Local Brokerages Stock Call 26 April 2013

From OCBC:
Olam Int’l: Refocusing on cash flow generation
Olam International Limited (Olam) has completed its strategic review and intends to take a rebalanced approach to growth and cashflow generation. To achieve its goals, Olam has identified six specific pathways or “concrete actions”. By doing so, management believes that Olam can become FCF positive by FY14 and also reduce its gearing boundary condition from < 2.5x to < 2.0x. However, we suspect that any meaningful impact may take some time to flow through (likely towards end FY16). As 3Q13 results are due in two weeks, we opt to leave our forecasts unchanged for now. Meanwhile, we keep our HOLD rating but place our S$1.50 fair value under review. 

Sheng Siong Group: A local darling
Sheng Siong Group reported an excellent set of 1Q13 results with contributions from new stores boosting revenue growth by 12.3% YoY while cost management initiatives continued to improve operating margins. In the coming quarters, Sheng Siong’s outlook remains positive as the lack of any foreseeable price competition amongst the Big 3 players, and defensive consumer spending in the face of continued economic uncertainty should prove supportive for the group. That said, we expect a double-digit top-line growth and margin enhancements to sustain for FY13. We maintain BUY on Sheng Siong and increase our fair value estimate to S$0.82 from S$0.69 previously.

Suntec REIT: 1Q13 results speak volumes on strength
Suntec REIT announced 1Q13 DPU of 2.228 S cents, down 9.2% YoY. This is within expectations, given that the quarterly distribution made up 24-25% of our and consensus FY13F DPU. Retail segment registered a 38.9% YoY decrease in revenue due to the partial closure of Suntec City Mall. However, the office segment continued to perform, achieving a 7.6% growth in revenue on the back of positive rental reversions and consistently high occupancy of 99.7%. Management updated that it has signed a total of 185,000 sqft of leases in 1Q, leaving it with only 10.3% of office leases due to expire in 2013. As such, we expect the segment to continue to exhibit resilience for the rest of FY13. We also understand that the Suntec City AEI and ROI target of 10.1% remain on track, with Phase 1 space due to open in Jun 2013 as planned and already securing a 96.7% pre-commitment. We are keeping our forecasts intact but now raise our fair value to S$2.16 from S$1.94. Maintain BUY on Suntec REIT.

Yangzijiang Shipbuilding: Results in line; still a steady ship
Yangzijiang Shipbuilding (YZJ) reported a 22% YoY fall in revenue to RMB2.9b and a 30% drop in net profit to RMB717.2m in 1Q13, accounting for 24% and 26% of our full year estimates, respectively. Results were in line with our expectations, and we note that gross profit margin from the shipyard operations remained healthy at 25.9% vs 26.4% in 1Q12 and 24.1% in 4Q12. Due to the difficult business climate faced by ship operators and an altered vessel delivery schedule with the cessation of previous orders, YZJ delivered nine vessels in 1Q13 vs 15 units in 1Q12. Still, the group entered into eight new shipbuilding contracts worth US$237m recently, bringing its order book to US$3.31b currently. Pending an analysts’ briefing later in the morning, we maintain our HOLD rating but put our fair value estimate of S$0.95 under review.

Ascott Residence Trust: Excluding one-off item, 1Q13 misses expectations
Ascott Residence Trust (ART) reported a 3% YoY decrease in revenue to S$69.2m for 1Q13 due to lower contributions from existing properties which decreased S$3.1m, outweighing the S$0.7m increase in revenue from the net effect of acquisitions less divestments. 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 and we judge the results to be lower than ours and the street’s expectations. 1Q13 DPU increased 5% YoY to 2.25 S cents. We put our fair value of S$1.36 under review but maintain our HOLD rating on ART. 

From CIMB

Olam International

Taking a breather

UNDERPERFORM - Downgrade | S$1.67 - Tgt. S$1.56 Mkt.Cap: US$3224m | Avg.Daily Vol: US$10.26m | Free Float: 40.60%

In its strategy review, Olam has decided to sacrifice profit growth for free cash flow generation. We see room for earnings disappointment, but believe that the refined strategy could be more supportive of a sustainable, disciplined long-term growth approach. We cut our FY13-15 EPS by 12-18% to factor lower margins and downgrade our rating from Neutral to Underperform amid heightened risk of earnings disappointment. Our target price, based on 1x CY13 NAV, falls to S$1.56. In the absence of re-rating catalysts, we think Olam will underperform the STI.

Sheng Siong Group

Good start to the year

OUTPERFORM - Maintained | S$0.72 - Tgt. S$0.75 Mkt.Cap: US$796.1m | Avg.Daily Vol: US$1.26m | Free Float: 64.60%

A healthy ramp-up in sales from the new stores powered Sheng Siong to a good set of results. Earnings were further aided by the absence of price competition, which decimated gross margins this time last year. 1Q13 core net profit forms 26% of our and consensus full-year estimates. We make no change to our earnings estimates, or target price, which is still based on 23x CY14 P/E (at a 10% discount to Dairy Farm). We expect catalysts to come from new store openings and stronger-than-expected same store sales growth (SSSG). Outperform maintained  

Suntec REIT

Intensification of Suntec AEI

NEUTRAL - Maintained | S$1.98 - Tgt. S$1.96 Mkt.Cap: US$3602m | Avg.Daily Vol: US$12.83m | Free Float: 95.00%

 1QFY13 DPU was expectedly hit by the intensifying AEI works at Suntec City Mall, though its impact was softened by management tapping on the divestment proceeds from Chijmes. The stock has done well YTD, and could increasingly be pricing in a smooth AEI execution. 1QFY13 DPU was broadly in-line with consensus and our expectations at 24% of our FY13 forecast. We adjust FY13-15 DPUs as we update for leases up for rent reviews and renewals and cost of borrowing. Our DDM-based target price is also higher, on a lower discount rate of 7.5% (previously 7.7%). Maintain Neutral on valuations.

From UOB KH:
F&N – Valuation Support But Let The Dust Settle
Trading at a discount to RNAV; potential catalysts ahead? We
have a RNAV estimate of S$10.80/share. Based on a 10-20%
conglomerate discount, a potential valuation range for F&N is
S$8.60-9.70/share. 

Suntec REIT- 1Q13: Spectacular pre-leasings at Suntec City
(SUN SP/BUY/ S$1.98/Target: S$2.27)
FY13F DPU Yld (%): 4.6
FY14F DPU Yld (%): 4.8
Results in line with expectations. Suntec REIT reported a 1Q13 distributable income of S$50.3m (-8.4% yoy, -4.0% qoq) and a DPU of 2.228 S cents (-9.2% yoy, -4.2% qoq) on the back of Suntec City Mall’s AEI. DPU includes S$2.7m (0.12 S cents per unit)
capital distribution from the Chijmes sales proceeds which forms a minimal 5.4% of the total distribution. 1Q13 DPU is in line with our expectations, accounting for 24.8% of our full-year estimates.
Spectacular leasing of Phase 1 of Suntec City Mall AEI with 96.7% pre-commitments ahead of Jun 13 completion from 83% in the previous quarter. Some of the additional brands that have signed up for Phase 1 include Adidas, Aibi, Bread Society, BYSI, Cotton
On, ECCO, Fossil, Giordano, Gong Cha, Harvey Norman, HSBC, J. Lindeberg, Love & Co., M1, OSIM, Royal Selangor, Singtel, The Coffee Bean & Tea Leaf and Stargems.
Maintain BUY with a DDM-derived (required rate of return: 6.4%, terminal growth: 2.0%) target price of S$2.27 (from S$2.03).
We have lowered our required rate of return assumption by 50bps to factor in the improving outlook in the office sector and the anticipated higher growth dynamics going forward.

Olam International- Re-balancing Growth And Cashflow
(OLAM SP/BUY/S$1.67/Target: S$1.98)FY13F PE(x): 12.4
FY14F PE(x): 8.5
Management unveils its latest strategic review, which seeks to balance growth and cashflow. Though its growth targets will be scaled back, investors may welcome its move to reduce gearing and prioritise cashflows.
Four new priorities. The group highlighted four new priorities including: a) accelerating free cash flow generation, b) reduce gearing, c) reduce complexity, and d) promote better understanding of its businesses.
Maintain BUY. Our target price of S$1.98/share remains unchanged pending its 3QFY13F results. Despite the scaling back of management’s profit target (of S$1.0b by FY16), we believe this has been partially priced in as FY14F PE (year to June) of 8.5x is
trading below its -1SD PE of 12.4x and mean of 15.6x (since 2010 – post financial crisis). In addition, we believe the market would welcome the concrete steps by management to address concerns over its gearing and enhanced stakeholder communication. The latter would include more details on investment performance of its various segments, a calendar of field visits to its operations and “investor days” for segment presentation. 

Global Logistic Properties (GLP SP, MC0) -
Technical BUY with +12.7% potential return
Last price: S$2.75
Resistance: S$3.10
Support: S$2.66
BUY with a target price of S$3.10 with tight stops placed
below S$2.66. The stock looks poised to form a new 52-week
high should it be well supported above its rising 50-day
moving average. Its MACD continues to trend higher above
its centreline and RSI indicator has turned up above a
reading of 40.

Wilmar International (WIL SP, F34) -
Technical BUY with +7.5% potential return
Last price: S$3.35
Resistance: S$3.60
Support: S$3.25
BUY with a target price of S$3.60 with tight stops placed
below S$3.25. The stock appears to be supported near its
resistance-turned-support level near S$3.25 and looks poised
to break above its downward sloping trendline. Its
Stochastics has moved out of its oversold region and its
MACD indicator has formed a bullish crossover.
Our institutional research has a fundamental BUY with a
target price of S$3.80.

Jardine Strategic Holdings Ltd (JS SP, J37) -
Technical SELL with +7.9% potential return
Last price: US$39.12
Resistance: US$40.85
Support: US$36.00
SELL with a target price of US$36.00 with tight stops placed
above US$40.00. The stock appears to form a top and a
retracement from here could find support near its rising 200-
day moving average. Its Stochastics indicator appears to
form a bearish crossover and its RSI indicator appears to turn
down below a reading of 60. Watch to see if its MACD could
trend below its centreline. 

From DBS:
1QFY13 net profit of HK$128.4m (+14% y-o-y) for China
Merchants Hldgs (Pacific) is in line with expectations; makes up
27% of full year core profit. Revenue growth of 27% y-o-y to
HK$436m was driven largely by consolidation of Ningbo-
Beilun Port Expressway. We remain positive on CMHP’s
earnings growth prospects, which are driven by both organic
traffic growth in China as well as acquisitions. Maintain BUY,
and S$1.12 target price. The stock offers an attractive
prospective yield of 6.3%.

Sheng Siong Group’s revenue was 5% below expectations,
but earnings beat our estimates by 12% on lower than
expected operating costs. FY13F earnings were raised by 5%.
We trimmed revenue growth rate but factored in better
operating margins. Maintain HOLD, TP raised to S$0.72 (Prev
S$ 0.68).

Results for Suntec REIT were impacted by Suntec Mall AEI
works. Operations remain robust; strong pre-commitment
levels at Suntec Mall mitigate leasing risks and reaffirms
earnings sustainability. Maintain Hold, TP S$1.99 (Prev
S$ 1.70). The stock is trading at 4.7% FY13 and FY14 yields.
Earnings for CapitaMalls Asia in line, gross margin
improvement and divestment gains boosted results.
Bedok Residences is expected to contribute from 2Q, six new
malls are also scheduled to open this year. Maintain BUY, TP
S$2.38 (Prev S$ 2.30).

Olam announced that it will be reducing capex in FY14-FY16
by S$1bn to US$1.2-1.6bn and releasing S$1.5bn cash
through balance sheet optimization and unlocking of intrinsic
value, leading to earlier achievement of positive free cash flow
by FY14. Net gearing levels will be kept below 2.0x vs 2.5x
previously. The delivery of these plans and fruition of previous
acquisitions are re-rating catalysts. However, recent weakness
in commodity prices may be a near term drag. Maintain HOLD 

Local Brokerages Stock Call 25 April 2013

From OCBC:
Cache Logistics Trust: Promising start to FY13
Cache Logistics Trust (CACHE) reported 1Q13 DPU of 2.234 S cents, up 7.1% YoY. This is in line with our expectations, given that the quarterly DPU made up 26.5% of our DPU forecast. The strong performance was mainly attributable to upward rental adjustments and incremental contribution from its past acquisitions. As at 31 Mar, the portfolio assets remained 100% occupied, with a healthy weighted average lease to expiry of 3.7 years. We also understand that CACHE has secured a new tenant, Agility Logistics, for its lease at APC Distrihub during the quarter. With this, CACHE has fully addressed its lease expiry in 2013, with zero renewals due for the rest of the year. CACHE currently has an aggregate leverage of 29.2% and a stable all-in financing cost of 3.52%. This provides CACHE with ample flexibility and firepower to pursue its growth opportunities. We are maintaining our BUY rating with a higher fair value of S$1.45 (S$1.33 previously) on CACHE.  
CapitaMalls Asia: Sharp execution bearing fruit
CMA’s 1Q13 PATMI came in at S$73.2m – up 9.6% YoY mostly due to contributions from Star Vista, four malls in Japan and Queensbay Mall, a S$6.6m gain from warehousing of two assets sold to CCDFII, better performance from CMT, ION Orchard and the China Funds, and a sale at The Orchard Residences. Excluding one-time items, we judge 1Q13 results to be somewhat above expectations. Given the H7N9 bird flu outbreak, shopper traffic for CMA’s Chinese malls showed a decrease of -0.9% YoY. On a same mall basis, however, tenant sales were up +15.9% YoY. We see worsening H7N9 fears potentially reducing retail traffic over the nearer term but a sustained long-term business impact, in our view, is unlikely. Maintain BUY with an unchanged fair value estimate of S$2.55. 
 
Telecom Sector: StarHub to get BPL on cross carriage basis
Summary: StarHub Ltd (STH) will be able to broadcast “live” matches of the much-coveted Barclays Premier League (BPL) for the upcoming 2013-2016 season. This after the MDA (Media Development Authority) asked SingTel to cross-carry the matches over the next three seasons even though SingTel had earlier secured the rights on a non-exclusive basis. Understandably, SingTel said it was “gravely disappointed” with the decision, adding that “it disadvantages both consumers and the industry”. SingTel has also said it intends to appeal the decision and seek legal recourse if necessary. The decision came as a bit of a surprise, given that SingTel had earlier secured the rights on a non-exclusive basis. However, the MDA has ruled that the agreement between SingTel and FAPL (content owner) had restrictions that prevent other Pay TV retailers from offering the same content, thus triggering the cross-carriage ruling. It is also unclear as to how FAPL would respond to the decision. We will be speaking further with both companies to get a clearer picture on this. In the meantime, we put our ratings on SingTel [BUY, S$3.68 fair value] and StarHub [HOLD, S$4.00 fair value] under review. 

From CIMB:

Telco - Overall
SingTel directed to share BPL
NEUTRAL - Maintained

In a surprising move, the regulator has directed SingTel to cross-carry the 2013-16 seasons of the Barclays Premier League. This is despite SingTel having non-exclusive rights to the BPL, which allows it to not share its content. This raises the question of MDA over-ruling again. StarHub stands to gain a little as this lowers the likelihood of churns and generates revenues from providing cross carriage. It is a setback for SingTel in its efforts to build up a pay TV franchise. All in, this development does not change our forecasts and views on SingTel and StarHub. The sector remains a Neutral with M1 (Outperform) as our top pick. 

Cache Logistics Trust
Awaiting acquisitions
OUTPERFORM - Maintained | S$1.38 - Tgt. S$1.50 Mkt.Cap: US$858.9m | Avg.Daily Vol: US$1.71m | Free Float: 87.90%

1Q13 was a steady quarter, led by organic growth from rental step-ups within the portfolio master leases. We look forward to the rest of FY13 as contributions from Precise Two kicks in and expect debt headroom to be utilised for accretive debt-funded acquisitions. 1Q13 DPU met our and consensus estimates at 26% of our FY13 forecast. We lower FY13-15 DPUs, factoring in Cache’s recent equity issuance, offset partially by a higher acquisition assumption. Our DDM-based target price, however, is raised on a lower discount rate of 7.1% (previously 7.7%). Maintain Outperform, with accretive acquisitions as catalysts.

Midas Holdings
On the road with Midas
OUTPERFORM - Maintained | S$0.50 - Tgt. S$0.70 Mkt.Cap: US$485.8m | Avg.Daily Vol: US$4.50m | Free Float: 79.20%

Feedback during our Midas roadshow covering five US cities in as many days was generally favourable, with investors anticipating a positive price performance due to potential order book momentum. Sceptics were concerned about potential order delays and debt levels. We continue to rate Midas an Outperform. The catalyst is the likelihood of orders commencing in 2H13 from China, which is committed to its Rmb130bn plan for rolling stocks. Midas is also gaining traction on the international stage. Its diversification into cold rolling could provide earnings growth from 2015 onwards. We raise our target price to S$0.70, now based on 1.29x P/BV (prev. 17x CY14 P/E) to smooth out earnings volatility.

From Lim and Tan:
STATS
As expected, STATS 1Q13 sales declined 15.4% qoq
to US$406mln, impacted by seasonal weakness, tight
inventory control in the wireless handsets, tablet and
consumer markets as well as continued softness in the
PC market.
Due to the weaker revenues, gross margin fell to 15.4%
against 18.3%.
But net profit improved to US$3.5mln against
US$1.7mln due to absence of litigation settlement
charges, otherwise, net profit would have declined 80%
sequentially due to dis-economies of scale.
The good news though is that looking ahead,
management is more optimistic expecting sales to
increase between 2-6% sequentially to US$422mln
with EBITDA margin improving to 21-25% range, up
from 1Q 13s guidance of 20-25% range (actual was
23%).
And to prepare for a stronger 2H13 for advanced
packaging and test turnkey services, management is
expecting capex to be increased from 1Q 13
US$92mln to US$100-120mln range in 2Q 13.
The recent refinancing of 7.5% to 4.5% bond issue will
help the company in annual interest savings of
US$13.2mln.
At 0.8x price to book against its historical average of
1x, we maintain our BUY recommendation. 

From UOB KH:
Cache Logistics Trust (CACHE SP)
1Q13: Building Up To Further Acquisitions
Results in-line as Cache completes private placement of 70m units and
S$57m acquisition of Precise Two in 1Q13. We believe that a S$90m-190m
acquisition is increasingly likely in the year ahead following the private
placement. Maintain BUY with a higher DDM-based target of S$1.52 (from
S$1.45) after factoring in a S$90m acquisition in 2014.

Mapletree Industrial Trust (MINT SP)
4QFY13: Feedback From Management Luncheon
Key topics from post-results luncheon included expiring leases, overseas
acquisitions, Iskandar, upcoming supply concerns and the future of
Singapore industrial space. Results were above expectations, driven by
higher temporary rentals from Credit Suisse and positive rental reversions.
Key forward drivers include AEIs and BTS completing over the next 2 years.
Maintain BUY with a higher DDM-derived target of S$1.75 (from S$1.66). 

From Maybank KE:
Sembcorp Marine: From The Bottom Looking Up; Maintain Buy TP $5.40
SMM SP | Mkt Cap USD7.2b | ADTV USD18.3m
SMM  will report 1Q13 results after trading hours on 3 May 2013. We
expect  PATMI  for  the  quarter to rise by 29% YoY to SGD146m. The low
base  performance a year ago would not be difficult to beat. SMM is our
preferred  rigbuilder  for  direct  exposure  to  the  offshore sector.
Maintain Buy and TP of SGD5.40.
A  sequentially  higher  EBIT  margin  this  quarter would not be a
surprise.  SMM  may continue to be conservative for some projects which
led  us to forecast EBIT margin of 12.6% for 1Q13. To elicit a positive
market  reaction,  EBIT margins would need to be above 13%. Regardless,
we believe that margins have passed the trough.
SMM’s  orderbook  of  SGD13.6b  still  offers strong visibility and
better  revenue coverage than Keppel. We think that margin concerns are
overdone  and  stock  is  at  an  unjustifiably low level. The relative
underperformance should see some reversion to mean.  

Cache  Logistics  Trust:  No  Surprises  In 1Q13 Results; Maintain Hold TP
$1.39 CACHE SP | Mkt Cap USD860.2m | ADTV USD1.8m
1Q13  revenue  at  SGD19.1m was 24% of ours and consensus estimate.
1Q13 DPU at 2.234 SG-cts was 25% of ours and consensus estimates. CACHE
retains  its  pole  position  in the ramp-up logistics warehouses space
(~4.7m sqft) with ~20+% market share in Singapore.
During the quarter, Cache signed on a new lease within APC Distrihub
with Agility Logistics. With this letting, Cache has no remaining space
due to expire in 2013.
The  warehouse  rental  in Singapore remain challenging with 18% of
available  stock  of  warehouse space (private sector; 14m sqft) coming
onboard  in  2013-2015.  CACHE has 36% and 33% of GFA up for renewal in
2015   and   2016   respectively.   We  remain  wary  of  its  inherent
concentration  risks  on  its main master lessee (CWT/C&P). At FY13 DPU
Yield  of  6.1%  and  P/B  of  1.4x,  we think valuation appears on the
high-side.   Pending   further   acquisitions   and  asset  enhancement
initiatives,  we  see  limited near-term upside for now. Reiterate HOLD
with a TP of SGD1.39. 

From DBS:
Mobile One (M1)
Our analyst believes that the street is overly bullish on
FY13F/14F earnings for M1 due to tiered data plans. He thinks
that tiered data plans may merely offset Average revenue per
user (ARPU) decline due to over-the-top (OTT) applications like
Whatsapp & Skype and lower roaming contribution. The rising
popularity of Android phones will benefit peers but may hurt
M1 instead. M1’s use of fair value accounting for iPhones
(heavily sold in 4Q12) will have a lingering impact on service
revenue in FY13F. In addition, while M1 has raised its monthly
service pricing, it also raised its handset subsidy. M1 offers
4.9% yield with mid-single digit growth. We do not see room
for M1 to raise dividends. M1 is the least preferred in the
sector due to downside risk to street’s estimates. Maintain
HOLD with revised TP of S$3.00 (Prev S$ 2.60).

F&N shares are due for a rebound after the 17% sell-down
that started just 3 days ago. The stock’s removal from the
MSCI standard and large cap Indices at the end of market
close yesterday had prompted the increased selling pressure in
recent session. Index related selling had increased since the
stock resumed trading this week and ended in a crescendo
yesterday during the pre-close matching period with 17.5mil
shares done in the final 5 minutes. Index related selling has
ceased. We believe this paves the way for a short-term
technical rebound. The Elliot-wave pattern of the stock’s
decline in the past 3 days supports this view. The immediate
support is at $7.85. Technically, we see the stock heading to
the 23.6% upward retracement level at $8.20 first, and then
towards the 38.2% level at $8.44.

Cache Logistics Trust reported a solid set of 1Q13 results.
100% of the income is already locked in for the rest of 2013,
providing clear visibility with minimal downside. Going
forward, given that its gearing remains conservative at 29.4%
and below management’s long term target of 35%-40%,
acquisitions will be a re-rating catalyst. BUY maintained with
TP S$1.47 (Prev S$ 1.40).
 

Local Brokerages Stock Call 24 April 2013

From OCBC:
First REIT (FREIT) reported its 1Q13 results which were within our expectations. Gross revenue grew 25.0% YoY to S$17.5m, underpinned by a full-quarter of contribution from the two properties it acquired on 30 Nov 2012. Distributable amount to unitholders and DPU increased by 16.5% and 9.4% YoY to S$11.6m and 1.74 S cents, respectively, if we exclude a special distribution made in 1Q12. Although FREIT is currently finalising its proposed acquisition of two hospitals from its sponsor Lippo Karawaci (subject to unitholders’ approval at an EGM), we expect it to continue its search for more yield accretive assets in the near future. We reiterate our HOLD rating and S$1.31 fair value estimate on FREIT as we believe that its valuations are not compelling (trading at 1.6x FY13F P/B).

Tiger Airways
Following the TGR AU sale approval, investors can now look to TGR SG as the main growth driver for the Group. As a recap, TGR SG recorded an impressive set of growth figures for 9MFY13 (revenue +30.7% YoY to S$444m) while its operating statistics for the quarter just ended has been equally positive and encouraging. Although TGR will continue to experience some drag from TGR AU – albeit at a lower 40% proportion – and SEAir (which is still in its infancy), we expect TGR SG’s performance to more than offset any draw-downs and continue to lead the ongoing recovery process for TGR. We reiterate our BUY rating on TGR with a lower fair value estimate of S$0.79 (S$0.86 previously) after taking into consideration the recent rights and PCCS issuance.  

Nam Cheong Ltd: Wins US$59m sale contracts
Nam Cheong Ltd has secured two sale contracts with a total value of US$59m for two units of accommodation work barges (AWBs). The AWBs were sold to Perdana Petroleum Berhad, an established offshore marine service provider in Malaysia. The vessels are constructed as part of Nam Cheong’s build-to-stock series in its subcontracted yards in China and are scheduled for delivery in 1H14. With this latest win, Nam Cheong’s order book stands at RM1.4b. We currently have a BUY rating with S$0.30 fair value estimate on the counter.

From UOB KH:
First Resources - 1Q13 results likely to be weaker qoq and yoy on rising production cost and weak ASP, partially mitigated by better CPO production growth
(FR SP/BUY/S$1.75/Target: S$2.35)
FY13F PE(x): 12.8
FY14F PE(x): 10.2
First Resources’ (FR) recent share price weakness is mainly due to the concern over its low 1Q13 FFB production, which was mainly due to its oil palm trees in Riau’s estates undergoing the biological stress cycle after two good years of production, vs. peers who are seeing a recovery in FFB production. We believe the market has over reacted as FR’s production is expected to pick up in 2H13 to meet management guidance of a 10% growth. Trees are taking a rest. FR reported 1Q13 FFB production of 394,757 tonnes (-23.7% qoq, -4.0% yoy) and CPO production growth of -20.9% qoq (+4.3% yoy). The decline in
production is likely due to biological stress after two good years of production and strong production in 1Q12. FR’s production did not suffer unlike that of peers in 1Q12. Based on our ground check, estates located in the same areas are showing a similar trend.
Thus, the weakness in production was a locality issue and not due to any management weakness.

Maintain BUY and target price of S$2.35, based on 14x 2014F PE, at mid-cycle valuation. We like FR for its hands-onmanagement team, young age profile and efficiency. We have adjusted our CPO price assumption to US$852/tonne (RM2,600/tonne) for 2013 as we believe FR is unlikely to achieve a CPO ASP of US$920/tonne (RM2,900/tonne) due to theweaker-than-expected CPO prices ytd. However, prices are expected to improve in 2014 (our assumption: RM2,950/tonne) as external demand would start to pick up and domestic demand would improve. Therefore, we cut our net profit forecast for 2013 by 20% to US$175m. We forecast net profit of US$175m, US$219m and US$236m for 2013, 2014 
and 2015 respectively. 
  
From CIMB:

Mapletree Industrial Trust

Eyes on The Signature

NEUTRAL - Maintained | S$1.56 - Tgt. S$1.62 Mkt.Cap: US$2064m | Avg.Daily Vol: US$4.99m | Free Float: 69.70%

We expect positive rental reversions at MINT’s flatted factories to mitigate downside at The Signature. Though headline yields are decent in the current climate of compressed yields, we maintain a Neutral rating pending clarity on backfilling and further growth catalysts. 4Q/FY13 DPUs were slightly above street and our expectations, forming 26/102% of our FY13 forecast. The variance was due to higher short-term business park rents. We raise DPU estimates and our DDM-based target price (discount rate: 7.3%) factoring in stronger rental assumptions and its recent BTS development.

From DBS:
Nam Cheong - On track to achieve FY13/14 sales targets;
maintain BUY with TP of S$0.30
Nam Cheong announced another round of vessel sales worth
US$59m for two accommodation work barges to be delivered
in 1H-2014. The pricing is within expectations and the vessels
were sold to repeat customer Perdana Petroleum, one of the
major offshore services providers in Malaysia. YTD, Nam
Cheong has won orders for 6 vessels across its build-to-stock
and build-to-order business models and is on track to achieve
FY13/14 sales targets. Orderbook now stands at about
RM1.4bn. This underpins robust earnings trajectory for the
Group in FY13/14. We expect Nam Cheong to secure order
wins for another 8-10 vessels in FY13, which will cover FY13
completions and half of FY14 completions. Maintain BUY with
TP of S$0.30. Expect the stock to firm up after holding at
$0.245-0.25 over the past 2-3 weeks.

Vard Holdings (previously STX OSV Holdings) has secured a LOI
with Simon Mokster Shipping, Norway, for design and
construction of 1 PSV. To be delivered in 1Q-2015 from
Norway yard, the vessel will be built to internal design PSV 06
LNG with dual-fuel LNG/ diesel-electric capabilities. The
contract value is not disclosed but we estimate could be about
NOK400m, based on previous similar orders. When finalised,
this will bring YTD FY13 contract wins to NOK2.9bn, or 23%
of our full year order win estimate of NOK12.5bn. Vard
remains a key proxy to the buoyant subsea market; maintain
BUY with TP S$1.57. 

Local Brokerages Stock Call 23 April 2013

From OCBC:
Wilmar: Acquires 27.5% stake in Cosumar SA
Summary: Wilmar International Limited (WIL) has acquired a strategic 27.5% stake in Cosumar SA – a Morocco-based sugar producer – for MAD2.3b (US$263m), funded by internal funds and bank borrowings. WIL believes that Cosumar provides the group with the opportunity to service a large and growing structural deficit in sugar in Morocco and the surrounding regions of Southern Europe, Northern and Western Africa. While we see the latest acquisition dovetailing nicely with WIL’s strategy of becoming a global sugar player, the near-term impact is likely going to be muted by still-weak sugar prices. Weaker sugar prices notwithstanding, we believe that WIL’s large distribution network in China puts the group in a good position to capitalize on the expected increase in sugar consumption there. Maintain BUY with an unchanged S$3.90 fair value (based on 15x FY13F EPS).  
Hospitality Sector: Wary about 2013
Summary: We have analyzed the relationship between the YoY change in average RevPAR and YoY change in average tourism receipts per visitor arrival. In general, the signs of both are the same for the same year, with change in RevPAR being of larger magnitude than the change in average tourism receipts. 2012 was an exception, where average tourism receipts per visitor fell ~5.5% YoY while RevPAR grew 5.7% YoY. STB’s targets imply that average tourism receipts per visitor may fall by 1% YoY. This further supports our cautious view regarding RevPAR performance in 2013. STB preliminary data supports what we have been saying since Dec: 1Q13 performance for the sector will be weak. 2M13 RevPAR fell 3.1% YoY to S$215.00. Economy hotels were the best performers. We remain NEUTRALon the hospitality sector. Our top pick is Global Premium Hotels [BUY, FV: S$0.33], which is a longer-term asset value play in the Economy space. 

From UOB KH:
Aviation Support Services- Tap here for higher yields;
raise our target price for SIAEC to S$5.60.
BUY SIAEC. On 11 April, we highlighted that SIAEC’s dividend
yield is likely to be compressed, vs that of STE and SATS. We
also highlighted the possibility of a special dividend payout.
Since then, the stock has risen 17 S cents to close at S$5.06.
We now raise our target price to S$5.60.

Indofood Agri Resources (IFAR SP, 5JS) –
Technical BUY with +11.1% potential return
Last price: S$1.125
Resistance: S$1.25
Support: S$1.07
BUY with a target price of S$1.25 with stops placed below
S$1.07. The stock closed with a potential bullish hammer
pattern pending a follow-through with prices trading above
S$1.10 with the lower Bollinger band acting as a support. Its
Stochastics indicator has formed a bullish crossover and its
RSI indicator has turned up above a reading of 20. Watch to
see if its MACD could also form one as well.
Our institutional research has a fundamental HOLD with a
target price of S$1.30.

Hongkong Land Holdings (HKL SP, H78) -
Technical SELL with +6.8% potential return
Last price: US$7.40
Resistance: US$7.65
Support: US$6.90
SELL with a target price of US$6.90 with stops placed above
US$7.65. The stock has formed a lower high and been
resisted twice near its potential support-turned-resistance
level near US$7.65 and closed below its mid Bollinger band
and its 50-day moving average. A break below US$7.40 and
its MACD centreline is likely to see more selling pressure.
Watch to see if its 200-day moving average could act as a
support.
Our institutional research has a fundamental SELL with a
target price of US$6.43.

From Maybank KE:
CapitaMalls Asia: Positive Outlook Maintained; Maintain BUY, TP $2.57
CMA SP | Mkt Cap USD6.2b | ADTV USD12.5m
CMA  will  report  its 1Q13 results on 24 April, and we expect its core
PATMI  to  rise  12%  QoQ and 22% YoY to ~SGD44m, with higher contribution
from the malls completed last year and positive rental reversion.
Its REITs, which account for about half of its core PATMI, have reported
healthy  operating  metrics  for  1Q13.  We  would  expect  to see similar
performance  from  the rest of CMA’s portfolio, which will underpin future
rental  reversion.  In  addition, we would look out for any updates on its
acquisition outlook.
CMA  remains  our  top  pick  for  its  strong  track record and market
leadership  in  the  retail  property  segment. Reiterate BUY with a price
target of SGD2.57.

From DBS:
4Q13 results for Mapletree Commercial Trust were slightly
ahead of our expectations. Organic growth will be a main
driver for FY14. While we believe that the current price fully
reflects the positives of the current portfolio, we remain
optimistic that given the significant pipeline from its sponsor,
acquisitions will remain a key feature for MCT. Maintain BUY,
TP raised to S$1.53 (Prev S$ 1.37).

Tiong Seng Holdings: BUY; S$0.28; TSNG SP
Myanmar beckons
Price Target : 12-Month S$ 0.33
•        MOU with Shwe Taung for a JV company in Myanmar to operate a precast plant
•        Strategically positive for Tiong Seng but earnings impact is not likely to be significant in the immediate term
•        BUY, TP S$0.33

From CIMB:

Tiger Airways

Positive, but still too early

UNDERPERFORM - Maintained | S$0.66 - Tgt. S$0.63 Mkt.Cap: US$520.3m | Avg.Daily Vol: US$1.19m | Free Float: 45.00%

What You Should Do
Maintain Underperform with de-rating catalysts expected from its continued cash burn. Our SOP target price is based on 13.5x CY14 EPS (LCC industry’s 5-year forward average), including proceeds from the sale.  
 

Local Brokerages Stock Call 22 April 2013

Sorry for being late in putting out the local brokerages
stock call. I wasn't available today for most of the day/

OCBC:
CapitaMall Trust: Results from AEIs now apparent
CapitaMall Trust (CMT) turned in a strong set of 1Q13 results last Friday. DPU increased by 7.0% YoY to 2.46 S cents, despite a retention of S$8.4m in income for the quarter. This is slightly ahead of our expectations, as S$6.6m in taxable income may be distributed in FY13 (1Q DPU already formed 25.2% of our FY13F DPU). Operationally, we note that CMT continued to deliver on various fronts. CMT also updated that the repositioning of IMM Building has been gaining traction, while the space vacated by Carrefour in 4Q12 at Plaza Singapore has been leased to Cold Storage and John Little and British retailer George. As previously guided, CMT announced a new AEI at Bugis Junction, which is expected to last from 2Q13 to 3Q14. We remain positive on CMT’s performance going forward, in view of these positive developments. We maintain BUY on CMT with a higher fair value of S$2.43 (previously S$2.32).

CapitaCommercial Trust: 1Q13 DPU up 3.2% YoY
CapitaCommercial Trust (CCT) reported 1Q13 distributable income of S$55.7m – up 3.3% YoY. This translates to a 1Q13 DPU of 1.96 S-cents, which is 3.2% above the 1.90 S-cents paid in 1Q12. We see this to be in line with expectations and 1Q13 distributable income now makes up 24% of our full year forecast. The growth in distributable income was mainly due to a full contribution from 20 Anson (acquired in Mar-12) and higher rentals at HSBC Building. CCT’s portfolio occupancy remained fairly stable at 95.3% in 1Q13, down marginally from 97.2% in 4Q12, mainly due to Cisco’s relocation from Capital Tower. We continue to see positive rental reversion in the portfolio – average monthly portfolio rents increased from $7.64 psf in 4Q12 to $7.83 psf in 1Q13. In addition, CapitaGreen remains on track for completion in 4Q14. Maintain BUY with a fair value estimate of S$1.80.

CapitaRetail China Trust: 1Q13 in line
CRCT's 1Q13 results were generally in line with ours and the street's expectations. Gross revenue climbed 3.7% YoY to S$39.3m and net property income rose 1.8% YoY to S$25.9m. On a QoQ basis, NPI at CapitaMall Minzhongleyuan (MZLY) fell 32% to RMB4.7m. We expect NPI from MZLY to dip further in the coming quarters since the AEI there is being fast-tracked, with temporary closure of the mall from Jul 2013 to 2Q14. According to management, CRCT has secured offers at favorable terms to refinance S$150.5m due in Jun 2013. Adjusting our estimates slightly, we increase our fair value from S$1.72 to S$1.76 but we maintain our HOLD rating on CRCT on valuation grounds.

From CIMB:

CapitaMall Trust

Searching for growth

UNDERPERFORM - Maintained | S$2.26 - Tgt. S$2.23

CMT’s operating metrics picked up in 1Q, with the ongoing completion of AEIs. Management retained a higher sum in 1Q, including S$6.6m which will be released in FY13 for income-smoothening. We think that CMT’s current valuations price in the positives. At 24% of our FY13 forecast, 1Q13 DPU broadly met our and market expectations. We raise FY13 DPU for reduced interest cost and retained earnings but lower FY14-5 for occupancy and rental changes. We keep our DDM-based target price (discount rate: 6.7%) and Underperform call. De-rating catalyst from over-paying for acquisitions.

From UOB KH:
Weekly Watch - Dividend-paying stocks will remain
attractive in this low interest rate environment.
Keppel REIT, with the best Grade-A office portfolio in
Singapore, will benefit from the bottoming out of office rentals
this year. Fraser Centrepoint Trust’s (FCT) Causeway Point
asset enhancement initiative (AEI) emerged as its best AEI todate
and Hafary Holdings’ (Hafary) earnings will be supported
by strong construction demand.

CapitaCommercial Trust- 1Q13: Lease renewals match
full-year renewals in 2012. (CCT SP/BUY/S$1.66/Target:
S$2.00)
Maintain BUY with target price raised to S$2.00 (from S$1.79),
based on DDM (required rate of return: 6.4%, terminal growth:
2.0%). We have lowered our required rate of return assumption
by 50bps to factor in the improving outlook in the office sector
and the anticipated higher growth dynamics going forward.

CapitaMall Trust- 1Q13: New AEI at Bugis Junction.
(CT SP/BUY/S$2.26/Target: S$2.54)
We maintain BUY with an unchanged target price of S$2.54. We
use the dividend discount model (required rate of return:
6.15%, terminal growth: 2.0%) to value CMT.
Sabana Shari’ah Compliant REIT- 1Q13: Watch for
acquisitions. (SSREIT SP/HOLD/S$1.37/Target: S$1.40)
Maintain HOLD with a higher target price of S$1.40 (from
S$1.30), based on DDM (required rate of return: 7.45%,
terminal growth: 2.0%). Entry price is S$1.22.

From Maybank KE:
CapitaMall Trust: Positive Start to the Year; Maintain BUY, TP $2.45
 CT SP | Mkt Cap USD6.3b | ADTV USD16.3m
 Following the completion of a number of major asset enhancements, plans
 are  afoot  for  a  medium-scale AEI at Bugis Junction. We remain sanguine
 about  CMT’s  growth potential and maintain our BUY recommendation, target
 price raised to SGD2.45.
 CMT’s  1Q13  DPU of 2.46 cts/unit was largely within expectations. The
 malls’  healthy  shopper  traffic  and sales growth had underpinned a 6.2%
 positive  rental  reversion  for  new  leases  or  renewals  signed in the
 quarter.
 No blockbuster AEI plans have been announced involving Tampines Mall
 and/or  Funan, but we have not ruled out the possibility that they will
 be  revealed  in  the coming months. Meanwhile, management will be kept
 busy with the Bugis Junction AEI and the active pre-leasing of Westgate
  Mall.
   
 CapitaCommercial Trust: Prepare for a Weaker Second Half; Sell TP $1.43
 CCT SP | Mkt Cap USD3.90b | ADTV USD10.7m
 We  maintain  our  contrarian  SELL recommendation on CCT as we see
 current valuations as unattractive with limited upside. Even though its
 1Q13  DPU of 1.96 cts/unit is in line with expectations, we expect more
  downside risks in 2H13.
 Despite  a  QoQ  increase in CCT’s average office portfolio rent to
 SGD7.83  psf,  we believe it will be challenging to keep up the pace of
 positive   rental   reversion   in  this  subdued  leasing  environment
 especially  after  Capital  Tower’s  occupancy  rate fell to 90.3% this
 quarter.  The  expiration  of One George Street’s yield support in July
 should lead to a weaker 2H.
 We prefer retail REITs as they offer organic growth potential via
 AEIs and positive rental reversion. Maintain SELL on CCT, target price
 unchanged at SGD1.43. 

From Phillip:

Wilmar International Ltd - Bird flu concerns likely less than initially feared
Recommendation: Accumulate
Previous close: S$3.34
Fair value: S$3.70

• Impact from China’s bird flu likely limited
• Vertically integrated model resilient to low CPO prices
• Upgrade to Accumulate with new TP of S$3.70

Golden Agri-Resources Ltd - Cutting 2013E CPO estimate
Recommendation: Neutral
Previous close: S$0.525
Fair value: S$0.55

• Lowering FY13E CPO estimate to US$820/MT
• Time needed for downstream growth
• Downgrade to Neutral from Accumulate

From OSK DMG:
CCT reported its 1Q13 results with a DPU of 1.96S¢ (3.2% y-o-y). Revenue and net property income for the period came in at SGD95.9m (+9.7% y-o-y) and SGD74.9m (+7.1% y-o-y) respectively; mainly attributed to a full quarter contribution from Twenty Anson and higher rent from HSBC Building. However, the higher NPI of 7.1% was partially offset by higher operating expenses and the normalisation of property tax. Given that the average passing rent of CCT’s portfolio is c.13% lower than average Grade A office market rent, CCT is well positioned to benefit from positive rental reversion through 2013. Having said that, as only 6.2% of leases within the portfolio (as a percentage of monthly grow rental income) is due to expire this year, we believe the upside to earnings from positive rental reversion in 2013 is limited from hereon. Although CCT’s earnings largely reflect a stable quarter, the concern on income support from One George Street remains. Based on an assumed passing rent of SGD8.90psf and an occupancy rate of 96%, we expect CCT to lose c.SGD6.1m in income, which translates to c.2% of NPI by the end of this year as the income support expires in mid-July. On this basis, together with high valuation (4.7% FY13 forecasted dividend yield) and a lack of clear growth driver in the near term, we have maintained our Neutral rating on CCT with an unchanged TP of SGD1.70.


CMT reported its 1Q13 results last Friday with a DPU of 2.46 cents (+7.0% y-o-y). Revenue for the period grew 14.8% y-o-y to SGD178.2m while net property income climbed 15.5% y-o-y to SGD125.1m. The strong 1Q13 result was mainly attributed to higher contributions from the well-executed asset enhancement works at JCube, Bugis+ and The Atrium@Orchard. As of 31st March 2013, the occupancy rates at these malls were 99.5%, 99.5% and 97.4% respectively. Going forward, with 20.8% of total portfolio (as a percentage of gross rental income) due to expire in FY13, we believe CMT will have minimal difficulties renewing majority of these leases with a mid-single digit positive rental reversion. Additionally, management announced the AEI at Bugis Junction will commence in 2Q13. This AEI will involve the recovery of c.70,000 sq ft of space from one the key tenants which will then be leased out to specialty stores. The projected capex for this AEI is SGD35m with a target return on investment of 9.0%, and is scheduled to be completed in 3Q14. Despite the strong quarter, we believe CMT is currently fairly valued as this counter trades at a forecasted FY13 dividend yield of 4.5% and 1.3x P/B. In view of these high valuations, we maintained our Neutral rating on CMT with a slightly revised higher DDM-based TP of SGD2.36 (COE: 7.1%, terminal growth: 2.0%). Our TP translates to a forecasted yield of 4.3%.