Local Brokerages Stock Call 25 July 2013

From OCBC:
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 BUYwith unchanged fair value of S$0.95 on SGREIT.

Cache Logistics Trust: Solid 2Q13 scorecard
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. 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. As at 30 Jun, the overall portfolio occupancy was maintained at 100%, with a weighted average lease to expiry of 3.6 years. CACHE’s aggregate leverage also held steady at 29.2% compared to 1Q. This, we note, is the second lowest gearing level among the industrial REITs listed in Singapore. While CACHE has kept mum on any likely acquisition asset, we judge that its robust financial position will put it in good stead for any attractive opportunities. Management also reiterated that there is no debt refinancing needs in the next two years, as its term loans will mature only in 2015 and 2016. In addition, 70% of its debts is hedged, thereby giving CACHE considerable certainty over its financing costs. We maintain BUY with unchanged fair value of S$1.40 on CACHE.
 
Frasers Commercial Trust: 28.8% jump in 3QFY13 DPU
Frasers Commercial Trust (FCOT) reported 3QFY13 gross revenue of S$30.0m and NPI of S$23.1m, down 16.1% and 13.4% YoY respectively due to the divestments of KeyPoint and Japan properties. However, income available for distribution to unitholders rose by 31.2% to S$14.4m as a result of lower interest costs and savings in the Series A Convertible Perpetual Preferred Unit (CPPU) distribution post redemption of 319.7m CPPUs this year. This has led to a similar jump of 28.8% in the quarterly DPU to 2.19 S cents. For 9MFY13, DPU tallied 5.76 S cents (+16.6%), meeting 78.9% of our FY13 DPU forecast (consensus: 73.8%). As at 30 Jun, the portfolio occupancy remained strong at 98.1%, while weighted average lease to expiry was long at 4.6 years. FCOT also announced that it has completed the Precinct Master Plan and asset enhancement works at China Square Central, which should enhance portfolio and position FCOT for further growth in future. We will be speaking to management later and in the meanwhile, we maintain BUY on FCOT but put our S$1.60 fair value under review.

CapitaLand Limited: 2Q13 figures within expectations
CapitaLand’s 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations and 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. 1H13 topline is S$1,844.6m, up 22.7% YoY mostly due to higher recognitions from residential projects in Singapore and China and stronger contributions from CMA and Ascott. Over 1H13, we saw 683 residential units sold in Singapore – up significantly YoY versus the 259 units sold in 1H12 – and Chinese residential sales also grew a healthy 58% YoY to 1,619 units in the first half of the year. The group reports that it foresees headwinds for the private residential market in Singapore over the near term due to recent curbs but remains positive about its businesses in China, which is underpinned by urbanization, growing affluence and increasing domestic consumption. Maintain BUY with our fair value estimate of S$3.77 under review.

Yangzijiang Shipbuilding: First company on the SGX to trade in RMB
The SGX has announced that Yangzijiang Shipbuilding (YZJ) will be the first company to have trading of its shares in Chinese Renminbi (RMB) on SGX’s dual currency trading platform. The group’s RMB-denominated shares will start trading on 5 Aug 2013. This move gives existing and potential investors the flexibility to buy and sell YZJ shares in yuan, gaining direct exposure to exchange rate fluctuations in the currency. We currently have a HOLD rating on YZJ with a fair value estimate of S$0.95, mainly due to the bleak outlook of the shipbuilding industry as well as uncertainties in China’s credit and financing business.

From UOB KH:
Recommendations
 Pan United Corporation (PUC). Initiate coverage with a BUY and SOTPbased
target price of S$1.25. PUC is Singapore’s largest supplier of cement and
ready-mixed concrete with a market share of 28%. With a quality product range
and timely delivery guarantee, PUC has established an impressive track record,
supplying RMC for the construction of both the Circle Line (CCL) and the
Downtown Line (DTL). The company’s controlling interest in one of China’s top 10
river ports also provides a steady recurring alternative source of income that
formed 15% of FY12 net profit. Positive earnings prospects, solid fundamentals
(net cash) and a stable dividend payout make PUC one of our top picks for the
sector.

Kori Holdings (Kori). Initiate coverage with a BUY and target price of S$0.60,
based on 5.5x 2014F PE. Through its strategic relationships with both foreign and
local contractors, Kori has a stellar track record, securing contracts for all three
stages of DTL. With Singapore looking to increasingly utilise its underground
space, outlook for the underground specialist is set to remain upbeat. Even with a
remarkable 72% rise in share price since its IPO last year, valuation remains
undemanding at 4.6x 2013F PE, vs peers’ average of 8.8x, and is underpinned by
a strong net cash of 14 cents/share (or 32.5% of market cap). We also like Kori for
its strong cash flow and earnings that support its dividend payout ability. While the
company does not have a dividend policy, we render a conservative 25% payout
will offer an attractive dividend yield of 5.4%.

Yongnam. Maintain BUY and target price of S$0.45, based on peers’ average
PE of 9.7x on our 2014F EPS of 4.7 cents. Yongnam has more than 40 years of
experience in steel fabrication and engineering solutions. The company has
worked with numerous reputable contractors, such as Takenaka Corporation,
Shimizu Corporationg Samsung Corporation and Ssangyong E&C. It was also
involved in many major projects that changed the architectural landscape in
Singapore. We like Yongnam for its undemanding valuation and a strong pipeline
of projects.

Hutchison Port Holdings Trust (HPHT SP, NS8U) –
Technical SELL with +11.8% potential return
Last price: US$0.760
Resistance: US$0.79
Support: US$0.67
Maintain SELL with the same target price of US$0.67
with tight stops placed above US$0.79. The stock has
failed to negate its dead cross and prices appear to be
resisted near its declining 50-day moving averages. Its
RSI indicator has turned down below a reading of 50.
Watch to see if its MACD indicator fails to move above
its centreline. Our institutional research has a
fundamental BUY with a target price of US$0.88.

KSH Holdings (KSHH SP, ER0) –
Technical BUY with +22.7% potential return
Last price: S$0.550
Resistance: S$0.675
Support: S$0.49
BUY with a target price of S$0.675 with tight stops
placed below S$0.525. The stock may continue its
rebound after a brief consolidation as prices closed
above its mid Bollinger band and prices appear to trend
above its rising 50-day, which could be acting as a
support as well. Watch to see if prices could break
above S$0.61 for further upside.

Indofood Agri Resources (IFAR SP, 5JS) –
Technical BUY with +9.1% potential return
Last price: S$0.935
Resistance: S$1.02
Support: S$0.890
BUY with a target price of S$1.02 with tight stops placed
below S$0.91. The stock looks poised for a potential
downtrend reversal should prices close above its
declining 20-day moving average with expanding
trading volume. Its RSI indicator has turned up with
MACD forming a bullish crossover. Watch to see if the
stock could close above S$0.95 for further upside. Our
institutional research has a fundamental BUY with a
target price of S$1.25

Cache Logistics Trust- 2Q13: A more difficult acquisition
environment.
(CACHE SP/HOLD/S$1.24/Target: S$1.38)
FY13F DPU Yld (%): 7.0
FY14F DPU Yld (%): 7.3
Results in line with expectations. Cache Logistics Trust (Cache)
reported 2Q13 distributable income of S$16.6m (+20% yoy, +5% qoq) and
DPU of 2.147 cents (+8% yoy, -4% qoq). The qoq slippage in DPU was
due to dilution from a private placement of 70m units in 1Q13. 1H13 DPU
is in line with our expectation, accounting for 50.3% of our full-year
estimate.

A more difficult acquisition environment as JTC rule on upfront
payment of land rent, flattish rentals and cap rate expectations, and shorter
land lease tenures make it more difficult for S-REITs to acquire industrial
properties. In addition, while Cache stands ready to acquire properties
from its parent CWT’s pipeline, CWT is likely to divest properties on its
own timetable to meet capital requirements. Cache has an acquisition
headroom of S$190m based on 40% gearing levels
.
Maintain HOLD and target price of S$1.38 based on DDM (required rate
of return: 6.8%, terminal growth: 1.5%). Entry price is S$1.20.

From DBS:
Cache Logistics Trust reported 2Q13 DPU of 2.147 Scts, in
line with expectations. Gearing remains conservative at
c.29%, which is below management’s optimal range of 35%.
Looking ahead, we continue to see opportunities for the
Manager to utilise its balance sheet to fund acquisitions.
There could also be opportunities to extract further GFA in its
existing portfolio. Maintain BUY, TP S$1.45 (Prev S$ 1.47).

Starhill Global REIT’s 2Q13 results in line. We expect strong
reversions for Singapore and Malaysian properties, while
income growth prospects still strong. Maintain BUY, TP
S$0.94 (Prev S$ 0.98), after accounting for a larger share
base and a higher risk free rate. Going forward, we believe
that 2H13 will reflect a stronger set of results as reversions
from the master leases in Ngee Ann City, Starhill Gallery and
Lot 10 begin to contribute on a full quarter basis.

2Q13 results for Cambridge Industrial Trust in line with
expectations. Portfolio remains resilient; earnings growth to
be led by opportunistic acquisitions or development projects.
HOLD maintained, TP S$0.78.