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OCBC Reports July 2013
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PostPosted: Tue Jul 23, 2013 9:51 am    Post subject: Reply with quote

CapitaMall Trust: Another promising quarter
CapitaMall Trust (CMT) reported DPU of 2.53 S cents, up 6.3% YoY. Together with 1Q DPU of 2.46 S cents, 1H13 DPU totaled 4.99 S cents (+6.6%), forming 50.9% of FY13F DPU. This is above our expectations given that a total of S$12.3m or c.0.36 S cents retained over 1H is available for distribution in 2H13. As at 30 Jun, CMT’s portfolio occupancy stood at 99.1%, up 0.9ppt QoQ, while positive rental reversion of 6.4% achieved in 1H was slightly higher than 1Q’s growth of 6.2%. CMT’s financial position also improved during the quarter, with gearing ratio down to 34.9% from 35.2% in 1Q. On 2 Jul, CMT redeemed all its outstanding convertible bonds due 2013, thereby fully addressing its refinancing needs for 2013. All 14 properties held directly by CMT, we note, are also unencumbered as a result. We now update our model to incorporate the better results and higher risk free rate assumptions. Consequently, our fair value eases from S$2.43 to S$2.35. However, given the strong upside potential, we maintain BUY on CMT. (Kevin Tan)

MORE REPORTS

Mapletree Logistics Trust: Strength despite uncertain backdrop
Mapletree Logistics Trust (MLT) reported 1QFY14 DPU of 1.80 S cents, up 5.9% YoY. Stripping out divestment gain from 30 Woodlands Loop, DPU would be up 4.7%. The results were in line with expectations, as 1Q DPU have met 24.8%/25.4% of our/consensus full-year DPU projections. Overall occupancy stood at 98.2%, largely stable from 98.5% seen in previous quarter. In addition, positive rental reversion of 17% was achieved. This is higher than prior quarter’s growth of 14%, although MLT maintains its view that the rate is set to moderate going forward. MLT also updated that its redevelopment project at 21 Benoi Sector in Singapore is on track for completion in 3QFY14, and that the property is currently 94% pre-leased. In the coming quarter, The Box Centre in Korea (acquired in Jul at NPI yield of 8.4%) will start contributing to MLT’s topline. We are keeping our forecasts intact for now as the results were within expectations. Maintain HOLD with an unchanged fair value of S$1.15 on MLT. (Kevin Tan)

Suntec REIT: Recovery possibly in sight
Suntec REIT’s 2Q13 DPU was up 0.9% QoQ (-4.7% YoY) to 2.249 S cents, helped by a S$7.8m capital distribution from Chijmes sale proceeds. For 1H13, DPU amounted to 4.477 S cents, down 7.0% YoY and 4.3% HoH, and formed 48.1% of our full-year DPU forecasts. This is broadly in line with our expectations, as Suntec REIT’s financial performance is likely to improve going forward now that the Phase 1 space has become operational in Jun. For the first time, Suntec REIT shared that SCM Phase 1 has achieved a passing rent of S$13.09 psf pm. This, we note, is higher than the rates of S$11.31 secured at the rest of SCM and S$12.59 projected for the AEI project. Committed occupancy at SCM Phase 1 now stands at 99.6%, while pre-commitment at Phase 2 has risen from 53.0% in 1Q to 70.1%. We tweak our model to incorporate the results and higher market risk free rates. While our fair value drops to S$1.85 from S$2.16, we view that current valuations are compelling. Maintain BUY on Suntec REIT. (Kevin Tan)

Raffles Medical Group: 2Q13 results in-line with expectations
Raffles Medical Group (RMG) reported its 2Q13 results this morning which were within our expectations. Revenue rose 12.9% YoY and 7.1% QoQ to S$86.8m. PATMI was up 15.9% YoY and 6.8% QoQ to S$14.4m. Growth during the quarter was driven by higher patient acuity and an increased depth and breadth of medical services on offer. Both RMG’s core divisions contributed to its topline increase, with its Hospital Services and Healthcare Services segments growing 16.8% and 6.5% YoY, respectively. For 1H13, revenue increased 12.1% YoY to S$167.9m, forming 48.3% of our full-year estimates; while PATMI jumped 16.0% to S$27.9m, or 45.9% of our FY13 forecast. This is unsurprising, as 2H is seasonally a much stronger half for RMG, and we expect this trend to be maintained this year. An interim dividend of 1 S cent/share was declared (payable on 29 Aug 2013), similar to 2Q12 and our forecast. We will provide more details after the analyst briefing. We maintain our BUY rating and S$3.42 fair value estimate (29x blended FY13/14F). (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- The S&P 500 index climbed slightly to end at another all-time high on Friday. The technology sector weighed on the DJIA and the Nasdaq after poor earnings from Advanced Micro Devices Inc. and Microsoft Corp.

- TEE Land has entered into an MOU to jointly develop, build and operate a series of “Boutique” Industrial Estates in Thailand.

- Perennial China Retail Trust intends to issue S$50.0m 5.25% fixed rate notes due 2016.

- SGX’s head of listings says that the IPO pipeline is healthy; there were 11 listings in 1H13.

- Blumont Group announced that it is likely to report a loss for 2Q13.

- Linair Technologies expects to report a consolidated loss for 1HFY13 due to lower margins for its engineering business, impairment of receivables and lower sales for its duct business.
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PostPosted: Wed Jul 24, 2013 9:53 am    Post subject: Reply with quote

CapitaMalls Asia: Gaining good traction
CMA’s 2Q13 PATMI is S$245.6m, which increased 5.9% YoY mainly due to higher fair value gains for Chinese assets and ION Orchard and profit recognition at Bedok Residences, partially offset by a lower divestment gain. Excluding one-time items, we view the 2Q13 results to be mostly within expectations and YTD core PATMI now makes up 63% of our FY13 forecast. We continue to see relatively firm NPI statistics across the group’s mall portfolio. In China (which makes up 51% exposure of total assets excl. cash), 1H13 tenants sales at CMA’s malls grew at 9.5% YoY on a psf basis. In Singapore, shopper traffic and tenant sales are up a healthy 4.2% and 3.5% YoY, respectively. Looking ahead, CMA expects to open phase 2 of CapitaMall Jinniu in Chengdu, China in 3Q13, and Bedok Mall and Westgate in 4Q13. We rate the stock with a BUY rating and an unchanged fair value estimate of S$2.55. (Eli Lee)

MORE REPORTS

Singapore Exchange: Increased DPS by 1 cent
Singapore Exchange (SGX) delivered FY13 net earnings of S$335.9m, exactly in line with market expectations. Securities Market saw Securities Daily Average Value (SDAV) of S$1.5b in FY13, up 10%, resulting in a 10% increase in turnover to S$363b. Derivatives Market enjoyed strong volume too, with 101m contracts traded, up 32% in FY13. Management has declared a FY13 full year dividend of 28 cents, up 1 cent from 27 cents (from FY2010-2012). This meant a final quarter payout of 16 cents (12 cents have already been paid out). Recent macro factors are pointing to uncertainty ahead, and this is likely to result in a quieter 1QFY14. In addition, this could potentially spillover into 2Q. Expenses are likely to stay high in FY14, largely from new product initiatives as well as its regulatory requirement related expenses. As we roll our estimates into FY14/15 and using the same blended 23x earnings, we are raising our fair value estimate slightly from S$7.16 to S$7.43. Dividend yield is 3.7% based on current price. Maintain HOLD. (Carmen Lee)

Frasers Centrepoint Trust: Positive trends largely intact
Frasers Centrepoint Trust (FCT) reported 3QFY13 DPU of 2.85 S cents, representing a YoY growth of 9.6%. This brings the 9MFY13 DPU to 7.95 S cents (+8.9%), forming 73.2% of our FY13F DPU. This is largely in line with our expectations, as we expect the remaining S$2.9m retained in 1H to be distributed in 4Q. Key drivers for 3Q performance remained Causeway Point (CWP) and Northpoint. However, pockets of weakness persisted at YewTee Point and Bedok Point. Looking ahead, FCT expects CWP and Northpoint to remain as the main engines for growth, as leases amounting to a substantial 75.6% of FCT’s gross rent are up for renewal in FY14, and positive rental reversions are still expected. On its acquisition front, FCT believes that the injection of Changi City Point in FY13 now appear remote as the strata title division of One@Changi City is still ongoing. We are keeping our forecasts largely unchanged, but as we switch our valuation to dividend discount model and factor in higher risk free rates, our fair value drops from S$2.13 to S$1.96. Maintain HOLD on FCT. (Kevin Tan)

Sheng Siong Group: 2Q13 results in-line
Sheng Siong Group’s (SSG) 2Q13 results came in within expectations with revenue and net profit increasing 8.7% and 20.8% YoY to S$159.8m and S$8.5m respectively. Gross profit and operating margins also improved YoY for the third straight quarter as an interim dividend of 1.2 S cents was declared (versus 1.0 S cent last year). In the coming quarters, the group could experience some pressures from lower same store sales and higher staff costs but we expect the impact to be minimal given the group’s effective cost management initiatives and full-year contributions from new stores opened last year. In addition, the operating environment remains conducive for the group with resilient supermarket expenditure and lower inflation expectations. Reiterate BUY for SSG with a slightly lower fair value estimate of S$0.80 (S$0.82 previously). (Lim Siyi)

Ascott Residence Trust: 2Q13 better than our expectations
Ascott Residence Trust (ART) reported 2Q13 results that were better than our expectations but in line with the street. Revenue fell 2% YoY to S$77.4m and gross profit dropped 4% YoY to S$41.0m. However, unitholders’ distribution grew 14% YoY to S$30.9m (including a reversal of over-provision of prior years’ tax expense of S$2.7m), which led DPU up 3% YoY to 2.45 S cents. Average daily rates in Singapore are down ~3-7% in 2Q13. Assuming that exchange rates stay constant for the rest of the year, management believes that the whole portfolio's RevPAU for 2H13 will be flat or slightly higher than 1H13's. We adjust our earnings forecasts for FY13-14 upwards in our valuation model and, as a result, our FV moves up slightly from S$1.31 to S$1.37. Maintain a HOLDrating on ART. (Sarah Ong)

Starhill Global REIT: 2Q13 DPU rose 10.2% YoY
Starhill Global REIT (SGREIT) announced 2Q13 NPI of S$39.1m and distributable income of S$26.7m, up 5.2% and 14.7% YoY respectively. While the number of units outstanding was enlarged post conversion of 152.7m convertible preferred units (CPUs) into 210.2m ordinary units, income to be distributed to CPU holders declined 88.2% YoY to S$0.3m. As a result, income to unitholders was up 22.1% to S$25.6m, while DPU was up 10.2% YoY to 1.19 S cents. Together with 1Q DPU of 1.37 S cents, 1H13 DPU totaled 2.56 S cents, up 19.1% YoY. This forms 52.1%/51.2% of our/consensus full-year DPU forecasts. The positive performance, we note, was mainly attributable to strong contribution from SGREIT’s Singapore portfolio and incremental revenue from its recently acquired Plaza Arcade in Australia. As at 30 Jun, SGREIT’s portfolio occupancy stood at 99.6%, largely unchanged compared to 99.7% in the Mar quarter. Financial position also remains strong, with gearing at 30.3% and interest cost at 3.03% (81% fixed/hedged). We will be attending SGREIT’s analyst briefing later in the morning. For now, we maintain BUY on SGREIT but place our fair value of S$0.95 under review. (Kevin Tan)
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PostPosted: Thu Jul 25, 2013 9:41 am    Post subject: Reply with quote

Starhill Global REIT: Poised for further upside
Starhill Global REIT (SGREIT) announced 2Q13 DPU of 1.19
S cents, up 10.2% YoY. Together with 1Q DPU of 1.37 S
cents, 1H13 DPU totaled 2.56 S cents, up 19.1% YoY. This
forms 52.1%/51.2% of our/consensus full-year DPU
forecasts, well within expectations. The positive
performance was mainly due to strong contribution from its
Singapore and Australia portfolios. For 2Q, we note that
SGREIT’s Singapore portfolio contributed 63.7% of total
revenue, largely unchanged from 66.3% in 1Q. Overall
occupancy also stayed stable at 99.6%, compared to 99.7%
seen in previous quarter. Looking ahead, management
believes the new renewal rate (+6.7%) for Toshin lease,
7.2% rental uplift from the Malaysia master leases, and
continued repositioning of Wisma Atria will help to bolster
SGREIT’s income in 2H13. On its capital management front,
SGREIT also expects its debt duration to improve from 1.2
years to 3.5 years and the percentage of its debts
fixed/hedged to increase from 81% to over 90%, having
secured loan facilities to refinance all its debts due in 2013.
We maintain BUY with unchanged fair value of S$0.95 on
SGREIT.
More reports:
- Cache Logistics Trust: Solid 2Q13 scorecard
- Frasers Commercial Trust: 28.8% jump in 3QFY13 DPU
- Yangzijiang Shipbuilding: First company on the SGX to
trade in RMB
- CapitaLand Limited: 2Q13 figures within expectations
News Headlines
• US equities retreated on Wednesday on mixed earnings
and increasing borrowing costs. The DJIA fell from the
prior day’s record close.
• MTQ’s 1Q14 PATMI rose 38% to S$6.5m; revenue had
climbed 146% to S$94.4m.
• Hisaka Holdings has announced an MoU in relation to the
proposed very substantial acquisition of Temasek Regal
Capital Sdn Bhd.
• Sysma Holdings has completed the purchase of a 60%
equity stake in GCAP Properties.
• Banyan Tree is issuing S$70m of 5.75% notes due 2018.
Key Singapore Indices
Close Chg % Chg
STI 3274.8 21.0 0.6
Catalist 181.6 -0.1 -0.7
Finance 842.3 5.5 0.7
Property 761.4 5.5 0.7
Electronics 544.4 0.8 0.2
Vol(m) 3970.8 1506.2 61.1
Val(S$m) 1476.0 48.9 3.4
World Indices
Close Chg % Chg
Dow Jones 15542.2 -25.5 -0.2
Nasdaq 3579.6 0.3 0.0
S&P500 1685.9 -6.5 -0.4
FTSE 6620.4 23.0 0.3
KLCI 1810.0 4.7 0.3
Hang Seng 21968.9 53.5 0.2
Nikkei 14731.3 -47.2 -0.3
SET 1501.4 -12.0 -0.8
KOSPI 1912.1 7.9 0.4
TWSE 8196.2 -18.5 -0.2
Market Statistics (SG)
STI 52-week range 2,932 3,465
No. of gainers 322
No. of losers 204
No. of unchanged 183
Economic Statistics
S$/US$ 1.3 0.0
Yen/US$ 100.3 0.0
3-mth S$ SIBOR 0.4 0.0
3-mth US$ SIBOR 0.3 0.0
Crude futures (US$) 105.2 -0.2
Research Team
(65) 6531 9800
e-mail: info@ocbc-research.com
OCBC Investment Research
Market Pulse
25 Jul 2013
2
Starhill Global REIT: Poised for further
upside
● 2Q13 DPU up 10.2% YoY
● Healthy underlying performance
● Clear catalysts for growth
In line 2Q13 results
Starhill Global REIT (SGREIT) announced
2Q13 NPI of S$39.1m and distributable
income of S$26.7m, up 5.2% and 14.7%
YoY, respectively. While the number of units
outstanding was enlarged post conversion of
152.7m convertible preferred units (CPUs)
into 210.2m ordinary units, income to be
distributed to CPU holders declined 88.2%
YoY to S$0.3m. As a result, distribution to
unitholders was up 22.1% to S$25.6m
(S$0.9m retained), while DPU was up 10.2%
YoY to 1.19 S cents. Together with 1Q DPU of
1.37 S cents, 1H13 DPU totaled 2.56 S cents,
up 19.1% YoY. This forms 52.1%/51.2% of
our/consensus full-year DPU forecasts, well
within expectations.
Strong numbers from Singapore and
Australia portfolios
The positive performance was mainly due to
strong contribution from its Singapore and
Australia portfolios. Both Wisma Atria (WA)
and Ngee Ann City (NAC) benefited from
higher occupancies and positive rental
reversions (15.1-15.6% increase for office
segment and WA retail leases committed
from Jul 2012 to Jun 2013). In addition, NAC
saw its NPI grow 9.8% YoY due to a 10.0%
rent increase for Toshin master lease. This
led to a 6.9% YoY growth in Singapore
portfolio’s NPI. Australia portfolio NPI also
jumped 32.7% YoY as a result of incremental
income from its recently acquired Plaza
Arcade, despite a weaker AUD (down ~5%).
This has more than offset the soft
performance at the other overseas portfolios.
For 2Q, we note that SGREIT’s Singapore
portfolio contributed 63.7% of total revenue,
largely unchanged from 66.3% in 1Q. Overall
occupancy also stayed stable at 99.6%,
compared to 99.7% seen in previous quarter.
Full potential not unleashed yet
Looking ahead, management believes the
new renewal rate (+6.7%) for Toshin lease,
7.2% rental uplift from the Malaysia master
leases, and continued repositioning of WA will
help to bolster SGREIT’s income in 2H13. On
its capital management front, SGREIT also
expects its debt duration to improve from 1.2
years to 3.5 years and the percentage of
debts fixed/hedged will increase from 81% to
over 90%, having secured loan facilities to
refinance all its debts due in 2013. We
maintain BUY with unchanged fair value of
S$0.95 on SGREIT. (Kevin Tan)
. . . . .
Cache Logistics Trust: Solid 2Q13
scorecard
● 2Q13 DPU up 8.4% YoY
● Limited lease renewal risk
● Low gearing of 29.2%; 70%
hedged
2Q13 performance within view
Cache Logistics Trust (CACHE) turned in a
firm set of 2Q13 results last evening. NPI
grew 17.0% YoY to S$19.6m and
distributable income increased 19.8% to
S$16.6m. The better performance was chiefly
driven by rental escalations from its existing
portfolio assets and full-quarter contribution
from Precise Two following the completion of
acquisition on 1 Apr. DPU for the quarter
came in at 2.147 S cents, representing a rise
of 8.4% YoY. This brings the 1H13 DPU to
4.381 S cents (+7.7% YoY), meeting
52.0%/50.9% of our/consensus FY13 DPU
projections. Based on the last closing price,
annualised current yield stands at 7.1% –
attractive in our view.
Portfolio maintained its resilience
As at 30 Jun, the overall portfolio occupancy
was maintained at 100%, with a weighted
average lease to expiry of 3.6 years. Notably,
CACHE’s lease expiry in 2013 has already
been fully addressed, while only 6% of total
portfolio GFA is due for renewal in 2014.
Hence, we believe that there should be
limited leasing risk over the period, and that
income stream would remain stable and
predictable.
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PostPosted: Fri Jul 26, 2013 9:19 am    Post subject: Reply with quote

CapitaLand Limited: Building competitive scale
CAPL’s 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations; 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. The group sold 736 Chinese residential units in 2Q13, which is respectable but somewhat slower than the 955-unit pace in 1Q13. Management guides that Chinese sales would likely fall to around 3.3k units for FY13, pointing to c.1.6k units in 2H13 – still healthy but below the 1.9k-unit pace in 2H12. In Singapore, residential sales slowed to 139 units in 2Q13 in the aftermath of a blowout 1Q13 (544 units sold) driven by discounts. Mall subsidiary CMA continues to report firm operating statistics: same-mall NPI in China and Singapore in 1H13 is up 12.1% and 2.0% YoY, respectively. We believe CAPL’s strategy of growing competitive scale in six geographic clusters is sound and well thought out, and we continue to see value in CAPL shares at current levels. Maintain BUY with an unchanged fair value estimate of S$3.77. (Eli Lee)


MORE REPORTS

Singapore Airlines: No re-rating yet

Excluding one-off items, Singapore Airlines’s (SIA) 1Q14 results came in below expectations. Revenue would have fallen slightly while PATMI was inflated by exceptional items and aircraft/parts disposal gains. ). SIA remains plagued by intense competition within the premium carrier space and passenger yields continue to stay depressed. With the outlook for FY14 still expected to remain lacklustre, we anticipate an extension of selling pressure on the counter for the interim. Based on a peg of 0.8x P/Book, we maintain SELL on SIA with a fair value estimate of S$9.50 (S$10.00 previously). (Lim Siyi)

SATS Ltd: Slightly off the mark
SATS’s 1Q14 results came in slightly under our expectations as revenue slipped 0.8% YoY to S$434.5m following declines in the food solutions segment and EBITDA fell 2.6% YoY to S$60.5m. Qantas’s move to Dubai and lower business volumes from TFK were the main culprits for this decline. Only with a write-back of prior-year’s tax provisions was the group able to record an 11.9% YoY improvement in PATMI to S$46.2m. For the coming quarters, we expect some softness in growth trends for passenger traffic and moderate our forecasts for the remainder of FY14 accordingly. While our fair value lowers to S$3.12 (S$3.15 previously) – suggesting limited upside at this juncture – we expect SATS’s defensive qualities i.e. earnings stability and healthy dividend attractiveness to provide some support for its share price. Maintain HOLD. (Lim Siyi)

Sembcorp Marine: Court of Appeal rules in favour of SMM
Sembcorp Marine (SMM) announced that the Court of Appeal has ruled in its favour with regards to its appeal filed in Jun 2012 relating to the High Court’s decision on SMM’s claims against PPL Holdings. Amongst other rulings, it has been ruled that certain provisions on the JV agreement between SMM and PPL Holdings premised on equal shareholding no longer applied when SMM increased its shareholding from 50% to 85% in PPL Shipyard. SMM is “pleased with the outcome”, and the group will now have complete control of PPL Shipyard’s board. The consortium (involving Yangzijiang Shipbuilding) that owns the remaining 15% in PPL Shipyard is likely to have little say over the management of PPL Shipyard. Maintain BUY with S$5.64 fair value estimate on SMM. (Low Pei Han)

CDL Hospitality Trusts: 2Q13 below street’s expectations
CDL Hospitality Trusts reported a 2.9% YoY decline in 2Q13 gross revenue to S$35.6m and a 4.4% YoY fall in net property income to S$32.6m. Income available for distribution contracted 6.4% YoY to S$29.4m. 2Q13 RevPAR for the Singapore hotels fell 8.5% YoY to S$193, affected by increased competition, weaker corporate demand, the absence of the biennial Food & Hotel Asia event in April, and a mild impact from the haze. The results were generally in line with our expectations, with 1H13 DPU of 5.41 S cents forming 50% of our FY13 estimate. We judge that the 2Q13 results missed the street’s expectations with 1H13 DPU forming only 47% of the mean FY13 estimate. We maintain a HOLD rating on CDLHT but place our FV of S$1.79 under review. (Sarah Ong)

TEE International: FY13 earnings down 32% YoY
Summary: TEE International (TEE) reported 4Q13 PATMI of S$6.4m, down 45% YoY mostly due to a S$4.1m increase in administrative expenses. Tee reported that these expenses were incurred for marketing property development projects and also included administrative expenses for its newly acquired integrated turnkey material handling subsidiary. FY13 PATMI cumulates to S$13.1m which we judge to be somewhat below our full year expectations. We note, however, that FY13 topline increased 51% YoY to S$21.6m as the group recognized higher levels of contributions from engineering and property development projects. We would speak with TEE later regarding these results and, in the meantime, put our rating and fair value estimate under review. (Eli Lee)

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


NEWS HEADLINES

- Japan’s consumer prices rose the most since 2008 in June; consumer prices excluding fresh food increased 0.4% YoY.

- Mapletree Industrial Trust reported 1Q14 distributable income of S$40.2m, up 9.0% YoY.

- Oxley Holdings has issued S$25m fixed rate notes due 2018 under its S$300m multicurrency MTN programme.

- Singapore Shipping reported 1Q14 net profit of US$1.95m, up 56% YoY; revenue had climbed 83% YoY to US$9.1m.

- Ziwo Holdings expects to report operating loss for 2Q13 due to slowdown in sales.
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PostPosted: Tue Jul 30, 2013 9:20 am    Post subject: Reply with quote

Telco Sector: Minimal impact on SingTel
SingTel will have to offer its BPL content to rival StarHub customers after the Ministry for Communications and Information (MCI) rejected its appeal for a stay of the Media Development Authority (MDA) ruling for the cross-carriage of the closely followed football content. However, the subscription comes with a price – new subscribers will have to fork out S$59.90 (before GST) for the stand-alone package, while existing mioTV subscribers can continue with the existing pricing of S$34.90 (before GST). While we may see some migration of subscribers from mioTV to StarHub’s cable TV platform, we do not expect a huge number. We maintain our NEUTRALrating on the sector. While we also maintain our HOLD rating on SingTel, we downgrade StarHub to SELL. (Carey Wong)

MORE REPORTS

StarHub Ltd: Downgrade to SELL; BPL likely non-event
StarHub Ltd will be able to cross carry the widely-followed BPL (Barclays Premier League) live matches for the upcoming 2013 to 2016 seasons. However, with a seemingly steep price point of S$59.90/month (before GST) for new subscribers (while existing mioTV subscribers continue to pay the current S$34.90 (before GST)), we suspect that any migration of subscribers from mioTV to StarHub’s cable TV platform would be quite muted. In light of the likely muted boost from the BPL cross carriage and recent strong run-up in share price (9.5% after our upgrade on 3 Jun), we feel that the stock may have run ahead of its fundamentals. As we are also keeping our DCF-based fair value unchanged at S$3.82 (already accounted for a higher risk-free rate), we foresee more downside risk from here. Hence, we downgrade our call back from Hold to SELL. (Carey Wong)

First REIT: Contribution from new assets
First REIT’s (FREIT) 2Q13 results were within our expectations. Revenue and DPU (after stripping out a special distribution in 2Q12) rose 43.4% and 16.4% YoY to S$20.1m and 1.85 S cents, respectively. Only 0.86 S cents will be paid to unitholders (on 29 Aug 2013) as FREIT had already made an advance distribution of 0.99 S cents on 26 Jun 2013 (prior to the issuance of new units for part payment of its acquisitions). FREIT is in the process of refinancing ~S$92m of its floating-rate debt to a 4-year fixed-rate unsecured bank loan. Upon completion, its floating rate exposure will be reduced from 72% to 46% of its total borrowings, which we view as a positive development. We retain our forecasts, HOLD rating and DDM-derived fair value estimate of S$1.20 on FREIT. (Wong Teck Ching Andy)

Yoma Strategic Holdings: First take on Yoma 1QFY14 results
Yoma Strategic Holdings (Yoma) reported 1QFY14 PATMI of S$1.6m, which decreased 80.6% YoY mostly due to higher staff costs as the group continues to build up a strong management team in anticipation of future activity. We judge 1QFY14 PATMI to be somewhat below view – forming only 14% of our full year forecast – but expect the pace of recognition at development projects to back-loaded in the year. 1QFY14 topline came in at S$15.2m, up 11.6% YoY due to higher contributions from recognition of residential sales. We highlight the slower pace of sales in Star City over 1QFY14, as the sales status for Buildings 3 and 4 only crept up by 22 units (from 491 units sold as at end Mar-13 to 513 units sold as at end Jun-13). However, we note the group also reported a potential conditional agreement with a third party investor for the sale of LDRs for five buildings (1043 units) in zone B of Star City, which could be a significant catalyst for Star City sales ahead. We would speak with management about this set of results and the outlook ahead and, in the meantime, maintain HOLD with our fair value estimate of S$0.87 under review. (Eli Lee)

M1: Joins Pay TV fray
M1 Ltd has announced its own Internet TV service – MiBox, which offers video-on-demand entertainment and educational titles, games, e-books and apps. Priced at just S$8/month with a 2-year contract for M1 fibre customers (S$12/month for non-M1 subscribers), customers will have access to MiBox’s library of 18k video-on-demand titles, 116 TV channels, 1.2k e-books and 370 apps. In addition, there is also an extensive selection of chargeable premium video-on-demand, e-learning titles and apps. According to M1, the service offers a new TV experience for everyone, from students to working adults to homemakers to retirees. However, given M1’s small fibre customer base and its relatively new presence in a pretty saturated Pay TV market, we do not expect to see any major impact on earnings. Maintain HOLD with an unchanged fair value of S$3.10. (Carey Wong)

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


NEWS HEADLINES

- US stocks posted a modest decline on Mon as home sales fell in the wake of higher mortgage rates and investors nervously awaited more data later in the week and a meeting of Federal Reserve policy makers.

- United Envirotech Ltd has proposed to acquire membrane products manufacturer Memstar Pte Ltd, a wholly owned subsidiary of Memstar Technology Ltd, for S$293.4m.

- Pteris Global Limited announced that it will be acquiring a 70% stake in Shenzhen CIMC-TianDa Airport Support Limited, owned by China International Marine Containers.

- Blumont Group plunged into the red to the tune of S$22.4m during 2Q13 as the company wrote down financial assets.

- SP Corporation Ltd posted a 20% drop in its revenue for 2Q13 to S$43.9m from S$54.7m last year.
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PostPosted: Wed Jul 31, 2013 9:03 am    Post subject: Reply with quote

OSIM International: To uInfinity and beyond!
Despite challenging economic conditions in China, OSIM International Ltd (OSIM) managed to record a 15.9% YoY jump in its 2Q13 PATMI to S$26.1m on the back of a 7.0% increase in revenue to S$165.5m. The former was 4.4% ahead of our forecast while the latter was 2.4% below. An interim DPS of 2 S cents was declared, in line with expectations and brings YTD dividends to 3 S cents/share. As a continuation to its innovative product drive, OSIM launched its new high-end massage chair named uInfinity in Hong Kong. This will also be sold in its other key markets in the coming weeks. We raise our FY13 and FY14 PATMI estimates by 2.5% and 2.4%, respectively, largely to account for higher share of profits of associated companies (mainly from TWG-Tea). Rolling forward our valuation to 16.5x blended FY13/14F EPS, our fair value estimate is raised from S$2.21 to S$2.40. Maintain BUY. (Wong Teck Ching Andy)


MORE REPORTS

SMRT Corporation: Disruptions continue
SMRT's 1Q14 results came in below our expectations as revenue growth slowed while higher staff and depreciation expenses caused operating and net profit to decline 49.4% YoY to S$22.2m and 55.2% YoY to S$16.3m respectively. In the coming quarters - and in the absence of fare adjustments - we expect this trend to persist as higher operating expenses continue to compress margins. In addition, recurring service disruptions suggest elevated repair and maintenance expenses. With the lack of any immediate catalysts (a switch to the new rail financing framework within FY14 is unlikely in our view), we lower our FY14 forecast figures yet again and our DDM-derived fair value estimate falls to S$1.30 (S$1.45 previously). Downgrade to SELL. (Lim Siyi)

Fortune REIT: MOU for Kingswood Ginza property
FRT has entered into a non-binding MOU in connection with the acquisition of 100% of the issued share capital of a target company by FRT and assignment of the shareholder loans to FRT. The target company owns Kingswood Ginza Property, which comprises the entire Kingswood Ginza Mall as well as other retail, kindergarten, parking lots and ancillary spaces. Kingswood Ginza Mall is the largest shopping center in HK’s Yuen Long district. The proposed acquisition, a connected party transaction, is expected to be yield accretive. The indicative purchase consideration is HK$5,849m. 142,962,000 new units, which is an increase of 8.4% of the total number of units currently in issue (excluding the new units), have been placed out at HK$6.82 each. The issue price represents a discount of 4.4% to the volume weighted average price of HK$7.1356 per unit for trades done on the SGX-ST and the SEHK for 29 July 2013. The net proceeds of ~HK$947m will be used to partially fund the proposed acquisition. We place our Buy rating and FV of HK$7.51 under review. (Sarah Ong)

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


NEWS HEADLINES

- US stocks ended slightly higher on Tue, as investors mostly adopted a cautious tone a day ahead of a monetary-policy decision from the Federal Reserve.

- Hutchinson Port Holdings Trust reported a 26% YoY drop in net profit to HK$420.5m (S$69m) for the 2Q13, due to weak trade demand from the US and the EU.

- Mapletree Greater China Commercial Trust posted available distribution per unit of 1.73 S-cents for the quarter ending 30 Jun, beating its forecast of 1.6 S-cents.

- Aussino Group has terminated the reverse takeover deal with Max Strategic Investments, the energy business of Max Myanmar Group.

- Blumont Group plans to raise about S$42.67m through the issue of up to some 861m one-for-two rights shares priced at 5 S-cents apiece.

- Horizon Oil Limited announced a S$53.5m fully underwritten accelerated non-renounceable pro-rata entitlement offer.
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