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.

 

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

Local Brokerages Stock Call 23 July 2013

From OCBC:
Raffles Medical Group: Solid double-digit growth
Summary: Raffles Medical Group’s (RMG) 2Q13 revenue of S$86.8m (+12.9% YoY; +7.1% QoQ) and PATMI of S$14.4m (+15.9% YoY; +6.8% QoQ) were within our expectations. Topline growth was driven by both its Hospital Services and Healthcare Services divisions, which increased 16.8% and 6.5% YoY, respectively. As expected, an interim dividend of 1 S cent/share was declared, similar to 1H12. Management is currently evaluating the bids for its commercial property and will make a decision on the sale in the coming weeks. Looking ahead, we expect further operating leverage improvement by RMG as management will continue to grow its revenue, underpinned by the expansion of its specialist services. We retain our projections, and reiterate our BUY rating and S$3.42 fair value estimate on RMG, pegged to 29x blended FY13/14F EPS.

Tiger Airways: Look beyond the bottom-line
Summary: Tigerair (TR) reported weaker-than-expected 1Q14 results following continued losses from its associate airlines, which masked overall improvements in performance from Tigerair SG (TRS) and Tigerair AU (TRA). The group’s operating loss had narrowed to S$6.2m from S$11.8m over the same period a year ago but 1Q14 net loss came in at S$32.8m (versus -S$13.7m in 1Q13). Nonetheless, we derive some positives from the figures as losses from its associates had actually narrowed during the quarter, and we believe the outlook for TR in FY14 remains encouraging. Adjusting our figures to account for TRA’s deconsolidation and aircraft deliveries for TRS, we maintain our BUY rating on TR with an unchanged fair value estimate of S$0.79.
SIA Engineering: Uninspiring 1Q14 but within expectations
Summary: SIA Engineering Company's (SIAEC) 1Q14 results were generally in line with ours and the street's expectations. Basic EPS of 6.22 S cents formed 25% of ours and 24% of the street's FY14 estimates. Revenue decreased 3.7% YoY to S$289.4m, chiefly due to lower material and fleet management revenue. Operating profit fell 19.5% YoY to S$27.7m. Share of profits from associated and JV companies increased 14.0% YoY to S$45.6m, representing a contribution of 58.0% of the group's pre-tax profits. PATMI was down 1.6% YoY to S$69.0m. We maintain our fair value of S$5.00 (EPS forecast of 25.0 S cents for FY14 and 20.0X peg) and HOLD rating on SIAEC.

Ascott Residence Trust: 2Q13 in line with street
Summary: Ascott Residence Trust (ART) reported 2Q13 results that were better than our expectations but in line with the street’s. 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 lead DPU rising 3% YoY to 2.45 S cents. Excluding the placement units issued in 1Q13, DPU for 2Q13 would be 2.70 cents. We place our FV of S$1.31 and Hold rating on ART UNDER REVIEW pending a briefing with management.  

OSIM International: Increases stake in TWG Tea by 10% to 45%
Summary: OSIM announced that it has increased its stake in associated company TWG Tea Company Pte Ltd (TWG Tea) from 35% to 45%. The astonishing element is that the 10% stake was acquired for a total purchase consideration of only S$2. This was because the founding members of TWG Tea had failed to meet the agreed performance target for the year ended 31 Mar 2013; although we believe that the TWG Tea business is doing well. As a recap, OSIM bought a 35% stake in TWG Tea for ~S$31.36m in Apr 2011. We estimate that this additional 10% stake will have an incremental 0.6% and 0.9% impact to our FY13 and FY14 PATMI forecasts for OSIM, respectively. We maintain our BUY rating and S$2.21 fair value estimate on OSIM for now as the group is scheduled to release its 2Q13 results next Tue, 30 Jul. 

From UOB KH:
Civmec (CVL SP, P9D) –
Technical SELL with +15.1% potential return
Last price: S$0.825
Resistance: S$0.87
Support: S$0.70
Maintain SELL with the same target price of S$0.70 and
tight stops placed above S$0.87. The stock is likely to
be resisted by its declining 50-day moving average,
which acted as resistance previously. Its RSI indicator
has turned down and its MACD indicator is currently
below its centreline. Watch to see if prices could break
below S$0.80 for further downside.

Genting Singapore (GENS SP, G13) –
Technical BUY with +12.4% potential return
Last price: S$1.37
Resistance: S$1.54
Support: S$1.31
BUY with a target price of S$1.54 with tight stops placed
below S$1.33. The stock looks poised to break out
above its upper Bollinger band and its 35-day moving
average, with prices closing above its mid Bollinger
band. Its Stochastics indicator has formed a bullish
crossover with its RSI indicator looking poised to move
above 50. Watch to see if prices could break above
S$1.385 for further upside. Our institutional research
has a fundamental SELL with a target price of S$1.17.

KS Energy (KST SP, 578) –
Technical BUY with +18.7% potential return
Last price: S$0.48
Resistance: S$0.57
Support: S$0.345
BUY with a target price of S$0.57 with tight stops placed
below S$0.45. The stock is trading near a potential
resistance-turned-support level, which is also near its
35-day moving average. Its Stochastics indicator
appears to hook up, with its MACD indicator well above
its centreline. Watch to see if the stock could be resisted
near its 200-day moving average.

Raffles Medical Group- 1H13: Solid performance; upgrade to BUY
after share price correction.
(RFMD SP/BUY/S$3.12/Target: S$3.78)
FY13F PE (x): 22.7
FY14F PE (x): 19.5
Solid 1H13 results in line with estimates. Raffles Medical Group’s (RMG)
1H13 net profit of S$27.9m (+16% yoy) is in line with our estimates,
accounting for 43% of our full-year estimates. We expect a seasonally
stronger 2H (particularly during holiday periods for noncritical treatment
such as aesthetics, medical screenings, etc) to lift earnings closer to our
full-year forecast. Revenue grew 12.1% yoy in 1H13 (S$167.9m), driven by
solid growth in the hospital services segment (2Q13 up 16.8% yoy) due to
higher volume and patient acuity.

Upgrading to BUY (from HOLD) with a higher target price of S$3.78/share.
We maintain our 2013-15 earnings forecast and have a DCF-based target
price of S$3.78/share (+6% from S$3.57/share previously). The change is
to reflect changes in assumption of risk-free rate (3.0% vs 2.2% previously)
and terminal growth (3.0% vs 2.0% previously). At our DCF-based target
price of S$3.78/share, the implied 2014F PER is 27.3x. This is close to its
+1 SD to mean PER of 28.6x but we think this is deserved, given its strong
cashflow generation and healthy financial position which could fund
potential M&As or other investments. 2013-15F ROE of 15.8-16.9% is also
higher than its long term average ROE of 11.0% (1997-2012).

SIA Engineering- 1QFY14: Revenue and operating margins decline;
downgrade to SELL.
(SIE SP/SELL/S$5.16/Target: S$4.65)
FY14F PE (x): 20.4
FY15F PE (x): 19.3
Disappointing 1QFY14 performance as top-line and operating profit
declined. Top-line declined for the third consecutive quarter and the 3.7%
yoy decline was said to be due to lower material and fleet management
revenue. Nothing was mentioned about line maintenance which typically
accounts for 35% of revenue but we assume revenue would have been at
least flat given Changi’s pax traffic growing only 3.9% yoy.

Downgrade to SELL with target price unchanged at S$4.65. The stock has
risen 19% ytd vs a 2% rise in the FSSTI due to the market’s appetite for
cash-rich yield stocks. We believe the outperformance will not continue
given the weak revenue and declining operating margins. Thus, we
downgrade SIAEC from HOLD to SELL with target price unchanged at
S$4.65. Our valuation is on a DDM basis (COE - 6.9%, terminal growth:
1%). At our target price, the stock offers a dividend yield of 4.8%.

Tiger Airways- 1QFY14: Singapore operations disappoint as yields
decline.
(TGR SP/SELL/S$0.62/Target: S$0.55)
FY15F PE (x): 7.6
FY16F PE (x): 6.8
Operating profit trend reversed as Singapore yields declined. The S$6.2m
operating loss vs our expectation of an S$13.2m operating profit was due
primarily to a 5.0% decline in yields for the Singapore operations. This
stood in contrast to our assumption of a 3.5% rise in yields for the group
(4QFY13: +7.0%) The decline in yields was attributed to a lack of pricing
power following a S$6.00 increase in passenger service charge (PSC) by
Changi Airport. The average fare of Tigerair Singapore was flat at
S$132.80 despite a near 5.0% higher stage length.
Maintain SELL with a lower target price of S$0.55 (from S$0.61), or 1.4x
FY14F book value, excluding perpetual securities.

SATS- 1QFY14 results preview: Expecting a 3% yoy decline in net
profit.
(SATS SP/HOLD/S$3.29/Target: S$3.13)
FY14F PE (x): 17.8
FY15F PE (x): 18.7
SATS will be reporting 1QFY14 results on 25 July after market close. We
estimate a 2.9% yoy decline in net profit to S$40m, mainly due to a 6.6%
yoy decline in unit meals produced and higher staff costs.
Unit meals per pax handled was the lowest in five years. Unit meals, which
are weighted meals served by SATS out of Changi, declined 6.6% yoy in
spite of a 6% rise in pax handled. SATS attributed the decline to Qantas
Airways’ move of its Kangaroo route transit hub from Singapore to Dubai,
which would have led to a decline in premium meals served. In addition,
SATS also lost Qatar Airways as an in-flight catering customer in 4QFY13
and the full impact of this will be reflected in the current quarter.
Maintain HOLD and target price of S$3.13, based on a dividend discount
model (required return: 7.0%, terminal growth 1.2%). At our fair value, the
stock will offer a dividend yield of 5.1%. Entry price is S$2.90.
  
From DBS:
Tiger Airways reported 1QFYMar14 operating loss of S$6.2m,
lower than our expectations of a small profit. Yield erosion in
Singapore led to disappointing operating results. FY14/15F
earnings cut by 32%/22% to reflect higher losses from
associates. The group should report stronger operating profits
hereon, with Tigerair Australia moving to the associate line
from 2Q14, and Tigerair Singapore expanding its fleet by
almost 25% in FY14. We still remain positive on Tigerair’s
ongoing transformation, and its niche focus on the booming
Singapore-Indonesia routes should bear fruit. Maintain BUY
with lower TP of S$0.74 (Prev S$ 0.79).

SIA Engineering reported 1QFYMar14 net profit of S$69m,
largely in line. Weaker core operating margins were offset by
stronger contributions from JV/ associates. Near term outlook
is steady but unexciting. Maintain HOLD while revising our TP
higher to S$5.10 (Prev S$ 4.80), as we benchmark valuations
to listed peers.

Ascendas India Trust’s 1Q14 performance was stable, with
revenue coming in flat at INR1,392m. Available distribution
per unit (DPU) of 1.27 cents for 1Q14 was down 5%
compared to the 1.33 cents posted a year ago. A-iTrust
remains operationally robust as India continues to be an
important hub for IT services. But the weakening INR means
that the strong growth in income has not been translated
into a stronger DPU growth in SGD. Given that acquisitions in
its current pipeline are more a medium term event, we
maintain HOLD, with TP unchanged at S$0.82.

2Q13 result for Raffles Medical in line, net profit up 16% y-oy.
A 1 Sct interim DPS was declared; group remains in healthy
net cash position. Its plan to divest Thong Sia Building is
underway. Maintain HOLD, TP is intact at S$3.15.

Courts Asia has entered into a Memorandum of
Understanding (MOU) with Sinar Mas Land, the property
development part of the Indonesian Conglomerate, Sinar Mas
Group, to build two “Big-Box” outlets in Indonesia. One
includes the previously announced 140,000 sq ft Bekasi store
located in eastern Jakarta. The second development will be
located at BSD City, Serpong, Tangerang, 25km S-W of
Jakarta. The BSD City site will have 130,000 sq ft of retail
space, a regional distribution centre and a support office.
This is expected to open six months after the Bekasi store
opens. The first development in Bekasi Indonesia is
expected to start contributing to earnings in 2014. We
have factored in modest contribution in FY15F. We expect
minimal contribution the BSD City store in FY15F since it
will open later than the Bekasi store. Maintain BUY, TP
S$1.13.

 

Local Brokerages Stock Call 22 July 2013

From OCBC:
CapitaMall Trust: Another promising quarter
CapitaMall Trust (CMT) reported DPU of 2.53 S cents, up 6.3% YoY. Together with 1Q DPU of 2.46 S cents, 1H13 DPU totaled 4.99 S cents (+6.6%), forming 50.9% of FY13F DPU. This is above our expectations given that a total of S$12.3m or c.0.36 S cents retained over 1H is available for distribution in 2H13. As at 30 Jun, CMT’s portfolio occupancy stood at 99.1%, up 0.9ppt QoQ, while positive rental reversion of 6.4% achieved in 1H was slightly higher than 1Q’s growth of 6.2%. CMT’s financial position also improved during the quarter, with gearing ratio down to 34.9% from 35.2% in 1Q. On 2 Jul, CMT redeemed all its outstanding convertible bonds due 2013, thereby fully addressing its refinancing needs for 2013. All 14 properties held directly by CMT, we note, are also unencumbered as a result. We now update our model to incorporate the better results and higher risk free rate assumptions. Consequently, our fair value eases from S$2.43 to S$2.35. However, given the strong upside potential, we maintain BUY on CMT.

Mapletree Logistics Trust: Strength despite uncertain backdrop
Mapletree Logistics Trust (MLT) reported 1QFY14 DPU of 1.80 S cents, up 5.9% YoY. Stripping out divestment gain from 30 Woodlands Loop, DPU would be up 4.7%. The results were in line with expectations, as 1Q DPU have met 24.8%/25.4% of our/consensus full-year DPU projections. Overall occupancy stood at 98.2%, largely stable from 98.5% seen in previous quarter. In addition, positive rental reversion of 17% was achieved. This is higher than prior quarter’s growth of 14%, although MLT maintains its view that the rate is set to moderate going forward. MLT also updated that its redevelopment project at 21 Benoi Sector in Singapore is on track for completion in 3QFY14, and that the property is currently 94% pre-leased. In the coming quarter, The Box Centre in Korea (acquired in Jul at NPI yield of 8.4%) will start contributing to MLT’s topline. We are keeping our forecasts intact for now as the results were within expectations. Maintain HOLD with an unchanged fair value of S$1.15 on MLT.
Suntec REIT: Recovery possibly in sight
Suntec REIT’s 2Q13 DPU was up 0.9% QoQ (-4.7% YoY) to 2.249 S cents, helped by a S$7.8m capital distribution from Chijmes sale proceeds. For 1H13, DPU amounted to 4.477 S cents, down 7.0% YoY and 4.3% HoH, and formed 48.1% of our full-year DPU forecasts. This is broadly in line with our expectations, as Suntec REIT’s financial performance is likely to improve going forward now that the Phase 1 space has become operational in Jun. For the first time, Suntec REIT shared that SCM Phase 1 has achieved a passing rent of S$13.09 psf pm. This, we note, is higher than the rates of S$11.31 secured at the rest of SCM and S$12.59 projected for the AEI project. Committed occupancy at SCM Phase 1 now stands at 99.6%, while pre-commitment at Phase 2 has risen from 53.0% in 1Q to 70.1%. We tweak our model to incorporate the results and higher market risk free rates. While our fair value drops to S$1.85 from S$2.16, we view that current valuations are compelling. Maintain BUY on Suntec REIT.
Raffles Medical Group: 2Q13 results in-line with expectations
Raffles Medical Group (RMG) reported its 2Q13 results this morning which were within our expectations. Revenue rose 12.9% YoY and 7.1% QoQ to S$86.8m. PATMI was up 15.9% YoY and 6.8% QoQ to S$14.4m. Growth during the quarter was driven by higher patient acuity and an increased depth and breadth of medical services on offer. Both RMG’s core divisions contributed to its topline increase, with its Hospital Services and Healthcare Services segments growing 16.8% and 6.5% YoY, respectively. For 1H13, revenue increased 12.1% YoY to S$167.9m, forming 48.3% of our full-year estimates; while PATMI jumped 16.0% to S$27.9m, or 45.9% of our FY13 forecast. This is unsurprising, as 2H is seasonally a much stronger half for RMG, and we expect this trend to be maintained this year. An interim dividend of 1 S cent/share was declared (payable on 29 Aug 2013), similar to 2Q12 and our forecast. We will provide more details after the analyst briefing. We maintain our BUY rating and S$3.42 fair value estimate (29x blended FY13/14F).

From UOB KH:
CapitaMall Trust (CT SP)  

2Q13: Awaiting Catalysts

Results in line as AEIs contributed to revenue growth. Positive leasing

momentum with Westgate 70% pre-leased ahead of end-13 opening.

Awaiting catalysts for acquisitions and further AEIs in 2013. Maintain HOLD

with a target price of S$2.14 based on DDM (RR: 6.8%, terminal: 1.8%).

Entry price is S$1.86. 

 

Suntec REIT (SUN SP)  

2Q13: Look Ahead As The Worst Is Over

Results in line as Suntec applies minimal S$8m Chijmes divestment

proceeds to mitigate income fall from Suntec City AEI. Look ahead as the

worst is over with Phase 1 of the AEI (99.6% committed) progressively

opening from June with passing rents of S$13.09 (5% above expectations).

Solid pre-leasings for Phase 2 with 70% committed five months before

completion. Maintain BUY with target price of S$1.95.

Local Brokerages Stock Call 19 July 2013

From OCBC:
Keppel Corporation: Group CEO and O&M CEO to retire in early 2014
Keppel Corporation (KEP) reported a 11.7% YoY decrease in revenue to S$3.08b and a 33.4% drop in net profit to S$346.8m in 2Q13. However, excluding the lumpy profits from the sale of Reflections at Keppel Bay and the one-time gain from sale of investment shares, net profit in 1H13 was in line with last year’s results, within our expectations. Operating margin in the O&M segment continued to hold up. The group CEO as well as the CEO of Keppel O&M will be retiring early next year and successors have been identified. An interim cash dividend and in-specie distribution of Keppel REIT units brings the total interim distribution to S$0.208/share. Maintain BUY with a slightly lower fair value estimate of S$12.53 (prev. S$12.68).

CapitaRetail China Trust: Improved debt profile in 2Q13
CRCT’s 2Q13 results were in line with ours and the street’s expectations. Net property income rose by 6.0% to S$26.4m and income available for distribution was 7.5% higher at S$17.9m. NPI would have grown 9.5% YoY excluding CapitaMall Minzhongleyuan, which is undergoing AEI.  CRCT has refinanced the S$150.5m due in June 2013 and significantly improved the average term to maturity of its debt to 2.52 years as at 30 June from 1.30 years as at 31 March. The fixed rate proportion of CRCT's debt is 78%. Apart from the CapitaMall Anzhen unsecured onshore loan maturing next year, all other loans are offshore, and the average cost of debt for 2Q13 was at 2.58%. Gearing stands at 23.5% and all assets are unencumbered. We maintain our BUY rating and fair value of S$1.58.
CapitaMall Trust: Robust growth in 2Q13
CapitaMall Trust (CMT) released its 2Q13 results this morning. NPI grew by 12.2% YoY to S$125.6m while distributable income to unitholders rose by 10.2% to S$87.7m. The completed asset enhancement works at JCube, Bugis+ and The Atrium@Orchard last year, together with the rental rates achieved from the portfolio’s new and renewed leases, were the key drivers for the quarter. DPU was up 6.3% YoY to 2.53 S cents, and was consistent with our expectations given that 1H13 DPU of 4.99 S cents formed 50.9% of FY13F DPU. As at 30 Jun, CMT’s portfolio occupancy stood at 99.1%, representing an improvement from 1Q occupancy of 98.3%. In addition, positive rental reversion of 6.4% was also slightly higher than last quarter’s reversion of 6.2%. We will be attending CMT’s analyst briefing later in the morning. For now, we maintain BUY on CMT but put our fair value of S$2.43 under review.
Mapletree Logistics Trust: 1QFY14 DPU gained 5.9% YoY
Mapletree Logistics Trust (MLT) reported 1QFY14 gross revenue of S$75.4m and NPI of S$65.3m, down 2% and 3% respectively. The decline was mainly due to a weaker JPY against the SGD. Excluding the forex impact, gross revenue and NPI would have increased by 3% and 2%, respectively. The impact of the depreciating JPY on distributable income was mitigated by currency hedges. During the quarter, MLT also benefitted from lower borrowing costs and a partial distribution of the net gain from the divestment of 30 Woodlands Loop. As a result, amount distributable to unitholders rose 6.9% YoY to S$44.0m while DPU grew 5.9% to 1.80 S cents. Stripping out the divestment gains, DPU would be up 4.7% YoY. The results were in line with expectations, as 1Q DPU have met 24.8% and 25.4% of our and consensus full-year DPU projections. We will be attending the analyst briefing later this morning. In the meanwhile, we keep our HOLDrating but place our S$1.15 fair value under review. 

 

From DBS:

2Q13 results for Keppel Corp were slightly below on higher
tax rate. O&M saw a slight uptick in EBIT margin from 14.1%
last quarter to 14.2%, though we had expected it to be
closer to 14.4%. A positive surprise was the dividend-inspecie
of 8 KREIT shares for 100 Keppel shares, equivalent
to10.8 Scents per Keppel share, bringing total interim DPS to
20.8 Scents. Management reiterates confidence in Brazil
operations. We believe over 10 years of operating experience
in Brazil and excellent risk management distinguishes Keppel
from other players that have run into operational issues in
Brazil. We have trimmed our FY13 core profit by 1.5% to
account for the higher taxes in 2Q13. Our TP is thus revised
to S$12.90 (Prev: S$13.00). Reiterate BUY.

Ezion is adding a 12th liftboat to fleet, which is backed by a
5-year charter contract. It may be converted to time charter
with potentially higher contract value of c.US$90m. The
newbuild rig is expected to be delivered to a national oil
company in SEA by late 1Q 2015. The cost of the newbuild -
US$60m - will be funded by the issuance of preference shares
(27%) and bank borrowings (73%). Ezion is issuing 300
redeemable exchange preference shares to five Global
Investor Programme Funds at an issue price of S$100k each
to raise S$29.5m net proceeds. Dilution is minimal at 1.4%
and would be more than offset by 1.6% earnings accretion
from the new liftboat. FY13-15F earnings were trimmed by
0.4-2.2%. Maintain BUY; TP adjusted to S$2.96 (Prev S$
3.00).

 

2Q13 results for CapitaRetail China Trust in line. Upgrade to
BUY, TP adjusted to S$1.75. We believe that market reaction
to CRCT on concerns of the supply glut and the economic
downturn is a tad unwarranted. Share price has fallen c.20%
from its high of S$1.87 in early April, and given its compelling
growth story for FY14 and the still strong underlying
performance of its existing malls, we believe this weakness
presents an opportunity to re-look at the investment case for
the stock.

 

The depreciation of the JPY against the SGD resulted in
Mapletree Logistics Trust (MLT) reporting 2% and 3% y-o-y
declines in gross revenues and net property income to
S$75.4m and S$65.3m, respectively. 1Q14 distribution
includes the payout of gains from the divestment of 30
Woodlands Loop. As with prior divestments, the manager will
distribute gains over 8 quarters. MLT has a defensive
portfolio. Forex weakness is expected to persist but will be
substantially hedged. Maintain BUY with revised S$1.32 TP
(Prev S$ 1.37).

 

From UOB KH:

Hongkong Land Holdings (HKL SP, H78) –
Technical SELL with +6.2% potential return
Last price: US$6.61
Resistance: US$7.09
Support: US$6.22
Maintain SELL with a target price of US$6.22 and tight
stops placed above US$6.84. The stock has broken
below its immediate support at US$6.65 and is likely to
trend lower on the back of a potential bearish crossover
at its MACD indicator and its negative directional index
has turned up. Watch to see if there is a further follow
through after the dead cross (on its 50- & 200-day
moving averages) has formed. Our institutional research
has a fundamental SELL with a target price of US$6.43.

 

Ezion Holdings (EZI SP, 5ME) –
Technical BUY with +13% potential return
Last price: S$2.30
Resistance: S$2.60
Support: S$1.95
BUY with a target price of S$2.60 with tight stops placed
below S$2.20. The stock appears to be trending above
its 50-day moving average, which could be acting as
support. Earlier, the stock was well supported near
S$1.95, which was a support level mentioned on 24 Jun
13. Its Stochastics indicator appears to hook up. Watch
to see if prices could break above S$2.32/2.42 for
further upside. Our institutional research has a
fundamental BUY with a target price of S$2.60.

 

Nam Cheong (NCL SP, N4E) –
Technical BUY with +18.5% potential return
Last price: S$0.27
Resistance: S$0.32
Support: S$0.26
BUY with a target price of S$0.32 with tight stops placed
below S$0.26. The stock continues to trend above its
rising key trendline and appears to be trading above its
rising 50- and 100-day moving averages, which could
be acting as a support. Its MACD indicator is near to its
centreline. Watch to see if the stock could break above
S$0.28 for further upside. Our institutional research has
a fundamental BUY with a target price of S$0.34.

 

Aviation - 1QFY14 results preview: Earnings decline for SIA while
Tigerair returns to the black.
Maintain SELL on Tigerair and target price of S$0.61, valuing the stock
at 1.4x FY14F P/B (excluding perps proceeds and no dilution). Maintain
HOLD on Singapore Airlines and target price of S$11.50 ,valuing it at
0.75x forward book value (ex-SIAEC).
For 1QFY14, we expect SIA to report an 87% yoy decline in core net
profit while Tigerair is expected to report a core net profit of S$5.5m
(1QFY13: S$14m loss). We expect SIA to report an operating loss of
S$38.4m (1QFY13: operating profit of S$72m), mainly from an expected
operating loss of S$47m from the parent airline due to lower loads and
weak yields. Throughout the quarter, SIA had guided that yields were
under pressure due to promotional activities. Key data to watch out for are
the extent of yield decline (we estimate 11.1 S cents, -3% yoy) and the
impact of forex movements (US$ and yen) on yields and bottom line.

 

Keppel Corp - 2Q13: O&M margins appear to be bottoming. Another
round of dividend in-specie of K-REIT units.
(KEP SP/BUY/S$10.90/Target: S$13.50)
FY13F PE (x): 13.5
FY14F PE (x): 13.3
Another round of dividend in-specie of K-REIT shares. Keppel Corp
(Keppel) has declared an interim DPS 20.8 S cents, comprising a) cash
DPS of 10.0 S cents and b) a dividend in-specie of Keppel's remaining
KREIT units (on the ratio of 8 K-REIT shares for every 100 Keppel shares
held) equivalent to 10.8 S cents/share. Keppel has also announced a top
management rejuvenation. CFO Loh Chin Hua is to replace CEO Choo
Chiau Beng from 1 Jan 14. O&M margins appear to be bottoming.
Keppel has reported a net profit of S$703.8m (-45% yoy) for 1H13.
Excluding exceptional and fairvalue items, net profit for 1H13 was
S$677m. Against our earlier net profit forecast of S$1.410b for 2013,
results appear to be in line with our projection, but may be marginally
below consensus net profit of S$1.563b for 2013. Net profit for 2Q13 came
in at S$346.8m (-33%). The dip in 1H13 O&M net profit (-8% yoy in 1H13)
was due to a lower O&M turnover (-13% yoy). 2Q13 O&M operating
margin of 14.2% (1Q13: 14.0%; 4Q12's 12.8%) was firm. O&M margins
appear to be bottoming.

Maintain BUY and raise our target price from S$13.10 to S$13.50, on a
higher sum-of-the-parts (SOTP) valuation, which still values Keppel’s O&M
business at 18x 2014F PE. Besides a higher valuation for Keppel’s O&M
business following our O&M earnings upgrade, we have also imputed
Keppel’s investment (before additional shares from options conversion and
additional cornerstone investor shares) in Kris Energy - as of end-1H13 - at
the latter’s IPO price of S$1.10/share.

 

Mapletree Logistics Trust- 1QFY14: Stable performer.
(MLT SP/BUY/S$1.10/Target: S$1.29)
FY14F DPU (S$ cent): 7.1
FY15F DPU (S$ cent): 7.5
Results in line with expectations. Mapletree Logistics Trust (MLT)
reported 1QFY14 distributable income of S$48.7m (+6% yoy, +16% qoq)
or a DPU of 1.80 S cents (+6% yoy, +4%qoq). 1QFY14 DPU of 1.80 S
cents (inclusive of divestment gains of 0.02 S cent) is in line with our
expectations, accounting for 25.3% of our full-year DPU estimate of 7.1 S
cents. Net S$4.96m gain from divestment of 30 Woodlands Loop will be
distributed over eight quarters. This translates into S$0.6m per quarter or
about 2.5 S cents per unit. Revenue down on yen depreciation but
impact mitigated by hedges. 1QFY14 revenues fell 2% yoy due to the
depreciation of the yen offset by positive rent reversions, while NPI fell 3%
yoy due to higher operating costs from conversion of single-user assets
into multiuser facilities and also higher term contract rates. The impact of
the dip in revenues and NPI was mitigated by income hedges. MLT has
hedged 90% of its FY14 distributable income.
Maintain BUY with an unchanged target price of S$1.29, based on
DDM (required rate of return: 6.9%, terminal growth: 1.5%).

 

From Maybank KE:

Keppel Corp: Passing on the Baton; Maintain Buy, TP $12.12
KEP SP | Mkt Cap USD15.5b | ADTV USD40.9m
Ø   2Q13  results  were  within  our expectations with PATMI of SGD347m
(-33%  YoY,  -3%  QoQ).  The  weaker  YoY  performance was due to lumpy
property  recognition  mainly from sale of Reflections units last year.
Interim  cash  dividend  of  10  cts/sh  was  declared  with additional
dividend-in-specie of Keppel Reit units (~10.8cts/sh). Maintain Buy, TP
SGD12.12.
O&M margin for 2Q13 was sustained QoQ at 14.1%, off the lows of the
13%  levels  seen  last  year.  Our  FY13F forecast is at 14.4%, but we
believe  that  there  are  opportunities  for  upside surprise. Overall
demand  for newbuild rigs from various markets remains encouraging. YTD
order wins have reached SGD3.5b with net orderbook now at SGD13.1b.
What  came  as a bit of an early surprise was the announcement of a
change  in  leadership.  The new successors have nevertheless been with
Keppel  for many years and we believe they have the capability to bring
the company to the next lap.
 

 Mapletree  Logistics Trust: 1QFY3/14 Inline; Growth Drivers Yearned; Hold,
 TP $1.05
 MLT SP | Mkt Cap USD2.1b | ADTV USD4.6m
1QFY3/14 revenue at SGD75.4m (-1% QoQ; -2% YoY) was 24% of ours and
25%  of  consensus  estimate.  The  YoY  decline  was mainly due to the
depreciation of the Japanese Yen. 1QFY3/14 DPU at 1.80 SG-cts (+4% QoQ;
+5.9%  YoY)  was  25% of ours and consensus estimate. The impact of the
Japanese  Yen  depreciation  on  distributable  income was mitigated by
currency  hedges  as the income stream for the quarter was fully hedged
into or derived in Singapore dollar.
1QFY3/14  results included the partial distribution of the net gain
from  the divestment of 30 Woodlands Loop. The SGD4.96m divestment gain
will  be  distributed over eight quarters commencing from this quarter.
This translated to SGD0.6m in amount distributable per quarter or about
0.025  SG-cts  per  unit.  Excluding this gain, 1QFY3/14 DPU would have
been 1.78 SG-cts.
Given the high valuation it is currently trading (1.2x P/B), and the
absence of concrete catalysts, we believe this counter is fairly priced

 at the moment. Reiterate HOLD with TP of SGD1.05.

Local Brokerages Stock Call 18 July 2013

From DBS:
As expected, 2Q13 net profit for Keppel Land was flat y-o-y,
dragged by lower associate income. Looking ahead, there will
be more new offerings in Singapore and China in 2H13, with
balance sheet having room for more investments. Maintain
BUY, TP S$4.66 (Prev S$ 4.68).

2Q13 results for CapitaCommercial Trust in line. The expiry of
yield protection income for One George Street is expected to
negatively impact 2H13 earnings. However, management has
indicated a willingness to utilise a portion of their retained
distributable income from Quill Capita Trust in order to
stabilise the DPU going forward. CCT has also announced
new AEI works at Capital Tower. Maintain HOLD, TP revised
lower to S$1.62 (Prev S$ 1.72).

Cosco has secured a contract worth over US$200m from
repeat Mexican customer – COTEMAR, to build one Harsh
Environment Semi Submersible Accommodation Vessel. This
is an exercise of one of the two options granted to COTEMAR
together with the contract for similar vessel in May 2012. The
vessel is scheduled for delivery in 24 months. The latest
contract takes Cosco YTD wins to US$944m, forming 47% of
our order win assumption of US$2bn. Upstream reported in
early June that Cosco is signing contracts for two drillships
worth US$650-700m each with X-Drill. If this materialise,
Cosco will beat consensus' order win assumption this year.
While the recent slew of order flow is encouraging, we
remain concerned over Cosco's project execution particularly
for the new vessel types. Positive order win momentum will
likely be overshadowed by poor earnings visibility, in our
view. Hence, we maintain our FULLY VALUED call and TP:
S$0.75. Cosco's 1H13 results will be due on 1st Aug.

From UOB KH:
Jardine Cycle & Carriage (JCNC SP, C07) –
Technical SELL with +11.8% potential return
Last price: S$40.85
Resistance: S$44.00
Support: S$36.00
Maintain SELL with a revised target price of S$36.00
with tight stops placed above S$42.60. The stock could
continue to trend lower as its mid Bollinger band could
be acting as a resistance and prices are also below its
declining 50- and 200-day moving averages. Its
Stochastics indicator has formed a bearish crossover.
Watch to see if prices could break below S$40.00 for
further downside.

QAF (QAF SP, Q01) –
Technical BUY with +9.6% potential return
Last price: S$1.04
Resistance: S$1.15
Support: S$0.97
BUY with a target price of S$1.15 with tight stops placed
below S$1.00. The stock may trend higher as prices
appear to be trading above its rising 15- and 35-day
moving averages, which acted a support. Its positive
directional index looks poised to rise correspondingly
with its rising ADX. Watch to see if prices could break
above its recent high near S$1.08 for further upside as
its Stochastics indicator has hooked up.

Rotary Engineering (RTRY SP, R07) –
Technical BUY with +12.9% potential return
Last price: S$0.54
Resistance: S$0.62
Support: S$0.46
BUY with a target price of S$0.62 with tight stops placed
below S$0.50. The stock looks poised to edge higher
and the odds could increase should a golden cross form
on its 50- and 200-day moving averages. Its positive
directional index has risen correspondingly with its rising
ADX. Watch to see if the stock could break above
S$0.55 for further upside.

CapitaCommercial Trust - 2Q13: Stability in the midst of adversity.
(CCT SP/BUY/S$1.48/Target: S$1.74)
FY13F DPU (S$ Cents): 8.0
FY14F DPU (S$ Cents): 8.0
Results in line with expectations. CapitaCommercial Trust (CCT)
reported a 2Q13 distributable income of S$59.6m (+1.9% yoy, +7.0% qoq)
and a DPU of 2.07 S cents (+0.5% yoy, +5.6% qoq). 1H13 DPU is in line
with our expectations, accounting for 50.1% of our full-year DPU estimate
of 8.0 S cents. 1Q13 revenues improved 1.8% yoy to S$97.5m while net
property income dipped 0.5% yoy to S$74.9m, as better performance at 6
Battery Road and higher rental contribution from HSBC Building were
offset by lower occupancy at Capital Tower and higher property tax and
operating expenses. Revaluation gain of S$85.3m from mid-year
revaluation of properties. With cap rates unchanged at 3.75% for Grade-A
offices, gains were achieved primarily from higher signing rentals at CCT’s
properties and lower cap rates at Raffles City (down 15-20bp for retail and
hotel components). Management also highlighted that, as the government
has an option to terminate the state lease for Bugis Village in 2019 with a
minimum payout of S$6.6m inclusive of accrued interest, valuations at
Bugis Village (S$59m) will be trending down towards 2019.

Maintain BUY with a target price of S$1.74 based on DDM (required rate
of return: 7.2%, terminal growth: 2.2%). Share price catalyst includes
positive newsflow on hiring, pre-leasing activity and pick-up in office
rentals.

Keppel Land - 2Q13: Deploys its formidable balance sheet.
(KPLD SP/BUY/S$3.57/Target: S$5.11)
FY14F Dividend yield (%): 3.4
FY15F Dividend yield (%): 3.4
Results in line with expectations. Keppel Land reported 2Q13 net profit
of S$94.7m, down 2.5% yoy due to the lower bumper contributions from
Reflections at Keppel Bay, offset by contributions from The Lakefront
Residences and The Luxurie. 1H13 results were in line with our
expectations accounting for 46% of our full-year forecast of S$417m. Net
profit from property investment was up 32% yoy to S$24.5m with improved
performance from Keppel REIT (KREIT) and higher contribution from
Marina Bay Financial Centre (MBFC) Tower 3. Earnings from property
fund management fell 39% yoy to S$9m due to the absence of KREIT
acquisition fees earned in 2Q12. Geographically, Singapore accounted for
the bulk 74% of profit contributions in 1H13, due to contribution from
associates MBFC Tower 3, KREIT and development properties such as
Marina Bay Suites, with the remaining largely from China residential
projects.

Maintain BUY with unchanged target price of S$5.11/share, pegged at
5% discount to its RNAV of S$5.37/share. Key catalysts include
acquisitions, divestment of its office assets and sustained recovery in
China sales.