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Monday, April 29, 2013

Local Brokerages Stock Call 26 April 2013

From OCBC:
CapitaLand Limited: Firm performances across key segments
Summary: 1Q13 PATMI came in at S$188.2m – up 41% YoY mostly due to heavier income recognition of property developments in Singapore and China and S$46m net gain from the sale of a Beijing project. Excluding one-time items, 1Q13 operating profit is S$133.3m which increased 70% YoY and we judge this to be generally within expectations. Despite incremental curbs from Chinese authorities, a good 955 residential units were sold in China over the quarter; this is a strong start to the year and significantly higher than the 189 units sold in 1Q12. There was also a stark pickup in Singapore residential sales, with 544 units sold over 1Q13 versus 681 units sold in the entire FY12. In addition, retail mall segment CMA’s 1Q13 PATMI was above view due to lower-than-expected opening costs, increased contributions from new malls and better performances from CMT, ION Orchard and the China Funds. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.29 (20% discount to RNAV).

Starhill Global REIT: Not in its prime yet
Summary: Starhill Global REIT’s (SGREIT) 1Q13 results came in within our expectations. DPU for the quarter stood at 1.37 S cents, representing 27.0% of our FY13F DPU. Excluding the Toshin arrears payout, we note that DPU would have increased 10.3% YoY to 1.18 cents, still impressive in our view. Noteworthy was the strong operational performance at its Singapore portfolio, which contributed 66.3% to 1Q13 NPI. For the first time, both Ngee Ann City and Wisma Atria achieved full occupancy for both its office and retail segments, while positive rental reversions were secured. This helped to offset the decline in NPI at its Japan and Chengdu properties. We are currently maintaining our view that SGREIT is likely to perform well going forward, as it continues to ride on the strength of its Singapore portfolio, gain from its newly acquired Plaza Arcade, and a 7.2% rent increase from its Malaysia master leases. Maintain BUY with a higher fair value of S$1.05 (before: S$0.98) as we lower our cost of equity to 6.7% from 7.0%.

Ascott Residence Trust: Excluding one-off item, 1Q13 misses expectations
Summary: Ascott Residence Trust (ART) reported a 3% YoY decrease in revenue to S$69.2m for 1Q13. 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, missing ours and the street’s expectations. 1Q13 DPU increased 5% YoY to 2.25 S cents, forming 25% of ours and the street's FY13F expectations. We are cutting our FY13F DPU estimate to 8.1 S cents from 8.7 S cents. Our fair value for ART declines from S$1.36 to S$1.35 and we maintain our HOLDrating.

CDL Hospitality Trusts: 1Q13 results miss expectations
Summary: CDLHT reported 1Q13 revenue of S$37.9m, down 1.3% YoY. Lower gross revenue from the Singapore hotels was partially offset by higher revenue from the overseas properties. Net property income fell 2.1% to S$35.3m. Total return for the period dipped 0.7% YoY to S$28.4m. 1Q13 DPU of 2.69 S cents fell slightly short of expectations, forming 23.0% and 22.6% of ours and consensus FY13F estimates respectively. RevPAR for CDLHT's Singapore hotels fell 7.9% YoY to S$191 on the back of 1.2ppt drop in occupancy to 87.0% and a 6.8% drop in average room rate to S$219. We are lowering our FY13 RevPAR growth assumption for CDLHT's Singapore hotels from 3.2% to 0% and cut our RNAV-based fair value for CDLHT from S$2.11 to S$2.05. We maintain our HOLD rating on CDLHT. 

Raffles Medical Group: 1Q13 results within expectations
Summary: Raffles Medical Group (RMG) reported its 1Q13 results this morning which were within our expectations. Revenue rose 11.2% YoY to S$81.1m, while PATMI increased by 16.0% YoY to S$13.5m, such that topline and bottomline formed 23.3% and 22.2% of our FY13 forecasts, respectively. This is unsurprising as 1Q is seasonally RMG’s weakest quarter and we had expected this trend to continue this year. RMG’s Hospital Services division was the main growth driver in 1Q13, with healthy revenue growth of 16.4% YoY. This was attributed to higher patient acuity and the expansion of specialist services provided. Revenue growth for its Healthcare Services division came in at a more modest 4.0% YoY. We will provide more updates after the analyst briefing. We maintain our HOLD rating on RMG but place our S$3.01 fair value estimate under review.

Frasers Commercial Trust: Strong uplift in 2QFY13 DPU
Summary: Frasers Commercial Trust (FCOT) announced its 2QFY13 results this morning. NPI fell 7.0% YoY to S$23.0m due to the loss of income arising from divestments of KeyPoint and the Japan properties. However, distributable income grew 16.8% to S$13.1m due mainly to savings following the redemption of its Series A Convertible Perpetual Preferred Units (CPPUs). DPU for the quarter stood at 1.9883 S cents, representing a 14.4% YoY growth. This is largely in line with our expectations, as 1HFY13 DPU of 3.5715 S cents formed 51.4% of our full-year DPU forecast. We will be speaking to management later in the morning for more details on its outlook. For now, we place our Buy rating and S$1.52 fair value under review. 

Vard: Name change for STX OSV from today
Summary:  STX OSV will now commence trading under the new trading counter name Vard Holdings (SGX-ST: MS7) with effect from today. This follows its acquisition by Fincantieri in Dec last year and the passing of the special resolution to rename itself during its AGM last week. Separately, we quizzed the management on the 4% fall in its share price last Friday, and management replied that it is equally baffled and has not seen any negative developments which could have trigger such a sell-off. If anything, the management is now more excited about the new majority shareholder and the opportunities they would bring. We currently have a BUY rating with S$1.52 fair value estimate, and will provide further updates together with its 1Q results in the coming weeks. 

From UOB KH:
Super Group (SUPER SP, S10) –
A leader in Myanmar’s branded coffee market

Last price: S$3.91
Target Price: S$4.54
Super has a more than 40% share in Myanmar’s branded coffee
market. We are upbeat on its rebranding exercise and push into
China’s coffee market. In our view, the rebranding exercise will
refresh its brand positioning as well as enhance its pricing
power in the medium term. In conjunction with this,
management plans to venture into China more aggressively in
2H13, where they will primarily target the younger and lifestyle
coffee consumers. After this year’s S$50m capex, maintenance
spending going forward will only be minimal. Based on this, the
group’s projected free cash flow is more than S$100m from
2014 onwards. Management will stick to its 50% payout policy
and the excess cash will be maintained for potential M&As. The
stock remains a BUY with a PEG-based target price of S$4.54.
Technically, the stock has been supported above S$3.30 and
only a break above S$4.06 may increase its odds for further
upside towards S$4.50.

Yongnam Holdings (YNH SP, Y02) –
Exciting potential venture into Myanmar

Last price: S$0.305
Target Price: S$0.40
Earlier this month, Yongnam announced that it has joined a
consortium to evaluate a project tender for the construction and
management of an international airport in Myanmar. In
addition, Yongnam said it will be diversifying by investing in
infrastructure developments locally and overseas either through
joint ventures and/or strategic alliances. We view the move as
positive as the construction industry in Singapore has been hit
hard by rising labour costs and competition from foreign
players. With this diversification, Yongnam will be able to enjoy
recurring income from infrastructure development investment
rather than lumpy project earnings recognition. The
construction pipeline remains healthy and the group is also
looking to secure projects within Singapore, HK, and Kuala
Lumpur’s metro rail lines. We have a BUY on the stock and a
target price of S$0.40, based on 9x 2013F PE.
Technically, the stock has been resisted at S$0.32 and has since
retraced. Watch for a break out towards S$0.40 should the said
retracement find support near S$0.28.

Yoma Strategic Holdings (YOMA SP, Z59) –
Purest proxy to Myanmar’s economic growth

Last price: S$0.795
Target Price: S$-
Yoma is viewed as a proxy for the Myanmar story as it builds
itself a portfolio of businesses in the country. Most recently, it
signed an agreement to jointly build a 5-star Peninsula hotel in
Yangon. Prior to this, it joined a consortium that has been prequalified
to apply for one of two new mobile phone licences in
the country, which is expected to be awarded later this year. Its
property portfolio continues to grow which now includes hotels,
residential buildings, office towers, and retail spaces. Yoma’s
other ventures in Myanmar are in the automobile, agriculture
and tourism sectors. The group has an exclusive dealership with
Dongfeng Automobile of China and is continuing to expand its
services in this sector. It has a wholly-owned subsidiary that is
currently involved in planting black pepper. It also aims to
dabble in tourism through partnerships with travel industry
Technically, the stock could form a large bullish flag pattern and
a break above S$0.90 may test S$1.30. Support remains at

Singapore Property- Residential measures prompt further switching.
Urban Redevelopment Authority’s (URA) real estate statistics for 1Q13 show that prices of residential, office, retail and industrial properties changed 0.6% qoq (4Q12: 1.8%), 2.1% (0.3%), 2.1% (-0.2%) and 4.5% (-0.7%) respectively. Rentals for residential,
office, retail and industrial properties adjusted in tandem by 0.8% (4Q12: 0.7%), -0.2% (-0.3%), -0.6 % (0.2%) and 0.4% (3.9%) respectively.
The slowdown in residential prices follows the seventh round of property measures in Jan 13. We anticipate that residential volumes will moderate by 20-40% yoy and prices to correct by 3-8% as investment demand slows. We prefer deep value and diversified stocks with exposure to the office sector. Top picks include Suntec REIT, CapitaCommercial Trust, OUE and Ho Bee.

Ascott Residence Trust- 1Q13: Well positioned for acquisitions.
(ART SP/BUY/S$1.46/Target: S$1.57)
FY13F DPU Yld (%): 5.8
FY14F DPU Yld (%): 5.6

Ascott Residence Trust’s (ART) 1Q13 DPU of 2.25 cents (+5% yoy) was in line with our and consensus expectations. Unitholders distribution rose 14% yoy to S$27.6m on the back of better performances from China and Japan, lower financing costs and an exchange gain. AEI works will continue to enhance yields. During the quarter, ART completed asset enhancement intitiatives (AEIs) in Citadines Croissette Cannes. Management sees this as an undervalued asset and expects the AEI to boost yields. Recent AEI works in Ascott
Jakarta and Citadines Prestige Trafalgar Square London have lifted rentals by up to 30%. Other AEI works in progress include one each in Belgium, Spain, China, Indonesia and Australia. Maintain BUY with a higher target price of S$1.57 (from S$1.52), factoring in the increased DPU. Our target price is based on a two-stage dividend discount model (required rate of return: 7.3% and terminal growth rate: 2.0%). ART is currently trading at 2013 and 2014 dividend yield of 5.8% and 6.2% respectively.

CDL Hospitality Trusts- 1Q13: Weaker results but acquisitions to boost future performance.
(CDREIT SP/HOLD/S$2.05/Target: S$2.36)
FY13F DPU Yld (%): 5.7
FY14F DPU Yld (%): 5.8

Results in line. CDL Hospitality Trusts (CDREIT) reported 1Q13 DPU of 2.99 cents (-3.2% yoy). The final 1Q13 DPU after working capital deductions (90% payout ratio) of 2.69 cents was in line with our expectation, accounting for 23% of our full-year DPU forecast.
Weaker 1Q13 Singapore performance in line with guidance, expect a better 2H. The weaker 1Q13 Singapore performance with RevPAR down 8% yoy was mainly due to a 7% fall in room rates. This is in line with management guidance of a softer 1Q due to
the absence of the bi-annual Singapore Airshow and CNY falling in February (2012: January), disrupting corporate travel. The most impacted was Grand Copthorne King, which saw a 23% yoy decline in NPI due to lower room bookings from key accounts in
the shipping and marine sectors. This was, however, partly offset by stronger performances from its overseas hotels. We see these results as one-off and expect a pick-up in room rates in 2H13 on the back of major events, such as Broadcast Asia 2013 and CommunicAsia 2013.
Maintain BUY and target price of S$2.36, based on a two-stage dividend discount model (required rate of return: 6.9% and terminal growth rate: 2%). CDREIT is currently trading at 2013 and 2014 dividend yield of 5.7% and 5.8% respectively.

Yangzijiang Shipbuilding Holdings- 1Q13: Earnings drop by 30% as expected.
(YZJ SP/BUY/S$0.96/Target: S$1.22)
FY13F PE(x): 7.1
FY14F PE(x): 7.8

Yangzijiang Shipbuilding’s (YZJ) 1Q13 results were in line with expectations. Revenue was Rmb2.87b (-22% yoy), of which shipbuilding revenue was Rmb2.47b (-26% yoy), and investment revenue generated from held-to-maturity investments, cash and
Runyuan micro financing was Rmb395m (+15% yoy). 1Q13 net income was Rmb717m (-30% yoy), representing 1Q13 EPS of Rmb0.19.
New contracts saw substantial recovery in 1Q13. YZJ has secured four 10,000 TEU orders from Seaspan, one 94,000 dwt transload vessel, five 82,000 dry bulks, and two 36,000 dwt multi-purpose vessels. The total contract value secured in 1Q13 was US$600m, which is double 2012’s full-year contract value of US$300m. Total value of orderbook reached US$3.3b, consisting of 36 containerships and 29 bulk carriers. Seaspan may further exercise 7-9 options of 10,000TEU within 2013, which would boost YZJ’s newbuild 2013 orders value to US$1.3b-1.5b.
Maintain BUY on YZJ and lower target price to S$1.22 from S$1.52, based on 9x 2013F PE. As a shipyard with adequate cash, we put YZJ as our top pick with Chinese shipyards sector amid an industry downturn.

From CIMB:

Operational pick-up in progress
OUTPERFORM - Maintained | S$3.65 - Tgt. S$4.33
US$12550m | Avg.Daily Vol: US$32.56m | Free Float: 60.50%
 CapLand’s 1Q13 core earnings jumped 1.3x yoy. Incentive schemes have helped move inventory in Singapore, while units were handed over in China. More will be delivered in 2H12, with strong sell-through rates reported in 1Q13 pointing to stronger operational momentum. As such, we deem 1Q13 core earnings in line at 20% of our full year and 18% of consensus. We tweak our FY13-15 core EPS estimates but maintain our target price, still based on a 15% discount to RNAV. Stock catalysts are expected from an earnings recovery in FY13 and corporate restructuring initiatives. Outperform maintained.

From DBS:
We maintain our positive view on SPH and OUE as the
potential for REIT spin-off will enable both companies to
unlock hidden value. This should continue to underpin their
stock price. We maintain our accumulate recommendation for
SPH. Technically, the stock is building a base at slightly above
$4.30. Our fundamental TP is $4.75. For OUE, the stock’s
gradually ascending 15-day EMA (currently at $3.05) has lent
support to the stock in the past 2 weeks. Our technical view is
for a rise to $3.52 should the REIT spin-off materializes.
We are selective on S-REITs after the sector’s strong
performance. Our S-RIETs picks are PCRT, MGCCT and

Yangzijiang’s 1Q13 net profit of RMB717mil (-30% y-o-y) on
the back of slower shipbuilding activities and a higher tax rate
was below our expectations but in line with the consensus.
Going forward, the yen depreciation has reduced the cost
competitiveness of Chinese yards. Our analyst trims FY13/14
net profit by 8.2/0.2% respectively. The stock is currently
trading inexpensively at 1x P/Bv and 6x FY13PE. Our TP is
reduced to S$1.02, based on 1.1x revised NBV. Dividend yield
of 4-6% could lend support to the stock price. Maintain HOLD 

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