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OCBC Reports April 2013
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PostPosted: Wed Apr 24, 2013 9:34 am    Post subject: Reply with quote

Tiger Airways: Core strengths will emerge
Following the TGR AU sale approval, investors can now look to TGR SG as the main growth driver for the Group. As a recap, TGR SG recorded an impressive set of growth figures for 9MFY13 (revenue +30.7% YoY to S$444m) while its operating statistics for the quarter just ended has been equally positive and encouraging. Although TGR will continue to experience some drag from TGR AU – albeit at a lower 40% proportion – and SEAir (which is still in its infancy), we expect TGR SG’s performance to more than offset any draw-downs and continue to lead the ongoing recovery process for TGR. We reiterate our BUY rating on TGR with a lower fair value estimate of S$0.79 (S$0.86 previously) after taking into consideration the recent rights and PCCS issuance. (Lim Siyi)


First REIT: Full-quarter of contributions from new assets
First REIT (FREIT) reported its 1Q13 results which were within our expectations. Gross revenue grew 25.0% YoY to S$17.5m, underpinned by a full-quarter of contribution from the two properties it acquired on 30 Nov 2012. Distributable amount to unitholders and DPU increased by 16.5% and 9.4% YoY to S$11.6m and 1.74 S cents, respectively, if we exclude a special distribution made in 1Q12. Although FREIT is currently finalising its proposed acquisition of two hospitals from its sponsor Lippo Karawaci (subject to unitholders’ approval at an EGM), we expect it to continue its search for more yield accretive assets in the near future. We reiterate our HOLD rating and S$1.31 fair value estimate on FREIT as we believe that its valuations are not compelling (trading at 1.6x FY13F P/B). (Wong Teck Ching Andy)

Nam Cheong Ltd: Wins US$59m sale contracts
Nam Cheong Ltd has secured two sale contracts with a total value of US$59m for two units of accommodation work barges (AWBs). The AWBs were sold to Perdana Petroleum Berhad, an established offshore marine service provider in Malaysia. The vessels are constructed as part of Nam Cheong’s build-to-stock series in its subcontracted yards in China and are scheduled for delivery in 1H14. With this latest win, Nam Cheong’s order book stands at RM1.4b. We currently have a BUYrating with S$0.30 fair value estimate on the counter. (Chia Jiunyang)

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


- In a sign that China is heading for stagnant growth in 2Q, Apr flash purchasing managers' index compiled by Markit and HSBC came in at 50.5 points, against 51.6 points in Mar.

- Boustead Singapore has secured contracts worth $60m to design, engineer and construct key process systems and waste heat recovery units for downstream oil refineries and gas processing plants in Canada, Finland, Nigeria and Saudi Arabia. These deals raised the group's orderbook backlog to $415m.

- Hong Leong Finance yesterday announced an 8.9% drop in 1Q13 net profit to $15.3m, from $16.7m a year ago.

- Synear Food Holdings has temporarily shut down its production plant in Sichuan as a precautionary move due to the numerous aftershocks in the Chinese province. The plant suffered minor physical damage, it said.

- Sino Construction expects to report a loss for FY2012 due to intense competition among construction players, a slowdown in the Chinese economy and property cooling measures introduced by the Chinese government.

- Transit-Mixed Concrete’s net profit for full year ended Feb 28, 2013 rose 15% to S$2.76m, spurred by an increase in construction activities.
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PostPosted: Thu Apr 25, 2013 9:05 am    Post subject: Reply with quote

Cache Logistics Trust: Promising start to FY13
Cache Logistics Trust (CACHE) reported 1Q13 DPU of 2.234 S cents, up 7.1% YoY. This is in line with our expectations, given that the quarterly DPU made up 26.5% of our DPU forecast. The strong performance was mainly attributable to upward rental adjustments and incremental contribution from its past acquisitions. As at 31 Mar, the portfolio assets remained 100% occupied, with a healthy weighted average lease to expiry of 3.7 years. We also understand that CACHE has secured a new tenant, Agility Logistics, for its lease at APC Distrihub during the quarter. With this, CACHE has fully addressed its lease expiry in 2013, with zero renewals due for the rest of the year. CACHE currently has an aggregate leverage of 29.2% and a stable all-in financing cost of 3.52%. This provides CACHE with ample flexibility and firepower to pursue its growth opportunities. We are maintaining our BUY rating with a higher fair value of S$1.45 (S$1.33 previously) on CACHE. (Kevin Tan)


CapitaMalls Asia: Sharp execution bearing fruit
CMA’s 1Q13 PATMI came in at S$73.2m – up 9.6% YoY mostly due to contributions from Star Vista, four malls in Japan and Queensbay Mall, a S$6.6m gain from warehousing of two assets sold to CCDFII, better performance from CMT, ION Orchard and the China Funds, and a sale at The Orchard Residences. Excluding one-time items, we judge 1Q13 results to be somewhat above expectations. Given the H7N9 bird flu outbreak, shopper traffic for CMA’s Chinese malls showed a decrease of -0.9% YoY. On a same mall basis, however, tenant sales were up +15.9% YoY. We see worsening H7N9 fears potentially reducing retail traffic over the nearer term but a sustained long-term business impact, in our view, is unlikely. Maintain BUY with an unchanged fair value estimate of S$2.55. (Eli Lee)

Telecom Sector: StarHub to get BPL on cross carriage basis
Summary: StarHub Ltd (STH) will be able to broadcast “live” matches of the much-coveted Barclays Premier League (BPL) for the upcoming 2013-2016 season. This after the MDA (Media Development Authority) asked SingTel to cross-carry the matches over the next three seasons even though SingTel had earlier secured the rights on a non-exclusive basis. Understandably, SingTel said it was “gravely disappointed” with the decision, adding that “it disadvantages both consumers and the industry”. SingTel has also said it intends to appeal the decision and seek legal recourse if necessary. The decision came as a bit of a surprise, given that SingTel had earlier secured the rights on a non-exclusive basis. However, the MDA has ruled that the agreement between SingTel and FAPL (content owner) had restrictions that prevent other Pay TV retailers from offering the same content, thus triggering the cross-carriage ruling. It is also unclear as to how FAPL would respond to the decision. We will be speaking further with both companies to get a clearer picture on this. In the meantime, we put our ratings on SingTel [BUY, S$3.68 fair value] and StarHub [HOLD, S$4.00 fair value] under review. (Carey Wong)

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


- United Engineers (UE) has extended the deadline for WBL Corporation shareholders and convertible bondholders to accept their takeover offer to 5.30pm on 10 May. As at 23 Apr, UE controlled 39.64% of WBL.

- Fewer development properties available for sale led Yeo Hiap Seng to report 1Q13 net profit that was 69% lower at S$15.5m versus the same period a year ago.

- Courts Asia's maiden bond foray was a "blowout" - it received an overwhelming S$2.1b orders for its three-year S$125 million bonds.

- Food manufacturer QAF's 1Q net profit grew 14% YoY with only a modest improvement in sales as its tax burden eased.

- Hotung Investment Holdings saw its net profit for 1Q13 falling 13% YoY to NT$73m (S$3m).

- Singhaiyi Group will be launching its Cosmoloft project, a 17-storey apartment tower comprising 56 units of freehold, designer lofts, on May 1.
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PostPosted: Fri Apr 26, 2013 8:56 am    Post subject: Reply with quote

Olam Int’l: Refocusing on cash flow generation
Olam International Limited (Olam) has completed its strategic review and intends to take a rebalanced approach to growth and cashflow generation. To achieve its goals, Olam has identified six specific pathways or “concrete actions”. By doing so, management believes that Olam can become FCF positive by FY14 and also reduce its gearing boundary condition from <2.5x to <2.0x. However, we suspect that any meaningful impact may take some time to flow through (likely towards end FY16). As 3Q13 results are due in two weeks, we opt to leave our forecasts unchanged for now. Meanwhile, we keep our HOLD rating but place our S$1.50 fair value under review. (Carey Wong)


Sheng Siong Group: A local darling
Sheng Siong Group reported an excellent set of 1Q13 results with contributions from new stores boosting revenue growth by 12.3% YoY while cost management initiatives continued to improve operating margins. In the coming quarters, Sheng Siong’s outlook remains positive as the lack of any foreseeable price competition amongst the Big 3 players, and defensive consumer spending in the face of continued economic uncertainty should prove supportive for the group. That said, we expect a double-digit top-line growth and margin enhancements to sustain for FY13. We maintain BUY on Sheng Siong and increase our fair value estimate to S$0.82 from S$0.69 previously. (Lim Siyi)

Suntec REIT: 1Q13 results speak volumes on strength
Suntec REIT announced 1Q13 DPU of 2.228 S cents, down 9.2% YoY. This is within expectations, given that the quarterly distribution made up 24-25% of our and consensus FY13F DPU. Retail segment registered a 38.9% YoY decrease in revenue due to the partial closure of Suntec City Mall. However, the office segment continued to perform, achieving a 7.6% growth in revenue on the back of positive rental reversions and consistently high occupancy of 99.7%. Management updated that it has signed a total of 185,000 sqft of leases in 1Q, leaving it with only 10.3% of office leases due to expire in 2013. As such, we expect the segment to continue to exhibit resilience for the rest of FY13. We also understand that the Suntec City AEI and ROI target of 10.1% remain on track, with Phase 1 space due to open in Jun 2013 as planned and already securing a 96.7% pre-commitment. We are keeping our forecasts intact but now raise our fair value to S$2.16 from S$1.94. Maintain BUY on Suntec REIT. (Kevin Tan)

Yangzijiang Shipbuilding: Results in line; still a steady ship
Yangzijiang Shipbuilding (YZJ) reported a 22% YoY fall in revenue to RMB2.9b and a 30% drop in net profit to RMB717.2m in 1Q13, accounting for 24% and 26% of our full year estimates, respectively. Results were in line with our expectations, and we note that gross profit margin from the shipyard operations remained healthy at 25.9% vs 26.4% in 1Q12 and 24.1% in 4Q12. Due to the difficult business climate faced by ship operators and an altered vessel delivery schedule with the cessation of previous orders, YZJ delivered nine vessels in 1Q13 vs 15 units in 1Q12. Still, the group entered into eight new shipbuilding contracts worth US$237m recently, bringing its order book to US$3.31b currently. Pending an analysts’ briefing later in the morning, we maintain our HOLD rating but put our fair value estimate of S$0.95 under review. (Low Pei Han)

Ascott Residence Trust: Excluding one-off item, 1Q13 misses expectations
Ascott Residence Trust (ART) reported a 3% YoY decrease in revenue to S$69.2m for 1Q13 due to lower contributions from existing properties which decreased S$3.1m, outweighing the S$0.7m increase in revenue from the net effect of acquisitions less divestments. RevPAU fell 10% YoY to S$124 and gross profit fell 9% YoY to S$33.8m. However, unitholders’ distribution increased by 14% YoY to S$27.6m. Unitholders’ distribution included S$8.1m from the replacement of foreign currency bank loans using proceeds from the S$150m placement in Feb. Without this one-off item, unitholders’ distribution would have fallen by 19% YoY and we judge the results to be lower than ours and the street’s expectations. 1Q13 DPU increased 5% YoY to 2.25 S cents. We put our fair value of S$1.36 under review but maintain our HOLD rating on ART. (Sarah Ong)

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


- Creative Technology's 3QFY13 net loss ballooned to US$10.45m from US$1.58m a year ago.

- Thakral Corporation Ltd is set to invest up to A$24m (S$30.8m) to fund a property development in Sydney, Australia.

- Del Monte Pacific yesterday submitted an application for a secondary listing on the Philippine Stock Exchange (PSE).

- TT International has obtained a loan facility of up to S$125m to fund project and financing costs related to Big Box's construction of an eight-storey warehouse retail complex.

- Croesus Retail Trust has revived its plans for a Singapore mainboard listing, in an initial public offering (IPO) that will raise about S$369m.
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PostPosted: Tue Apr 30, 2013 8:45 am    Post subject: Reply with quote

Frasers Commercial Trust: Advancing steadily
Frasers Commercial Trust’s (FCOT) 2QFY13 DPU came in at 1.9883 S cents, representing a 14.4% YoY growth. This is slightly above our expectations, as 1HFY13 DPU of 3.5715 S cents already formed 51.4% of our full-year DPU forecast. Key rental growth drivers for the quarter came from FCOT’s Australia properties. As at 31 Mar, the portfolio occupancy remained strong at 95.3%, with weighted average lease to expiry at 4.8 years. Looking ahead, we hold our view that FCOT will continue to perform strongly. While the actual occupancy at China Square Central stood at 73.0%, a high committed occupancy of 92.6% was secured. The passing rents for several of its properties are also below the market rates, thus presenting potential for rental upside. In addition, the redemption of another 157.1m CPPUs in Apr is likely to provide further uplift in DPU. We maintain our BUY rating with a higher fair value of S$1.66 (S$1.52 previously) on FCOT. (Kevin Tan)


Global Premium Hotels: No surprises in 1Q13
Global Premium Hotels (GPH) performed in line with our expectations in 1Q13. Revenue fell 2.1% YoY to S$14.6m and gross profit declined 2.9% YoY to S$12.6m. Interest expense was S$1.3m higher YoY due to the restructuring exercise undertaken by GPH pursuant to the IPO in 2Q12 and this was the primary reason that net profit contracted 32.0% to S$4.3m. Revenue and net profit came out to 23% and 24% of our full-year estimates respectively. 1Q13 hotel room revenue decreased 1.1% YoY was mainly due to the lower average occupancy rate (AOR) of 89.6%, down 2.1ppt YoY. We expect slightly better YoY performance in the remaining quarters, especially because 1Q13 was slow for the industry because of the later occurrence of Chinese New Year, which pushed back corporate travel. Using a 10% discount to RNAV, we maintain our fair value of S$0.33 and BUY rating on GPH. (Sarah Ong)

SMRT Corporation: A loss-making quarter to end the year
As expected, SMRT reported a loss-making 4Q13 to end the year. Although revenue grew 2.4% YoY to S$281.3m, increases in operating expenses namely staff (+28.5% YoY) and repair costs (+41.6% YoY) resulted in a net loss of S$12.1m. For FY13, SMRT reported a 30.6% YoY decline in net profit to S$83.2m despite a 5.9% YoY increase in revenue to S$1,119m. SMRT also declared a final dividend of 1 S cent (versus 5.7 S cents last year) to bring its total dividends declared to 2.5 S cents. Pending a results briefing with management, we maintain our HOLD rating on SMRT as we feel that much of the negatives have been priced in by the street. Nonetheless, we place our fair value estimate of S$1.51 under review. (Lim Siyi)

OCBC: 1Q net earnings of S$696m
OCBC posted net earnings of S$696m, -16% YoY or +5% QoQ, and above market expectations of S$640m (based on a Bloomberg poll). Net Interest Income fell 4% YoY and 1% QoQ to S$912m. NIM was 1.64% in 1Q13 versus 1.70% in 4Q12 and 1.86% in 1Q12. Non Interest Income fell 20% YoY and 11% QoQ to S$676m (1Q12 included higher trading income and mark-to-market investment gains from the insurance business). Loans grew 4% from the previous quarter to S$146.8b. Loans to deposits ratio also moved up from 86.2% in 4Q12 to 87% in 1Q13. We do not have a rating on OCBC. DBS and UOB will be releasing 1Q results on 2 May 2013 (Thu). The consensus 1Q13 net profit estimates are S$824m for DBS and S$660m for UOB. (Carmen Lee)

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


- U.S. stock climbed on Monday, and the S&P 500 closed on a record high as investors were heartened on the latest corporate earnings.

- Jardine Cycle & Carriage has been appointed as Daimler AG’s official partner to distribute Mercedes-Benz passenger cars and commercial vehicles and Fuso trucks in Myanmar.

- Lian Beng’s construction order book has reached a new high of S$1.2b after being awarded three new contracts worth a total of about S$211m.

- Fragrance Group reported a 20% YoY decline in 1Q13 PATMI to S$17.6m, despite revenue climbing 17% to S$110.5m.

- BH Global Marine has won a series of contracts worth a total of ~S$11m.

- Hu An Cable has issued a profit guidance for 1Q13 due to a decrease in sales and an increase in expenses from the operation of the group’s new plant in Yixing City, Jiangsu Province.
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