct 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 : Architecture should speak of its time and place, but yearn for timelessness. - FRANK GEHRY Singapore: The Day Ahead SINGAPORE DAYBOOK : Improving tertiary education not just a numbers game: PM Lee. Unis must provide skills relevant in the future and which lead to good jobs [SINGAPORE]The government's efforts to improve Singapore's tertiary education system cannot be just about increasing the number of university places, says Prime Minister Lee Hsien Loong. Some countries have found that having a large proportion of their students going to universities "does not necessarily guarantee happy outcomes", he said at the opening ceremony of the National University of Singapore's (NUS) University Town campus last night. About 27 per cent of each cohort of students currently get a place in one of Singapore's publicly funded universities, and the target is to hit 40 per cent by 2020. In his speech, Mr Lee talked about the situation in South Korea, where more than 70 per cent of each cohort attend university. (Source: The Business Times) MARKET SCOOP Cosco Shipyard unit bags contracts worth US$233.3m SGX Q1 net profit rises 24% as revenue gains Grow-Tech Properties is top bidder for both Gambas Crescent plots Qian Hu reports S$88,000 Q3 profit Keppel Corp Q3 net profit rises 32% on property earnings Planned OUE Reit to include Shanghai's Lippo Plaza Asiasons to relook Black Elk deal after SGX rejects new share issue Singapore NODX contracts 1.2% in Sept (Source: The Business Times) DBS VICKERS Securities says ... PAN-UNITED CORPORATION | BUY | TP: S$1.21 Post acquisition of MIIF's 34.2% stake for S$101m (out of MIIF's 38% in CXP), CXP now contributes more significantly to PAN's earnings (27% vs 18% previously) Based on our estimates, the acquisition is earnings accretive and will improve FY14F's earnings by 10% We visited CXP port to gain further insight to its operations and have confidence that CXP is capable of contributing a sustainable stream of earnings to PAN going forward CXP is strategically located along the Yangtze River and is capable of serving 100,000 dwt vessels CXP enjoys a low 30% breakeven utilisation for its operations with port operational functions outsourced to third parties Cargo volumes have grown at 9% CAGR since 2005 We expect cargo volumes to be supported by robust log demand and expansion of steel and paper mills in the area As there is no longer a requirement that was made by MIIF to pay out 100% of earnings as dividends at CXP's level, management has more financial resources available to further develop the port in areas such as warehousing The CXP visit has given us confidence that earnings will be sustainable going forward We have not made any major changes to our forecast and outlook for now PAN should be able to maintain DPS despite retaining some portion of CXP's earnings for port development Reiterate BUY and S$1.21 TP UOB KAY HIAN says ... SINGAPORE AIRLINES | HOLD | TP: S$11.50 Pax traffic rose 1.8% in Sep and 4.9% for 2QFY14. 2Q loads improved 1.3ppt on the back of strong demand during Hari Raya period coupled with summer holiday leisure travel Cargo traffic declined 6.7% in sep and 7.2% during the quarter Key highlight was the 4.5ppt improvement in Europe loads for the quarter SIA attributed the improvement to better capacity management rather than a demand pickup SIA noted that efforts to boost loads continue to place downward pressure on yields Yields fell 2.6%yoy in 1Q due to competition and forex impact Loads fell 4ppt for Sep and 3.5ppt for 2Q marking the seventh consecutive month of decline Key reason was the 11.8ppt decline in West Asia loads as capacity growth far outpaced demand increase Overall some encouragement on the pax front with loads improving 4.9%yoy and 2.1%qoq 2Q loads are 1.3ppt above 2Q13 break-even loads indicating better results if yields remain firm.SIA will be reporting the results on 12th Nov(after market close) We will do a detailed results preview closer to the announcement date Maintain HOLD fair price of S$11.50, valuing it at 0.8x FY14's book value(ex- SIAEC) NOMURA Securities says... ASCENDAS REIT | BUY| TP: S$2.61 AREIT reported its 2QFY14 results on 16 October after the market closed 2QFY14 DPU of 3.6Scts (+2%y-y; +1.4%q-q) brought the 1HFY14 DPU to 7.2Scts (+1.3%y-y), which met 53.1% of our full year forecast of 13.5Scts The better-than-expected 1H performance was principally on account of: 1) marginally higher NPI; 2) lower net interest expense and 3) higher distribution from AREIT's China investment AREIT's aggregate leverage was 29.7% as of end-September (from 28.6% as of end-June; 30.5% if committed but yet-to-be-funded capex of SGD73mn were to be included) The SGD395mn CMBS due in mid-2014 could be refinanced by drawing from the SGD1.2bn revolving credit facility (33% drawn as of end-September), according to management The 2.1-3.7%q-q decline in market rents for AREIT's Business and Science Park (BSP) as well as light industrial and flatted factory portfolios during the quarter suggests a still challenging operating environment That being said, AREIT's overall portfolio appears to have held up quite well despite the challenges New and expansion leases of 53,461 sq m were signed during the quarter (vs. 44,873 sq m in 1QFY14 and 28,628 sq m in 2QFY13) with an increase of 1.5-14% in new take up rates (vs. a decline of 2.6-8% during the previous quarter) On a same-store basis, overall portfolio occupancy was slightly higher at 94.9%, vs. 94.8% at the end of the previous quarter With the exception of the previous Ultro Building (no pre-commitment yet) and the LogisTech new annex block (still in negotiation with prospective tenant), leasing for newly created space within the portfolio also appears brisk Commitment at Nexus increased to 73.9% by end-September (from 55.7% at end-June) and management expects commitment to exceed 80% soon The new factory block at Techplace II is now 22% committed Pre-commitment of the upgraded space at 31 IBP improved to 81.5% as of end-September (from 76.7% at end-June) Including leases under offer, the new warehouse space at Xilin Districentre Building D is almost fully committed In our view, AREIT's valuation remains relatively undemanding at P/B of 1.2x, based on the end-September book value of SGD1.90/unit, compared to the historical trading average of 1.3x Maintain Buy