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Maybank Kim Eng Reports June 2013
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PostPosted: Fri Jul 19, 2013 9:33 am    Post subject: Reply with quote

Keppel Corp: Passing on the Baton; Maintain Buy, TP $12.12
KEP SP | Mkt Cap USD15.5b | ADTV USD40.9m

2Q13 results were within our expectations with PATMI of SGD347m (-33% YoY, -3% QoQ). The weaker YoY performance was due to lumpy property recognition mainly from sale of Reflections units last year. Interim cash dividend of 10 cts/sh was declared with additional dividend-in-specie of Keppel Reit units (~10.8cts/sh). Maintain Buy, TP SGD12.12.
O&M margin for 2Q13 was sustained QoQ at 14.1%, off the lows of the 13% levels seen last year. Our FY13F forecast is at 14.4%, but we believe that there are opportunities for upside surprise. Overall demand for newbuild rigs from various markets remains encouraging. YTD order wins have reached SGD3.5b with net orderbook now at SGD13.1b.
What came as a bit of an early surprise was the announcement of a change in leadership. The new successors have nevertheless been with Keppel for many years and we believe they have the capability to bring the company to the next lap.
Click here for full report yeakcheekeong@maybank-ke.com.sg
Mapletree Logistics Trust: 1QFY3/14 Inline; Growth Drivers Yearned; Hold, TP $1.05
MLT SP | Mkt Cap USD2.1b | ADTV USD4.6m

1QFY3/14 revenue at SGD75.4m (-1% QoQ; -2% YoY) was 24% of ours and 25% of consensus estimate. The YoY decline was mainly due to the depreciation of the Japanese Yen. 1QFY3/14 DPU at 1.80 SG-cts (+4% QoQ; +5.9% YoY) was 25% of ours and consensus estimate. The impact of the Japanese Yen depreciation on distributable income was mitigated by currency hedges as the income stream for the quarter was fully hedged into or derived in Singapore dollar.
1QFY3/14 results included the partial distribution of the net gain from the divestment of 30 Woodlands Loop. The SGD4.96m divestment gain will be distributed over eight quarters commencing from this quarter. This translated to SGD0.6m in amount distributable per quarter or about 0.025 SG-cts per unit. Excluding this gain, 1QFY3/14 DPU would have been 1.78 SG-cts.
Given the high valuation it is currently trading (1.2x P/B), and the absence of concrete catalysts, we believe this counter is fairly priced at the moment. Reiterate HOLD with TP of SGD1.05.
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PostPosted: Mon Jul 22, 2013 9:27 am    Post subject: Reply with quote

CapitaMall Trust: Another Quarter of Steady Growth; Maintain Buy TP $2.15
CT SP | Mkt Cap USD5.5m | ADTV USD16.9m

Maintain BUY on CMT as it delivered another quarter of DPU growth at 2.53 cts/unit. Including taxable income that has been retained for distribution later this year, we expect CMT to be on track to deliver a full-year DPU of 10.6 cts/unit, implying a DPU yield of 5.2%. We adjusted our TP to SGD2.15 on the back of higher cost of equity assumption.
Operationally, CMTs malls enjoyed YoY growth in shopper traffic and tenants sales of 4.8% and 3.3% respectively in 1H13, underpinning healthy positive rental reversion. Currently, the only ongoing AEI is at Bugis Junction, but management is actively looking at its plans for Funan.
While we do not expect any acquisitions in 2H13, investors can look forward to the completion of Westgate in 4Q13 (currently ~70% leased), which will underpin DPU yield growth to 5.4% in FY14F, based on our estimates.
Click here for full report wilsonliew@maybank-ke.com.sg
Suntec REIT: No Letdown From Suntec; Continues To Shine; Buy TP $1.75
SUN SP | Mkt Cap USD2.7b | ADTV USD13.0m

Maintain BUY with an unchanged TP of SGD1.75. Our investment thesis on Suntec remains intact. In this growth-limited environment, Suntec is one of the very few S-REITs that has a DPU CAGR growth of 4% from 2012-2015 (12.5% over three years), following the rental reversions from the major overhaul at Suntec City. Suntec is now trading at yield spreads of 3.2% and P/B of 0.74x
Suntecs 2Q13 DPU exceeded our forecast of 2.23 SG-cts with an upbeat payout of 2.249 SG-cts. (+0.9%) 2Q13/1H13 DPU at 2.249 SG-cts (+1% QoQ; -5% YoY)/ 4.477 SG-cts (-7% YoY) was 24%/49% of ours and 25%/49% of consensus estimates (in-line). Last quarter included a 0.345 SG-cts DPU top-up (total SGD7.8m) from the sales proceeds of Chijmes for capital distribution.
Pre-commitments for Phase 1 leases in 2Q13 hit 99.6% (we forecast above 98%), with average passing rent of SGD13.09 psf/mth. Suntec also reported that 70.1% of Phase 2 NLA has been pre-committed (prev. qtr 53%).
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PostPosted: Tue Jul 23, 2013 1:04 pm    Post subject: Reply with quote

SIA Engineering : Results Fine, Positive View Affirmed; Buy TP $6.19
SIE SP | Mkt Cap USD4.5b | ADTV USD1.9m
Maintain BUY. Our positive view on the stock remains unchanged. We reiterate our view the market had not fully appreciated the hidden value within its key JVs with Rolls Royce, which would benefit from the influx of Trent engines into the market. We tweaked our TP to SGD6.19 to align our DCF assumptions for revised market risk premium of 5.5% (previous 6.0%).
SIAEC reported a steady set of results with net income of SGD69.0mn (+4.7%QoQ, -1.6%YoY) on sales of SGD289.5mn (+2.1%QoQ, -3.7%YoY). Outlook statement highlights stable near term outlook, but cited challenging operating environment with uncertainties facing the global economy.
While core operating profit came in fairly soft, JVs and Associates reported 14% higher contribution. Strong balance sheet and FCF continues to be the highlight of this stock.
Click here for full report derrickheng@maybank-ke.com.sg
Raffles Medical Group : Operating Leverage Remains Intact; Buy, TP $3.80
RFMD SP | Mkt Cap USD1.4b | ADTV USD0.9m
Maintain BUY with a DCF-based TP of SGD3.80, implying 29.2x FY14F. 1H13 now makes up 45% of our full-year estimates and is likely on track given slightly strong seasonality in the second half.
2Q13 results were within expectations, with net profit up 16% yoy despite concerns over loss of revenue from prison contracts and higher wage costs.
Revenue grew 13% yoy, with hospital segment up 17% yoy. We see substantial flexibility to increase prices from this point, given that prices are still 20-30% behind peer hospitals.
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PostPosted: Wed Jul 24, 2013 9:51 am    Post subject: Reply with quote

CapitaMalls Asia: The Harvesting Continues; Maintain Buy TP $2.51
CMA SP | Mkt Cap USD6.0b | ADTV USD11.7m
CMA remains our top big-cap pick for its retail mall business. Reiterate our BUY recommendation, TP adjusted to SGD2.51. An interim dividend of 1.75 cents/sh has been declared.
Excluding revaluation gains and portfolio gains totaling SGD192m, CMAs 2Q13 core PATMI came in at SGD53.6m (-20% QoQ; +40% YoY), largely in line with expectations. 1H13 core PATMI accounts for 49% of our full-year core PATMI estimate.
Operationally, CMAs malls in Singapore and China mostly saw improved shopper traffic and tenants sales growth, which will provide the basis for positive rental reversions going forward. The malls expected to be opened later this year (Bedok Mall, Westgate and Jinniu Phase 2) are also significantly pre-committed.
Click here for full report wilsonliew@maybank-ke.com.sg
Sheng Siong Group: Toppish Valuations; Cut to HOLD, TP $0.74
SSG SP | Mkt Cap USD759.9m | ADTV USD1.2m
Cut to HOLD with TP unchanged at SGD0.74 as we downgrade the stock on grounds of valuation appearing toppish. An interim dividend of SGD1.2cts was announced (87% of 1H payout), up by 0.2cts from last years interim dividend.
1H13 revenue of SGD339.2m (10.6% YoY), and core net profit of SGD19m (26.7% YoY) comes in-line with ours and consensuss expectations.
Store growth is largely driven by bumper store openings from last year, but was offset by a contraction from the older stores. SSG declined by 1% in 1H13.

Click here for full report alisonfok@maybank-ke.com.sg
Economics
Singapore CPI, June 2013: Inching up
Headline Inflation moved up slightly to +1.8% YoY in June 2013 (May 2013: +1.6% YoY) amid rising COE premiums, fuel prices and increase in service costs like healthcare. Core inflation rate (CPI excluding accommodation and private road transport) however remained at +1.7% YoY for a second consecutive month.
Inflation rate in 2Q 2013 moderated sharply to +1.6% YoY (1Q 2013: +4.0% YoY) and posted it first QoQ decline since 2Q 2009 of -1.2% (1Q 2013: +1.2% QoQ), which in turn led to 1H 2013 inflation rate averaging +2.8% YoY (1H 2012: +5.1% YoY).
We currently expect the full-year inflation rate to come in at +2.3%, while the official inflation rate forecast is revised down to 2%-3% from 3%-4% previously.
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PostPosted: Thu Jul 25, 2013 9:42 am    Post subject: Reply with quote

Starhill Global REIT: Still Among Our Top Choices; Buy, TP $0.95
SGREIT SP | Mkt Cap USD1.5b | ADTV USD2.4m
2Q13/1H13 DPU at 1.19 SG-cts (-13% QoQ; +10% YoY)/ 2.56 SG-cts (+19% YoY) was 27%/52% of ours and consensus estimates (in-line). This was attributable to the strong contribution from the Singapore portfolio and full-quarter contributions from the recently-acquired Plaza Arcade.
SGREITs future growth drivers include the potential asset redevelopment of David Jones Building and Plaza Arcade in heart of Perth CBD. Management is looking at conducting a feasibility study and possible renovation works in 2014. In addition, there will be a upward-only lease review for David Jones Building in Aug 2014, which SGREIT guided a possible 6% positive rental reversion.
SGREITs key assets are in the coveted Orchard Road area, where tight supply and the entry of new international retailers should give it greater bargaining power in terms of leasing its space. At 5.7% FY13F yield and 330bps yield-spread, we reiterate BUY with a DDM-derived TP of SGD0.95.
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PostPosted: Fri Jul 26, 2013 9:17 am    Post subject: Reply with quote

CapitaLand: Decent First Half, All Eyes on the Second; Buy, TP $4.10
CAPL SP | Mkt Cap USD10.8b | ADTV USD37m
We maintain our BUY recommendation on CapitaLand, as 1H13 home sales and retail tenants sales growth in both Singapore and China justified our preference for its diversified business. TP trimmed to SGD4.10, mainly on the back of lower fair values for CMA and CCT.
CapitaLands 2Q13 core PATMI of SGD108m was largely in line with expectations. We expect full-year earnings to be more back-end loaded, as ~1,900 homes in China will be delivered to buyers in 2H13.
Australand remains a key investment for now, but we do not rule out revisiting the potential divestment should a compelling offer come along in the future. Meanwhile, management targets to achieve ROEs of 8-12% on a sustainable basis going forward, with a 2:1 mix of operating assets and projects under development.
Click here for full report wilsonliew@maybank-ke.com.sg
SATS: A Decent Quarter; Maintain Buy TP $4.05
SATS SP | Mkt Cap USD3.0b | ADTV USD3.3m
Reiterate BUY with higher TP of SGD4.05 on revised DCF assumptions. Our fundamental view on the stock remains unchanged with results largely in line with expectations. With the highly cash generative nature of its business, we believe that SATS would structurally increase their dividends as they seek to optimise their capital structure.
SATS reported a steady set of results with operating profit improving on better margins. Underlying net income improved significantly off a low base to SGD47.9mn (-24% QoQ, +16% YoY).
A surge in Gateway revenue was dampened by weaker contributions from TFK Corp due to the 20% weakening of the JPY.

Click here for full report derrickheng@maybank-ke.com.sg
Singapore Airlines: Flattered by one-off items; Maintain Hold TP $10.30
SIA SP | Mkt Cap USD9.5b | ADTV USD9.8m
Maintain HOLD with a lower TP of SGD10.30.
While we were positively surprised by the headline numbers for the quarter, closer scrutiny suggests that the strong performance was mainly due to one-off items.
SIA reported a very strong set of results with net income of SGD122mn (+78% QoQ, +56% YoY). However, we wish to highlight that headline figures were flattered by exceptional gains of SGD18.4m and surplus on disposal of assets of SGD13.9m. Furthermore, settlement pertaining to changes in aircraft delivery slots had boosted revenue by SGD75m.

Click here for full report derrickheng@maybank-ke.com.sg
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PostPosted: Wed Jul 31, 2013 9:04 am    Post subject: Reply with quote

SG Daily: SMRT - Another Weak Set Of Numbers; Sell, TP $1.00 | OSIM International - Strong Foundations For Future Growth; Buy, TP $2.34

Singapore Daily

SMRT: Another Weak Set Of Numbers; Sell, TP $1.00
MRT SP | Mkt Cap USD1.7b | ADTV USD1.3m

Maintain Sell with TP of SGD1.00. With structurally higher leverage and poor dividend yield support, we argue that SMRT should de-rate from its historical levels. The stock of SMRT currently trades at 25X FY14E P/E and yields merely 1.7%.
SMRT reported a weak set of results with net income of SGD16.3m (-54% YoY). Profitability of the group remains poor with EBIT margin of only 7.8% (1QFY13: 16.0%). Higher staff cost (+1% QoQ, +23% YoY), incurred as a result of larger headcount and wage revision, was a key pressure point.
SMRT recorded negative FCF of more than SGD400mn and finished the quarter with a net debt position of SGD505mn (net gearing: 0.64x).
Click here for full report derrickheng@maybank-ke.com.sg


OSIM International: Strong Foundations For Future Growth; Buy, TP $2.34
OSIM SP | Mkt Cap USD1.2b | ADTV USD1.9m

Maintain BUY with reduced TP of SGD2.34 to account for dilution from convertible bond, now that share price is firmly above exercise price of SGD1.90. We see further room for better operating leverage and expect TWG contribution to become more meaningful going forward.
2Q13 results were broadly within expectations. Net profit for the quarter came in at SGD26.1m (up 16% yoy) versus our preview expectations of SGD26.5m.
Revenue grew 7% yoy, driven mostly outside North Asia. We believe the new uAngel was also a major contributor. EBIT margin grew from 19% to 21%.
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