Local Brokerages Stock Call 30 April 2013

From OCBC:
Frasers Commercial Trust: Advancing steadily
Frasers Commercial Trust’s (FCOT) 2QFY13 DPU came in at 1.9883 S cents, representing a 14.4% YoY growth. This is slightly above our expectations, as 1HFY13 DPU of 3.5715 S cents already formed 51.4% of our full-year DPU forecast. Key rental growth drivers for the quarter came from FCOT’s Australia properties. As at 31 Mar, the portfolio occupancy remained strong at 95.3%, with weighted average lease to expiry at 4.8 years. Looking ahead, we hold our view that FCOT will continue to perform strongly. While the actual occupancy at China Square Central stood at 73.0%, a high committed occupancy of 92.6% was secured. The passing rents for several of its properties are also below the market rates, thus presenting potential for rental upside. In addition, the redemption of another 157.1m CPPUs in Apr is likely to provide further uplift in DPU. We maintain our BUY rating with a higher fair value of S$1.66 (S$1.52 previously) on FCOT.

Global Premium Hotels: No surprises in 1Q13
Global Premium Hotels (GPH) performed in line with our expectations in 1Q13. Revenue fell 2.1% YoY to S$14.6m and gross profit declined 2.9% YoY to S$12.6m. Interest expense was S$1.3m higher YoY due to the restructuring exercise undertaken by GPH pursuant to the IPO in 2Q12 and this was the primary reason that net profit contracted 32.0% to S$4.3m. Revenue and net profit came out to 23% and 24% of our full-year estimates respectively. 1Q13 hotel room revenue decreased 1.1% YoY was mainly due to the lower average occupancy rate (AOR) of 89.6%, down 2.1ppt YoY. We expect slightly better YoY performance in the remaining quarters, especially because 1Q13 was slow for the industry because of the later occurrence of Chinese New Year, which pushed back corporate travel. Using a 10% discount to RNAV, we maintain our fair value of S$0.33 and BUY rating on GPH. 

SMRT Corporation: A loss-making quarter to end the year
As expected, SMRT reported a loss-making 4Q13 to end the year. Although revenue grew 2.4% YoY to S$281.3m, increases in operating expenses namely staff (+28.5% YoY) and repair costs (+41.6% YoY) resulted in a net loss of S$12.1m. For FY13, SMRT reported a 30.6% YoY decline in net profit to S$83.2m despite a 5.9% YoY increase in revenue to S$1,119m. SMRT also declared a final dividend of 1 S cent (versus 5.7 S cents last year) to bring its total dividends declared to 2.5 S cents. Pending a results briefing with management, we maintain our HOLD rating on SMRT as we feel that much of the negatives have been priced in by the street. Nonetheless, we place our fair value estimate of S$1.51 under review.

OCBC: 1Q net earnings of S$696m
OCBC posted net earnings of S$696m, -16% YoY or +5% QoQ, and above market expectations of S$640m (based on a Bloomberg poll). Net Interest Income fell 4% YoY and 1% QoQ to S$912m. NIM was 1.64% in 1Q13 versus 1.70% in 4Q12 and 1.86% in 1Q12. Non Interest Income fell 20% YoY and 11% QoQ to S$676m (1Q12 included higher trading income and mark-to-market investment gains from the insurance business). Loans grew 4% from the previous quarter to S$146.8b. Loans to deposits ratio also moved up from 86.2% in 4Q12 to 87% in 1Q13. We do not have a rating on OCBC. DBS and UOB will be releasing 1Q results on 2 May 2013 (Thu). The consensus 1Q13 net profit estimates are S$824m for DBS and S$660m for UOB.

From CIMB:

CapitaLand

Post-results investors meeting

OUTPERFORM - Maintained | S$3.75 - Tgt. S$4.33 Mkt.Cap: US$12894m | Avg.Daily Vol: US$32.45m | Free Float: 60.50%

We hosted a post-results meeting for investors with the management of CapLand. The key issue discussed was how it plans to improve ROE through simplifying the business, deploying capital strategically and having an optimal mix of operating and development assets. Overall, we believe investors came away from the meeting feeling slightly more positive on the outlook: execution will now be key. We maintain our target price, still based on a 15% discount to RNAV. Catalysts include an earnings recovery in FY13 and corporate restructuring initiatives. Outperform maintained.  

Indofood Agri Resources
Wrestling with cost pressures
UNDERPERFORM - Downgrade | S$1.12 - Tgt. S$1.02 Mkt.Cap: US$1296m | Avg.Daily Vol: US$1.80m | Free Float: 31.10%

 Indofood Agri’s 1Q13 core earnings were below expectations, at only 12% of our full-year forecast and 9% of consensus numbers. Lower FFB output, a higher tax rate and increased fertiliser and labour costs were to blame and overwhelmed higher edible oils & fats earnings. We cut our FY13-15 EPS by 29-36% to reflect our earnings downgrade for 72%-owned SIMP on the back of higher costs and a lower 1Q ASP. Our SOP target price falls by 16% to S$1.02 following our target price downgrade for SIMP. We cut Indofood Agri from neutral to Underperform, with the key de-rating catalysts coming from its weak 1Q and higher-than-expected costs.

Singapore Press Holdings

More realistic expectations

NEUTRAL - Upgrade | S$4.39 - Tgt. S$4.32 Mkt.Cap: US$5691m | Avg.Daily Vol: US$19.68m | Free Float: 90.00%

SPH’s share price has fallen 7% after our downgrade post-2Q13 results. Today’s price reflects more realistic expectations on proceeds and special dividends from any potential REIT deal, in our view. A bleak operating environment is balanced by strong recurring dividends. No change to our SOP based target price, though we upgrade it to Neutral from Underperform as its risk-reward trade-off has turned more favourable. Our estimates are tweaked on housekeeping matters.  

From UOB KH:

Indofood Agri Resources- 1Q13: Weak results on lower
CPO ASP and higher cost. Expect CPO production growth
of 5-10% yoy for 2013. (IFAR SP/HOLD/S$1.12/Target:
S$1.25)
Maintain HOLD with a lower target price of S$1.25, or 11.6x
2014F PE, based on the SOTP valuation and after a holding
company discount of 25%. Entry price is S$1.05.

Raffles Medical- 1Q13: Steady results, well-contained
costs. (RFMD SP/HOLD/S$3.44/Target: S$3.57)
Maintain HOLD but raise our DCF-based target price to S$3.57,
up 6.6% from S$3.35 previously.

Starhill Global REIT- 1Q13: Feedback from management
luncheon. (SGREIT SP/BUY/S$0.985/Target: S$1.06)
Maintain BUY with a higher target price of S$1.06 (from
S$1.03), based on a dividend discount model (required rate of
return: 6.5%, terminal growth: 2.0%).

World Precision Machinery- 1Q13: Sequential recovery.
(BWPM SP/BUY/S$0.425/Target: S$0.54)
Reiterate BUY. World Precision is trading at an attractive 7.2x
2013F PE (Chongqing Machinery: 5.8x, Haitian International:
13.6x). Our 12-month target price is S$0.54, based on 9x
2013F PE. 

Ramba Energy (RMBA SP, R14) -
Technical BUY with +21.3% potential return
Last price: S$0.515
Resistance: S$0.625
Support: S$0.465
BUY with a target price of S$0.625 with tight stops placed
below S$0.475. The stock appears to be trending sideways
and above its rising 100-day moving average. Prices also
closed above its middle Bollinger band. Its Stochastics
indicator has turned up after forming a bullish crossover.
Watch to see if prices could break above its upper Bollinger
band for it to trend higher.

People's Food Holdings (PFH SP, P05) -
Technical SELL with +22.6% potential return
Last price: S$1.37
Resistance: S$1.60
Support: S$0.96
SELL with a target price of S$1.06 with tight stops placed
above S$1.49. The stock appears to form a top and lately a
tweezer top with a bearish engulfing pattern. A break below
S$1.30 is likely to see more selling pressure. Its Stochastics
indicator has formed a bearish crossover and it is turning
down. Its RSI indicator appears to turn down below a reading
of 60. Watch to see if its MACD could break below its
centreline.

Singapore Telecommunications (ST SP, Z74) -
Take profit from previous technical BUY
Last price: S$3.84
Resistance: S$3.85
Support: S$3.55
The stock was featured as a technical BUY when it opened at
S$3.58 on 16 Apr 13. It has since returned 7.3% on closing
prices, one tick shy of hitting the target of S$3.85. Some
profits could be taken off the table should prices fail to close
above S$3.86 and watch to see if its Stochastics indicator
could form a bearish crossover.
Our institutional research has a fundamental SELL with a
target price of S$3.41. 

From DBS:
Frasers Commercial Trust, Buy S$1.54, Bloomberg: FCOT SP  
Growth story intact
Price Target : 12-Month S$ 1.69 (Prev S$ 1.45)  
Attractive growth over FY13-15F. Supported by its restructuring exercise coupled with underlying growth, we like FCOT’s growth story over FY13-15F, which is visible and achievable. Maintain BUY with a higher TP of S$1.69 as we raise our FY15F earnings from Alexandra Technopark master lease expiry.  

From OSK-DMG:
Frasers Commercial Trust: Reaping What Has Been Sowed (BUY,
S$1.50, TP: S$1.65)
FCOT reported 2QFY13 DPU of 1.99 cents (+14% y-o-y). Together with
its 1QFY13 DPU of 1.58 cents, 1HFY13 DPU accounts for 43.4% of our
full year forecast. With the main boost in DPU (a result of the buyback
of c.96% of CPPU) to come through in 2HFY13, together with its
resilient portfolio and bright prospects, we maintain our BUY rating on
FCOT with a higher DDM based (COE: 7.1%; TGR: 2.0%) TP of
SGD1.65.

Raffles Medical Group: Growth Momentum Continues (NEUTRAL,
S$3.41, TP: S$3.30)
Raffles Medical achieved 16% y-o-y growth in PATMI on the back of a
11.2% y-o-y increase in revenue, due to improved patient acuity and a
wider range of medical specialties. This was in-line with our
expectations. Improved cost efficiencies allowed it to achieve better
margins y-o-y. Raffles Medical plans to focus on expanding its hospital
operations into China. Maintain NEUTRAL with TP of SGD3.30.

NeraTel: Nera Malaysia To Drive Up Earnings (BUY, S$0.675, TP:
S$0.79)
NeraTel’s 1QFY13 results came in within expectation with SGD6.0m
PATMI (-10.0% y-o-y) on the back of SGD36.5m revenue (-16.3% y-o-y).
Notably, the group had fully acquired its associate Nera Malaysia. We
adjusted our forecasts upwards to cater for the extra earnings
contribution. Reiterate BUY with a higher TP of S$0.79 based on 9.8x
FY14 P/E. The counter remains our top pick for the Tech sector. 

From Maybank KE:
OSIM International: Touched By An uAngel; Reiterate Buy, TP $2.60
OSIM SP | Mkt Cap USD1.2b | ADTV USD2.1m
OSIM is announcing its 1Q13 results on 7 May after market close. We are expecting net profit of around SGD25.5m for the quarter (up 15% yoy), on double-digit sales growth.
The uAngel has proven to be very popular according to our channel checks, and will likely boost YoY sales growth. However, the full effect will only be apparent from the 2nd quarter onward.
Our TP of SGD2.60 remains a Street high, reflecting our bullishness for 2013. OSIM is our top pick within the Singapore consumer sector and we reiterate BUY.

Sheng Siong Group Ltd: David versus the Goliaths, Maintain Buy, TP $0.80
SSG SP | Mkt Cap USD801.3m | ADTV USD1.4m
 Since the beginning of the year, Sheng Siong has done well. Its stock has outperformed the market by 36%, and despite rising competition and domestic labour constraints, core profits have jumped 30+%, driven by aggressive store expansion.
Competition has stepped up a notch this year. Apart from switching into 24-hour outlets services, Shop N Save has rebranded to Giant outlets, which are offering 10% off on all house brand items in April. Sheng Siong has kept up the pace with the market and we believe there would not be an impact in the near term.
We raise our earnings forecasts by 6-8% for FY13-15F. Maintain BUY with a TP of SGD0.80 (raised from SGD0.70).

Vard Holdings: NDR Feedback; Maintain Buy, TP $1.66
VARD SP | Mkt Cap USD1.2b | ADTV USD6.7m
We hosted a NDR for Vard last week. Investors were concerned about 3 key issues: (1) margin expectations, (2) order win prospects and (3) Vard’s direction after the change in ownership. Maintain Buy, TP SGD1.66.
We believe that recent sell-down was due to consensus cutting estimates on overly optimistic FY13F forecast. We were well aware of the risks and our FY13F figures have been and remained the lowest in the Street.
However, we think that the market has underestimated the strength of recovering order wins. Management is confident of winning close to NOK12b in new orders against consensus expectation of NOK10-11b. We see room for upside surprise in contract wins.