Local Brokerages Stock Call 18 April 2013

From OCBC:

FroKeppel Land: Strategic alliance with Vanke
Keppel Land’s (KPLD) 1Q13 PATMI came in at S$96.6m – down 32% YoY mostly due to the absence of contributions from Reflections at Keppel Bay. KPLD also reported that it would join China Vanke (Vanke) in a strategic alliance to develop property in China and Singapore. As a start, Vanke would take a 30% interest in KPLD’s Tanah Merah GLS site for S$135.5m. All considered, we believe this price is reasonable and see the limited loss of accretion to KPLD’s RNAV mostly offset by the potential synergies from this alliance and further asset diversification in an increasingly uncertain domestic residential space. Maintain BUYwith an unchanged fair value estimate of S$4.53 (25% discount to RNAV). 
 
Frasers Centrepoint Trust: No surprises in 2QFY13
Frasers Centrepoint Trust’s (FCT) 1HFY13 DPU climbed 8.5% to reach 5.1 S cents, forming ~47% of ours and consensus full-year DPU forecasts. This is broadly in line with expectations, given that the income retained in 1H is likely to be distributed in 2H. On the whole, we note that positive rental reversion of 6.6% was achieved in 1H (1Q: 5.2%, 2Q: 10.1%). Portfolio occupancy also improved to 98.2% as at 31 Mar from 87.2% in prior quarter, boosted by start of tenant operations following the fitting out at CWP and Bedok Point. This more than offset the temporary dip in occupancy rates at YewTee Point and Anchorpoint. Looking ahead, management expects CWP and Northpoint to continue to uphold the growth momentum of FCT, while the rest of the malls to remain stable. FCT also updated that the sub-division of the strata titles of the components at One@Changi City is still ongoing, and completion of the process remains uncertain. We like FCT for its strong execution, strong financial position (30.5% gearing) and suburban mall exposure, but at current price, we deem the valuation (1.45x P/B) as fair, not compelling. As such, we maintain HOLD and S$2.13 fair value on FCT.

Mapletree Logistics Trust: Firm 4Q results as expected
Mapletree Logistics Trust (MLT) reported 4QFY13 NPI of S$65.5m and total amount distributable of S$46.7m, up 6.7% and 11.2% YoY respectively. The growth was mainly attributable to an enlarged portfolio and improved performance from existing assets. DPU for the quarter was up 1.8% YoY to 1.73 S cents after accounting for S$4.6m due to its perpetual securities holders. For FY13, DPU increased by 2.5% to 6.86 S cents from 6.69 S cents achieved in the four quarters ending 31 Mar 2012. This is relatively in line with our/consensus full-year DPU forecasts of 6.93/7.0 S cents. Operationally, portfolio occupancy has stayed healthy at 98.5% (99.2% in 3Q), while positive rental reversions of 14% were achieved (17% in 3Q). In addition, aggregate leverage improved from 35.9% in previous quarter to 34.1%, due mainly to lower translated JPY borrowings. We will be attending MLT’s results briefing later in the morning to get more details on its outlook and direction. For now, we keep our HOLD rating but place our S$1.34 fair value under review.

From CIMB:

Banks

Basel III could weigh on growth

OVERWEIGHT - Maintained We think some features of Basel III are ill suited to Asian banking markets and take a cautious view on its adoption across Asia this year. Sector growth could be weighed down by rising liquidity premiums (biggest ST concern), potential balance sheet pressures (mid-term worry) and ongoing constraints on cross-border business (structural). Our base-case FY12-14 sector earnings CAGR is 10.3%. In an alternative scenario, CAGR could slow by 1.5% pts to 8.8%. Banks in Australia, Korea, Malaysia, Singapore and Thailand could be most negatively impacted. Banks in China, India and Indonesia seem better positioned. We Overweight Asian banks with preferences for China, Korea and Indonesia.  Frasers Centrepoint Trust Awaiting accretive acquisition OUTPERFORM - Maintained | S$2.18 - Tgt. S$2.31 Causeway Point and NorthPoint remain the key drivers of FCT’s performance. We continue to like FCT for its resilient retail exposure, and see catalysts from the accretive acquisition of a larger Changi City Point, which should provide FCT with its next prong of growth. 2Q/1HFY13 DPUs broadly met our and consensus expectations at 26/48% of our FY13 forecast. The slight variance was due to higher retained earnings, which should be paid out in the remaining quarters. We tweak our DPUs and DDM-based target price (discount rate: 6.7%) higher. Maintain Outperform. Mapletree Logistics Trust Awaiting acquisitions NEUTRAL - Maintained | S$1.31 - Tgt. S$1.33 With its currency hedges in place, MLT’s performance was unmarred by JPY weakness as it continued to deliver low single-digit DPU growth. We continue to await acquisitions, which is critical in our view, for further growth and upside from current levels. 4Q/FY13 DPUs came in broadly in line with consensus and our expectations, at 25/98% of our full-year forecast. We tweak our FY14-15 DPUs to factor in a larger but later acquisition. Our DDM-based target price is raised after rolling forward our numbers with a lower discount rate of 7.1% (previously 7.3%). Maintain Neutral. Keppel T &T Building its core OUTPERFORM - Upgrade | S$1.41 - Tgt. S$1.54 KPTT was able to maintain its core operating earnings as data centre and logistics earnings continued to perform. KPTT is actively involved in several logistics development projects in China and Singapore. We may also hear of potential organic/inorganic data centre expansions. 1Q13 core net profit of S$15m was in line with our expectations. We adjust our depreciation/interest cost assumptions, and therefore trim our FY13-15 EPS. In light of a growing core, we lower our holding company discount from 15% to 10%, raising our SOP-based target price to S$1.54. Upgrade from Neutral to Outperform. A robust 2H13 outlook is a likely price catalyst. Keppel Land More forays into China NEUTRAL - Maintained | S$3.99 - Tgt. S$4.00 KepLand’s 1Q13 report card was mixed: margins have compressed yoy despite improving unit sales in China. More capital has been deployed into China and we expect more to come given its latest alliance with China Vanke. This, however, may not drive the stock in the near term. 1Q13 core net profit (S$78m) was below our estimate at 18% of our full-year and 20% of consensus. More unit deliveries in China are expected in FY13 and we expect profit recognitions to catch up later. Hence, we keep our core EPS estimates and target price (still on 20% discount to RNAV). Maintain Neutral as we remain unclear about the group’s longer-term strategic direction. From UOB KH: Frasers Centrepoint Trust- 2QFY13: Causeway Point’s AEI one of the best performing AEIs. (FCT SP/BUY/S$2.24/Target: S$2.51) Maintain BUY with a higher target price of S$2.51 (from S$2.37), based on the dividend discount model (required rate of return: 6.3%, terminal growth: 2.0%). Keppel Land- 1Q13: On the lookout for acquisitions. (KEP SP/BUY/S$3.99/Target: S$5.11) Maintain BUY and raise target price to S$5.11, pegged at a 5% discount to our RNAV of S$5.37/share. Key catalysts include acquisitions, divestment of its office assets and a pick-up in China sales. Capita Commercial Trust (CCT SP, C61U) - Technical BUY with +8.1% potential return Last price: S$1.72 Resistance: S$1.86 Support: S$1.58 BUY with a target price of S$1.85 with tight stops placed below S$1.67. The stock has closed above its recent high at S$1.71 with considerably higher volume and may continue to trend higher. Its 20-day moving average has formed a golden cross with its 50-day moving average. Its MACD and RSI indicators did not turn down, albeit Stochastics is now in the overbought region. Our institutional research has a fundamental BUY with a target price of S$1.79. Suntec Real Estate Investment Trust (SUN SP, T82U) - Technical SELL with +5.4% potential return Last price: S$1.955 Resistance: S$2.05 Support: S$1.85 SELL with a target price of S$1.85 with tight stops placed above S$2.05. The stock is trading near its gap down on 28 Jun 07 which could be acting as a resistance if prices fail to close the said gap. In addition, a potential bearish harami has formed. Its RSI indicator has turned down and Stochastics has formed a bearish crossover in the overbought region. Watch to see if its mid Bollinger band could act as a support. Our institutional research has a fundamental BUY with a target price of S$2.03.   SPDR Gold Shares (GLD SP, O87) – Take profit on previous technical SELL Last price: US$133.78 Resistance: US$145 Support: US$128 The stock was featured as a technical SELL when it opened at US$150.9 on 12 Apr 13. It has since returned 11.3% on closing prices after touching an intraday low of S$128.38 on 16 Apr 13, which exceeded our initial SELL target of US$140. Some profits could be taken off the table as SPDR Gold appears to be rebounding from its potential support level.  From DBS: Frasers Centerpoint Trust (FCT)’s results are above expectations. 2Q13 topline grew 8.4% to $39.8 million while NPI saw a 9.7% growth to $28.7 million, attributable to higher contributions from Causeway Point and Northpoint, with other malls remaining stable. Looking ahead, with only 7.6% of NLA due to expire for the remainder of the year, earnings in the 2HFY13 looks resilient. Our analyst tweaks the estimates for Causeway Point upwards to account for the strong rental performance and have forecasted in Changi City Point acquisition by end of FY13, assumed at S$400m at a yield of 5.25%, funded by a mix of debt and equity. TP is thus raised to S$2.33 (from $2.15) based on DCF. Maintain Buy. Mapletree Logistics Trust (MLT) reported 4Q13 results in line with expectations. Gross revenues and net property income grew 6.4% and 6.7% y-o-y to S$75.7m and S$65.5m respectively. Growth was however, mitigated by the weakness of the Japanese yen. Still, we note that 85% of their distributable income is hedged for FY14, which means the weak JPY is likely to see limited impact on the immediate quarters distributions. The stock has done well YTD and trading above our current $1.22 TP. We will provide more details post results conference call. SembCorp Industries (SCI) announced that its 49% owned India power plant, Thermal Powertech Corporation, has secured a long term power purchase agreement from the government of Andhra Pradesh. This is positive news but within expectations so no change to $5.20 TP and Hold call. From Maybank KE: Keppel Land: Standing On The Shoulder Of Giants; Buy TP $4.78 KPLD SP | Mkt Cap USD5.0b | ADTV USD8.7m We  reiterate  our  BUY  recommendation  on  KepLand, following the  announcement  of  a  strategic  tie-up with China Vanke, as well as its  strong  execution in China. Its 1Q13 results, even though down 32% YoY,  were broadly in line with expectations.  KepLand  sold  an  impressive ~850 homes in China in 1Q13, 23% more  than  in 4Q12. The commitment rate at MBFC Tower 3 has now inched up to  86%, up from 79% in end-2012.  We believe there will be more positive news flows pertaining to its  tie-up  with  Vanke  in  the coming months, after Vanke announced it is  taking  a  30%  stake in KepLand’s Tanah Merah project in Singapore. If  leveraged  properly,  KepLand  could use the alliance to grow in China.  Maintain BUY on KepLand, target price unchanged at SGD4.78.