Local Brokerages Stock Call 24 July 2013

From OCBC:
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.

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.

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.

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).

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.

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. 

From UOB KH:
DBS Group (DBS)
Last price: S$16.77
Technically, DBS needs to trade above S$16.80 to test
S$17.40 as its 20-day moving average (MA) has crossed
above its 50-day MA.
On 16 Jul 13, the Monetary Authority of Singapore said
local lenders have “adequate buffers” to cope with higher
interest rates after Moody’s Investors Service cut its
outlook for the local banking system on concern
borrowing costs may climb. In our institutional research
email dated 31 May 13, we maintain our BUY
recommendation and target price of S$20.80, based on
1.50x P/B, derived from the Gordon Growth Model. DBS
has demonstrated its ability to execute its nine strategic
priorities. It generated organic growth by building up its
global transaction services, wealth management and
SME businesses on a regional basis. It stabilised net
interest margin and benefitted from growth in fee income
in 1Q13.

CapitaMall Trust (CT)
Last price: S$2.06
Technically, CT needs to trade above S$2.10 and its
200-day moving average to test S$2.23.
On 20 Jul 13, CT reported 2Q13 distributable income
rose 10.2% yoy to S$87.7m and distribution per unit
(DPU) rose 6.3% yoy to 2.53 cents. In our institutional
research email dated 22 Jul 13, we maintain our HOLD
recommendation and target price of S$2.14, using the
dividend discount model (required rate of return: 6.8%,
terminal growth: 1.8%). As regards to further acquisition
targets, we believe the most likely would be Star Vista -
CapitaMalls Asia (CMA) shopping mall in Buona Vista
which was completed in Sep 12, although management
may be awaiting the completion of nearby office
development, The Metropolis, and for stabilisation during
the mall’s first lease cycle. Other potential acquisition
targets from the sponsor could include CMA’s stake in
Ion Orchard, the upcoming Bedok Mall (slated to
complete in end-13) and a potential asset swap for the
Westgate mall.

Thai Beverage (THBEV)
Last price: S$0.570
Technically, THBEV needs to continue to trade above
S$0.53 to avoid forming a top and break above S$0.62
to negate its bearish outlook.
Earlier on 18 Jul 13, F&N has been allowed an additional
and final period of up to 31 Dec 13 to restore its public
float and trading of F&N shares will continue. TCC
Assets Ltd has not been able to sell F&N shares with a
view to restoring the public float during a period of three
months to 19 Jul 13.

CNA Group (CNA)
Last price: S$0.230
Technically, CNA could be supported near S$0.195
should prices continue to retrace from its recent 52-week
high.
On 18 Jul 13, CNA Group announced a placement of
60m new shares at S$0.1208 each. The placement
shares represent 16.31% of the enlarged issued and
paid-up share capital of the company. The estimated net
proceeds were S$6.8m and would be used for general
working capital and selected projects in Thailand. NTA
per share would drop from S$0.19 to S$0.17 after the
placement. Reported on 2 Jul 13, CNA received a letter
of intent from its real estate partner in Thailand to
appoint CNA as its main engineering, procurement and
construction contractor for two real estate projects in
Thailand worth a total S$63.6m.

Ascott Residence Trust- 2Q13: Growth to moderate.
(ART SP/HOLD/S$1.36/Target: S$1.43)
FY13F DPU Yld (%): 6.6
FY14F DPU Yld (%): 6.8
Results lifted by one-off gains. Ascott Residence Trust (ART) posted
2Q13 DPU of 2.45 S cents (+%3 yoy), bringing 1H13 DPU to 4.70 S cents
(+4% yoy), in line with our and consensus estimates. Distributable income
was up 14% yoy despite a 7% dip in gross profits due to one-off reversal of
over provision of tax (S$2.7m), lower financing costs, and forex gains
(S$5.8m).

Flat RevPAU guidance for 2H13. 1H13 RevPAU declined by 10% yoy
due to weaker performance in China (-8% yoy), the Philippines (-15%) and
Singapore (-3%) and divestment of Somerset Grand Cairnhill.
Management has guided for flat to low single-digit growth in RevPAU for
2H13. Key growth markets include UK, Indonesia, Japan and China with
potential yield enhancments from asset enhancement intiatives (AEI). ART
is seeing a 20-25% increase in rates for its recently refurbished rooms in
UK and Indonesia.

Maintain HOLD and target price of S$1.43 as the 2% increase in our
2013 DPU has a minimal impact on our DDM-based target (two-stage
dividend discount model, required rate of return: 7.9% and terminal growth
rate: 2.0%). At the current share price, ART is yielding 6.6% and 6.8% for
2013 and 2014 respectively.

From DBS:
We hosted Yoma on a two-day roadshow in Hong Kong.
Investors who are keen on Myanmar opening up mostly
agreed that Yoma is a direct and liquid access to this frontier
market. Discussions centered on Yoma’s property business,
with key concerns being sustainability of demand and pricing,
Yoma’s funding needs and its ability to execute an aggressive
and diversified expansion plan. Also, the share price has more
than doubled within the year and investors are apprehensive
of entering at current levels, and asked about possible rerating
catalysts. Property sales remain healthy but we cut
FY14F/15F earnings by 14%/9% as higher costs would
squeeze margins and growth. No change to long term
positive view on Yoma; maintain BUY with lower TP of
S$1.02 (Prev S$ 1.08).

Nam Cheong announced another round of vessel sales worth
US$70.5m for 2 PSVs and 1 accommodation work barge
(AWB) to be delivered between 1Q14-4Q14. The AWB was
sold to a subsidiary of Malaysian contractor Perdana
Petroleum, a repeat customer who had earlier bought 2
similar vessels in April 2013. 1 of the PSVs were sold to an
existing Asian customer, who had earlier bought 4 PSVs in
May 2013, and the other PSV was bought by new customer
EDT Offshore, a specialist OSV operator based in Cyprus. Nam
Cheong is well on track to achieve its sales target of 19
vessels in FY13 and 25 in FY14. Orderbook now stands at
about RM1.5bn. This underpins robust net profit CAGR of
20% for the Group in FY13/14. Maintain BUY with TP of
S$0.36. Expect further near term catalysts from a strong
showing in 2Q13.

3Q13 results for Frasers Centrepoint Trust in line. Strong
performances were seen at Causeway Point (CWP) and
North Point (NP). We should continue to see positive
rental reversions at both malls. Management is
repositioning Bedok Point in light of the completion of
Bedok Mall at the end of the year. In the coming quarters,
CWP and NP will continue to be the two key growth
drivers for the REIT, with performances for the other malls
remaining stable. In addition, we expect the acquisition of
Changi City Point to be completed in FY14, and this
should contribute positively to earnings. Maintain BUY, TP
unchanged at S$2.33.

Ascott Reit reported weaker yoy revenue and profit,
largely due to a lost income from the divestments of
Grand Cairnhill and Somerset Gordon Heights. Despite
the JPY and AUD depreciating against the SGD, Ascott
recorded a 0.4% net property income translation gain
due to stronger EUR and CNY. Going forward, the REIT is
looking to hedge 50% to 70% of its EUR and JPY
denominated currencies in order to minimize income
volatility from exchange rate movements. Maintain BUY,
TP S$1.51.

2Q13 earnings for Sheng Siong Group slightly below;
growth was driven by margin expansion and contribution
by new stores but offset by store renovations and
competition. We expect margins to expand further, and
earnings should improve sequentially from seasonally
weak 2Q. The group has declared interim DPS of 1.2
Scents; dividend yield of c.4% supports share price.
Maintain BUY, TP S$0.80 (Prev S$ 0.78).

Singapore Exchange reported 4Q13 net profit of S$88m.
Full year earnings at S$336m were in line with consensus
but 7% above our estimates. Strong derivatives and other
revenue lifted profits; expenses rose in tandem with
revenue, and were mainly due to higher staff costs. SGX
declared final DPS of 16 Scts, inclusive of 4 Scts base DPS,
bringing full year DPS to 28 Scts (89% payout). Maintain
HOLD and S$7.15 TP