Local Brokerages Stock Call 18 April 2013

From OCBC:

FroKeppel Land: Strategic alliance with Vanke
Keppel Land’s (KPLD) 1Q13 PATMI came in at S$96.6m – down 32% YoY mostly due to the absence of contributions from Reflections at Keppel Bay. KPLD also reported that it would join China Vanke (Vanke) in a strategic alliance to develop property in China and Singapore. As a start, Vanke would take a 30% interest in KPLD’s Tanah Merah GLS site for S$135.5m. All considered, we believe this price is reasonable and see the limited loss of accretion to KPLD’s RNAV mostly offset by the potential synergies from this alliance and further asset diversification in an increasingly uncertain domestic residential space. Maintain BUYwith an unchanged fair value estimate of S$4.53 (25% discount to RNAV). 
 
Frasers Centrepoint Trust: No surprises in 2QFY13
Frasers Centrepoint Trust’s (FCT) 1HFY13 DPU climbed 8.5% to reach 5.1 S cents, forming ~47% of ours and consensus full-year DPU forecasts. This is broadly in line with expectations, given that the income retained in 1H is likely to be distributed in 2H. On the whole, we note that positive rental reversion of 6.6% was achieved in 1H (1Q: 5.2%, 2Q: 10.1%). Portfolio occupancy also improved to 98.2% as at 31 Mar from 87.2% in prior quarter, boosted by start of tenant operations following the fitting out at CWP and Bedok Point. This more than offset the temporary dip in occupancy rates at YewTee Point and Anchorpoint. Looking ahead, management expects CWP and Northpoint to continue to uphold the growth momentum of FCT, while the rest of the malls to remain stable. FCT also updated that the sub-division of the strata titles of the components at One@Changi City is still ongoing, and completion of the process remains uncertain. We like FCT for its strong execution, strong financial position (30.5% gearing) and suburban mall exposure, but at current price, we deem the valuation (1.45x P/B) as fair, not compelling. As such, we maintain HOLD and S$2.13 fair value on FCT.

Mapletree Logistics Trust: Firm 4Q results as expected
Mapletree Logistics Trust (MLT) reported 4QFY13 NPI of S$65.5m and total amount distributable of S$46.7m, up 6.7% and 11.2% YoY respectively. The growth was mainly attributable to an enlarged portfolio and improved performance from existing assets. DPU for the quarter was up 1.8% YoY to 1.73 S cents after accounting for S$4.6m due to its perpetual securities holders. For FY13, DPU increased by 2.5% to 6.86 S cents from 6.69 S cents achieved in the four quarters ending 31 Mar 2012. This is relatively in line with our/consensus full-year DPU forecasts of 6.93/7.0 S cents. Operationally, portfolio occupancy has stayed healthy at 98.5% (99.2% in 3Q), while positive rental reversions of 14% were achieved (17% in 3Q). In addition, aggregate leverage improved from 35.9% in previous quarter to 34.1%, due mainly to lower translated JPY borrowings. We will be attending MLT’s results briefing later in the morning to get more details on its outlook and direction. For now, we keep our HOLD rating but place our S$1.34 fair value under review.

From CIMB:

Banks

Basel III could weigh on growth

OVERWEIGHT - Maintained We think some features of Basel III are ill suited to Asian banking markets and take a cautious view on its adoption across Asia this year. Sector growth could be weighed down by rising liquidity premiums (biggest ST concern), potential balance sheet pressures (mid-term worry) and ongoing constraints on cross-border business (structural). Our base-case FY12-14 sector earnings CAGR is 10.3%. In an alternative scenario, CAGR could slow by 1.5% pts to 8.8%. Banks in Australia, Korea, Malaysia, Singapore and Thailand could be most negatively impacted. Banks in China, India and Indonesia seem better positioned. We Overweight Asian banks with preferences for China, Korea and Indonesia.  Frasers Centrepoint Trust Awaiting accretive acquisition OUTPERFORM - Maintained | S$2.18 - Tgt. S$2.31 Causeway Point and NorthPoint remain the key drivers of FCT’s performance. We continue to like FCT for its resilient retail exposure, and see catalysts from the accretive acquisition of a larger Changi City Point, which should provide FCT with its next prong of growth. 2Q/1HFY13 DPUs broadly met our and consensus expectations at 26/48% of our FY13 forecast. The slight variance was due to higher retained earnings, which should be paid out in the remaining quarters. We tweak our DPUs and DDM-based target price (discount rate: 6.7%) higher. Maintain Outperform. Mapletree Logistics Trust Awaiting acquisitions NEUTRAL - Maintained | S$1.31 - Tgt. S$1.33 With its currency hedges in place, MLT’s performance was unmarred by JPY weakness as it continued to deliver low single-digit DPU growth. We continue to await acquisitions, which is critical in our view, for further growth and upside from current levels. 4Q/FY13 DPUs came in broadly in line with consensus and our expectations, at 25/98% of our full-year forecast. We tweak our FY14-15 DPUs to factor in a larger but later acquisition. Our DDM-based target price is raised after rolling forward our numbers with a lower discount rate of 7.1% (previously 7.3%). Maintain Neutral. Keppel T &T Building its core OUTPERFORM - Upgrade | S$1.41 - Tgt. S$1.54 KPTT was able to maintain its core operating earnings as data centre and logistics earnings continued to perform. KPTT is actively involved in several logistics development projects in China and Singapore. We may also hear of potential organic/inorganic data centre expansions. 1Q13 core net profit of S$15m was in line with our expectations. We adjust our depreciation/interest cost assumptions, and therefore trim our FY13-15 EPS. In light of a growing core, we lower our holding company discount from 15% to 10%, raising our SOP-based target price to S$1.54. Upgrade from Neutral to Outperform. A robust 2H13 outlook is a likely price catalyst. Keppel Land More forays into China NEUTRAL - Maintained | S$3.99 - Tgt. S$4.00 KepLand’s 1Q13 report card was mixed: margins have compressed yoy despite improving unit sales in China. More capital has been deployed into China and we expect more to come given its latest alliance with China Vanke. This, however, may not drive the stock in the near term. 1Q13 core net profit (S$78m) was below our estimate at 18% of our full-year and 20% of consensus. More unit deliveries in China are expected in FY13 and we expect profit recognitions to catch up later. Hence, we keep our core EPS estimates and target price (still on 20% discount to RNAV). Maintain Neutral as we remain unclear about the group’s longer-term strategic direction. From UOB KH: Frasers Centrepoint Trust- 2QFY13: Causeway Point’s AEI one of the best performing AEIs. (FCT SP/BUY/S$2.24/Target: S$2.51) Maintain BUY with a higher target price of S$2.51 (from S$2.37), based on the dividend discount model (required rate of return: 6.3%, terminal growth: 2.0%). Keppel Land- 1Q13: On the lookout for acquisitions. (KEP SP/BUY/S$3.99/Target: S$5.11) Maintain BUY and raise target price to S$5.11, pegged at a 5% discount to our RNAV of S$5.37/share. Key catalysts include acquisitions, divestment of its office assets and a pick-up in China sales. Capita Commercial Trust (CCT SP, C61U) - Technical BUY with +8.1% potential return Last price: S$1.72 Resistance: S$1.86 Support: S$1.58 BUY with a target price of S$1.85 with tight stops placed below S$1.67. The stock has closed above its recent high at S$1.71 with considerably higher volume and may continue to trend higher. Its 20-day moving average has formed a golden cross with its 50-day moving average. Its MACD and RSI indicators did not turn down, albeit Stochastics is now in the overbought region. Our institutional research has a fundamental BUY with a target price of S$1.79. Suntec Real Estate Investment Trust (SUN SP, T82U) - Technical SELL with +5.4% potential return Last price: S$1.955 Resistance: S$2.05 Support: S$1.85 SELL with a target price of S$1.85 with tight stops placed above S$2.05. The stock is trading near its gap down on 28 Jun 07 which could be acting as a resistance if prices fail to close the said gap. In addition, a potential bearish harami has formed. Its RSI indicator has turned down and Stochastics has formed a bearish crossover in the overbought region. Watch to see if its mid Bollinger band could act as a support. Our institutional research has a fundamental BUY with a target price of S$2.03.   SPDR Gold Shares (GLD SP, O87) – Take profit on previous technical SELL Last price: US$133.78 Resistance: US$145 Support: US$128 The stock was featured as a technical SELL when it opened at US$150.9 on 12 Apr 13. It has since returned 11.3% on closing prices after touching an intraday low of S$128.38 on 16 Apr 13, which exceeded our initial SELL target of US$140. Some profits could be taken off the table as SPDR Gold appears to be rebounding from its potential support level.  From DBS: Frasers Centerpoint Trust (FCT)’s results are above expectations. 2Q13 topline grew 8.4% to $39.8 million while NPI saw a 9.7% growth to $28.7 million, attributable to higher contributions from Causeway Point and Northpoint, with other malls remaining stable. Looking ahead, with only 7.6% of NLA due to expire for the remainder of the year, earnings in the 2HFY13 looks resilient. Our analyst tweaks the estimates for Causeway Point upwards to account for the strong rental performance and have forecasted in Changi City Point acquisition by end of FY13, assumed at S$400m at a yield of 5.25%, funded by a mix of debt and equity. TP is thus raised to S$2.33 (from $2.15) based on DCF. Maintain Buy. Mapletree Logistics Trust (MLT) reported 4Q13 results in line with expectations. Gross revenues and net property income grew 6.4% and 6.7% y-o-y to S$75.7m and S$65.5m respectively. Growth was however, mitigated by the weakness of the Japanese yen. Still, we note that 85% of their distributable income is hedged for FY14, which means the weak JPY is likely to see limited impact on the immediate quarters distributions. The stock has done well YTD and trading above our current $1.22 TP. We will provide more details post results conference call. SembCorp Industries (SCI) announced that its 49% owned India power plant, Thermal Powertech Corporation, has secured a long term power purchase agreement from the government of Andhra Pradesh. This is positive news but within expectations so no change to $5.20 TP and Hold call. From Maybank KE: Keppel Land: Standing On The Shoulder Of Giants; Buy TP $4.78 KPLD SP | Mkt Cap USD5.0b | ADTV USD8.7m We  reiterate  our  BUY  recommendation  on  KepLand, following the  announcement  of  a  strategic  tie-up with China Vanke, as well as its  strong  execution in China. Its 1Q13 results, even though down 32% YoY,  were broadly in line with expectations.  KepLand  sold  an  impressive ~850 homes in China in 1Q13, 23% more  than  in 4Q12. The commitment rate at MBFC Tower 3 has now inched up to  86%, up from 79% in end-2012.  We believe there will be more positive news flows pertaining to its  tie-up  with  Vanke  in  the coming months, after Vanke announced it is  taking  a  30%  stake in KepLand’s Tanah Merah project in Singapore. If  leveraged  properly,  KepLand  could use the alliance to grow in China.  Maintain BUY on KepLand, target price unchanged at SGD4.78.

  

Local Brokerages Stock Call 17 April 2013

From CIMB:

Wilmar International

Snaps up Moroccan sugar firm
OUTPERFORM - Maintained | S$3.31 - Tgt. S$3.74
Wilmar's acquisition of a strategic 27.5% stake in Cosumar gives the group exposure to the regulated Moroccan sugar industry and access to Africa's structurally sugar-deficient market. It can add value by introducing better techniques for farming and procuring raw sugar. We are positive on the acquisition as we feel that valuations for the assets are fair. We also expect this acquisition to enhance the group's future earnings base, with the potential earnings enhancement estimated to be around 1%. We maintain Outperform with an unchanged SOP-based target price of S$3.74.

M1 Limited

Tiered data plans kick in

OUTPERFORM - Maintained | S$2.95 - Tgt. S$3.60

 M1’s 1Q13 annualised results are in line at 98% of our estimate and 99% of consensus. The adoption of tiered data plans is robust with 20% of postpaid users switching over, up from 14% in 4Q12. Management maintains its 2013 outlook for moderate yoy growth in net profits. The group’s EBITDA margin should be lifted by lower subsidies as Android devices increase in popularity. M1 remains an Outperform and our top Singapore telco pick as it will benefit the most from the take-up of tiered data plans. We retain our forecast and DCF-based target price (WACC 8.0%). A faster-than-expected adoption of tiered plans would catalyse the stock.

Singapore Exchange

Buoyed by strong trading activity

UNDERPERFORM - Maintained | S$7.70 - Tgt. S$7.29

Strong securities/derivatives trading, an increase in demand for depository services and effective cost control helped widen 3QFY13 operating jaws. Management appears upbeat on SGX’s ability to ride Singapore’s new offshore Rmb-clearing status. 3QFY13 (S$97.7m) slightly exceeded estimates (ours: S$96.2m, consensus: S$94m). 9M13 formed 79% of our FY13 estimate. We raise FY13 by 4.2% as our volume assumption is too low compared to current activity, but maintain FY14-15. Our DDM-based target price inches up to S$7.29 accordingly (r: 9.5%, g: 4.5%). Strong trading activity is unlikely to recur. We maintain Underperform as we see risks from weaker trading activities.

From OCBC:
CWT: Growth from warehouse assets and Commodity SCM
CWT is a leading provider of logistics solutions for worldwide customers in the commodities, chemical, petrochemical, marine, oil & gas, defense and industrial sectors. A competitive edge is its global logistics network which connects customers to around 200 direct ports and 1,500 inland destinations. The group is currently developing two large warehouses, estimated to add another 50% to its owned warehouse space in Singapore. In total, we estimate its entire warehouse portfolio to be worth about S$800m. Meanwhile, the recently acquired Commodity SCM business is also expected to scale up quickly, taking advantage of the group’s strong global logistics network and reputation as an established commodity collateral manager. Our SOTP fair value estimate for CWT is S$2.08 per share. Given the ample upside, we initiate coverage with BUY.

Singapore Exchange: Strong 3Q, but likely QoQ slowdown in 4Q
Singapore Exchange (SGX) generated above market expectation 3QFY13 net earnings of S$97.7m, up 25.6% YoY. The strong performance came from several units, especially its core Securities and Derivatives businesses. A 3Q dividend of 4 cents has been declared and is payable on 2 May 2013. The final quarter is likely to see some slowdown, largely due to prevailing macro economic uncertainties, and we expect volatility to come back again as sentiment is likely to turn more cautious especially after the good gains for the key equity indices since the start of the year. We have raised our fair value estimate slightly from S$6.80 to S$7.16 based on the same 23x blended earnings. With an estimated dividend yield of 3.5%, total return is -3.5% and we are buyers only at S$6.80 or lower. Maintain HOLD.  
 
M1: 1Q13 results in line; downgrade to HOLD
M1 Ltd reported its 1Q13 revenue of S$243.0m (-7.4% YoY, -25.8% QoQ) which met just 21.3% of our full-year forecast, mainly due to lower handset sales and also the mix of handsets (Android now makes up >50% of its postpaid subscriber base). Nevertheless, net profit grew 1.7% YoY and 8.2% QoQ to S$41.0m, meeting 26.5% of our FY13 forecast. It may have also gotten a one-off boost from recognizing the unused credit in expired pre-paid cards that were periodically terminated. While we are not making any chances to our FY13 estimates as 1Q13 results were largely in line, our DCF-based fair value improves to S$3.10 (from S$2.89) as we tweak our interest rate expectations slightly lower in view of the still sluggish global economic performance. But as there is now < 10% total return from here, we downgrade the stock to HOLD.

Rigbuilders: Who has been ordering from the Chinese yards?
There have been recent reports on Chinese yards surpassing Singapore yards in terms of jack-up rig orders YTD. Indeed, we find that jack-up orders for the former have totaled ~US$2.3b so far, compared to ~US$2.1b for the latter. However, we note that many of the contracts that Chinese yards have won so far are mostly from newcomers in the offshore industry, including speculators who sell the rigs later for a profit. Meanwhile, Keppel Corp (KEP) and Sembcorp Marine (SMM) have been diversifying their product range and innovating to stay ahead in certain niche areas. Maintain BUY on both KEP [FV: S$12.68] and SMM [FV: S$5.64]; we note that markets may be increasingly volatile ahead, providing an opportune time to enter such quality stocks.

Frasers Centrepoint Trust: 2QFY13 results broadly in line
Frasers Centrepoint Trust (FCT) announced its 2QFY13 results this morning. NPI and distributable income grew by 9.7% YoY and 10.4% YoY to S$28.7m and S$23.5m respectively. DPU for the quarter came in at 2.7 S cents, up by a slightly slower 8.0% YoY due to retention of S$1.2m in distributable income. For 1HFY13, DPU rose by 8.5% YoY to 5.1 S cents. This is broadly in line with both ours and consensus expectation, with 1HFY13 DPU forming ~47% of our full-year DPU forecasts. FCT’s portfolio assets continued to exhibit resilience. Average occupancy improved to 98.2% as at 31 Mar from 97.2% in the prior quarter, and positive rental reversion of 6.6% was achieved for 1HFY13. We will be speaking to management during the analyst briefing scheduled later in the morning. For now, we keep our S$2.13 fair value and HOLD rating on FCT unchanged.

Keppel Land: Diversifying stake in Tanah Merah site
Keppel Land (KPLD) announced yesterday that it would join China Vanke (Vanke) in a strategic alliance to develop property in China and Singapore. In addition, Vanke would take a 30% interest in a KPLD’s Tanah Merah GLS site for S$135.5m. Recall that KPLD had won this site with a S$434.6m bid last Oct and Vanke’s entry price is only marginally above that of KPLD’s cost. We believe this price is reasonable and, all considered, expect a neutral market reaction to this transaction. In our view, the potential loss of accretion to KPLD’s RNAV from this divestment is limited and mostly offset by the benefits of diversification in an increasingly uncertain domestic residential space. Maintain BUYwith an unchanged fair value estimate of S$4.53. 
From UOB KH:
M1- 1Q13: Unfavourable mix of handsets. (M1
SP/HOLD/S$3.00/Target: S$3.04)
M1 reported a net profit of S$41m for 1Q13 (+8.2% qoq,
+4.2% yoy), marginally below our expectations. Our target
price is S$3.04, based on DCF (required rate of return: 7.2%,
terminal growth: 0%).

Hafary Holdings- Positive Earnings Outlook With A
Portfolio Of Industrial Gems; BUY Initiation
(HAFA SP/BUY/S$0.485/Target: S$0.66)
We initiate coverage on Hafary Holdings (Hafary) with a
BUY recommendation and a SOTP-based target price of
S$0.66, implying a 36.1% upside from the current price.
Strong construction demand is likely to boost future earnings.
Valuation is backed by a portfolio of industrial buildings held
at low cost on balance sheet. Any plans to unlock hidden
value of the property portfolio may be an upside catalyst for
the stock, in our view.

From Maybank KE:
M1: Maximum Warp, Mr Data. Up to BUY; TP $3.55
M1 SP | Mkt Cap USD2.23b | ADTV USD2.4m
We upgrade M1 to BUY with a DCF-derived target price of SGD3.55, at
 the  top  end  of consensus. Including forecast dividends of 14.8 cents
for  FY13,  the  upside potential is 23%. Switch to M1 from StarHub and
SingTel.
The  relative  underperformance  of the stock this year against its
 peers  provides  a  chance to get in early on potential earnings upside
 from the adoption of 4G, which we believe will happen faster and sooner
 than expected in 2013. Yield of 5% is also very decent.
 Already,  the  numbers  unearthed from the in-line 1Q13 results are
 encouraging.  Service  revenue  rose 4% YoY, the fastest since 2010, on
 the  back  of  tiered  price  hikes  and  ARPU  uplift from excess data
 charges.

Sino Grandness: A Big Step Towards Profit Target; BUY TP $1.60
SFGI SP | Mkt Cap USD296.9m | ADTV USD2.3m
Sino  Grandness’  beverage  subsidiary,  Garden Fresh, has received
indicative  orders  worth  more  than CNY290m at last month’s F&B trade
fair  in  Chengdu,  China. The order win from this year’s event trumped
last year’s CNY200m by 45%.
In  our  view,  this development augurs well for Garden Fresh as it
represents  a  big  step towards helping it meet its profit target this
year.
We continue to like Sino Grandness’s growth prospects and the
potential spinoff of Garden Fresh to unlock value. The stock has surged
28% in the last week but we still see plenty of upside from here.
Reiterate BUY and target price of SGD1.60. 

From OSK-DMG:
SGX: Strong Securities And Derivatives Revenues Help Lift 3QFY13 Results
(SELL, S$7.66, TP: S$6.80)
SGX’s 3QFY13 net profit rose 26% y-o-y (+28% q-o-q) to SGD98m, on the back
of a pickup in securities market average daily turnover (ADT) to SGD1.7bn (17%
y-o-y; +41% q-o-q) and a record quarter for derivatives. We raised our FY13-14
net profit projections by 4% p.a. and our fair value to SGD6.80 (21x FY14 EPS)
from SGD6.50. However, our Sell call is unchanged. Apr’s ADT has softened,
suggesting a weaker 4QFY13.
Valuation and recommendation. Fair value raised to SGD6.80 from SGD6.50,
based on unchanged target FY14 PER of 21x. SGX is currently trading at CY13 PER
of 24.5x. While not particularly excessive, we prefer Bursa Malaysia (Buy, MYR7.16,
TP: MYR7.50) given cheaper valuations (CY13 PER: 22x) and stronger earnings
growth (2013F: 14%). Furthermore, we note that Apr’s ADT has softened to around
SGD1.26bn, potentially suggesting a weaker 4QFY13 is in store. Thus, despite the
commendable results, we have maintained our Sell call on the stock.

M1: A Seasonally Weaker Quarter, Roaming Revenues Stay Under Pressure
(NEUTRAL, S$3.00, TP: S$2.70)
There were no surprises in M1’s 1QFY13 results, which reflected typical
seasonality and the extended weakness in roaming revenue. Management
expects margin upside to be capped as subscriber acquisition cost (SAC) will
likely remain high. We maintain our core earnings forecasts, which assume a
two-year CAGR of 14.5%. Our FV remains at SGD2.70, based on DCF (10%
WACC). Maintain NEUTRAL.
Share price playing catch-up. M1’s share price has risen 11.3% YTD, which could
indicate a laggard play following its relative underperformance vis-à-vis its peers in
2012. Management has reaffirmed its previous net profit guidance of ‘moderate
growth’ and capex guidance of SGD130m-SGD150m for FY13 (excluding 4G
spectrum cost). We make no changes to our core earnings forecasts of SGD161m
and SGD192m for FY13 and FY14 respectively. NEUTRAL.

From Phillip:

M1 – Results
Recommendation: Neutral
Previous close: S$3.00
Fair value: S$2.58

• 1.7% y-y increase in Net Income, Service revenue healthy with 4.1% y-y growth
• Positive on 11% of re-contracting customers upgrading to higher tiered postpaid plans
• Maintain Neutral, with new TP of S$2.58.

Wilmar International Ltd - Acquires 27.5% stake in Cosumar
Recommendation: Neutral
Previous close: S$3.27
Fair value: S$3.79

• Acquisition of 27.5% stake in Cosumar for MA$2.3bn
• Impact should remain insignificant in the near term
• Maintain Neutral rating

SGX – Results
Recommendation: Accumulate
Previous close: S$7.70
Fair value: S$8.00

• SGX reported 5-year record high 3Q13 net profit of S$97.7 million and Total revenue of S$190.6 million.
• Securities and Derivatives  revenue positive on improved market sentiments, wide variety of attractive offerings, and solid infrastructure
• Maintain “Accumulate” with TP of S$8.00, based on unchanged PE multiple of 26X FY13 earnings.  

Local Brokerages Stock Call 16 April 2013

From CIMB:

Keppel Corporation

The prodigal rig

OUTPERFORM - Maintained | S$11.39 - Tgt. S$13.30 Proven design and track record could be the reasons why Singapore-listed Falcon Energy is returning to home ground and ordering a jack-up rig from Keppel instead of adding to the two being built by China’s CMHI. We reiterate our Outperform rating. With about S$2.2bn of new contracts, Keppel has met 40% of our S$5.5bn target for 2013. The latest KFELS super B-class rig from Falcon is valued at US$226m, similar to the last Bigfoot design rig that Keppel secured from Ensco last week at US$225m. We maintain our EPS and target price, which remains based on RNAV. Stronger orders and margins could be the key catalysts. Singapore Airlines A slightly anti-climactic end to FY13 NEUTRAL - Maintained | S$10.60 - Tgt. S$11.00 Passenger loads for the mainline fell in Mar after seven straight months of improvement. Loads for SilkAir also deteriorated, while cargo traffic continues to soften. We reiterate our Neutral rating on SIA as we think that competitive pressures will continue to weigh on traffic, while persistent S$ strength will eat into yield growth as well. We leave our target price and estimates unchanged. Our CY14 target price of S$11 is based on a trough multiple of 4.2x CY14 EV/EBITDAR, reflecting the de-rating that we believe SIA is undergoing Telco - Overall Cashing in on data NEUTRAL - Upgrade We believe the take-up for higher-tiered data plans will boost data monetisation for the Singapore telcos and generate incremental revenues that will fall directly to the PBT. We expect 35% of postpaid users to switch over by end-2013 vs. mid-teens at end-12. M1, our new top pick, should benefit the most as it should experience the highest ARPU uplift. Hence, we upgrade M1 to Outperform while StarHub and SingTel remain Neutral and Underperform, respectively. With M1's upgrade, we raise our sector call from Underweight to Neutral. We up our FY13-15 EPS estimates of Singapore telcos by 0.4-20.2% and target prices by 1.5-24%. Keppel REIT Occupancy nudging higher NEUTRAL - Maintained | S$1.42 - Tgt. S$1.45 Key leasing developments in 1Q came from new take-ups at OFC and pre-commitments at 8 Chifley Square in Australia. KREIT’s headline yields remain its key draw, though we see this balanced by a flattish DPU outlook and its higher asset leverage and income support. 1QFY13 DPUs met consensus and our expectations, forming 25% of our FY13 forecast. We tweak our FY13-15 DPUs higher as we update leases up for rent reviews and renewals. Our DDM-based target price (discount rate: 7.7%) is also higher. Maintain Neutral, with higher headline yields compensating for higher asset leverage and income support.  From OCBC: Singapore Residential Property:  Wave of launches driving firm Mar sales Summary: URA reported that a headline total of 3,072 new private homes (including 279 EC units) were sold in Mar 13, which was up 235% MoM and 1% YoY. These healthy numbers were driven by a wave of new launches after the Lunar New Year, including D'Nest (912 total units, Pasir Ris) 699 units sold at a median S$963 psf, Bartley Ridge (868 total units, Mt Vernon Rd) 367 units sold at S$1296 psf and Urban Vista (582 total units, Tanah Merah) 348 units sold at S$1,503 psf. We see sales reflecting still firm residential demand and an environment of continued liquidity but remain cognizant of potential incremental curbs should the housing sector show excessive activity going forward. Maintain NEUTRAL on the residential property sector and we prefer developers with strong balance sheets and diversified exposure. Our top picks are CapitaLand [BUY, S$4.29], Keppel Land [BUY, S$4.53] and CapitaMalls Asia [BUY, S$2.55]. First REIT: No major impact from possible Siloam Hospitals IPO Summary: News agency Reuters reported that Lippo Karawaci (Lippo), which is First REIT’s (FREIT) sponsor, is seeking to raise at least US$200m in an IPO of its Siloam Hospitals healthcare division. We do not foresee any major impact to FREIT’s prospects, as we believe that FREIT would remain as an important vehicle for Lippo to implement its asset-light strategy. Moreover, FREIT has a right-of-first-refusal for the purchase of healthcare assets from its sponsor and/or any of its subsidiaries. Meanwhile, FREIT will hold an EGM on 29 Apr to seek unitholders’ approval in relation to its two proposed acquisitions from Lippo. As we expect the acquisitions to be DPU accretive and value-enhancing to unitholders, we expect unit-holders to vote in favour of the proposed conditions. Maintain HOLD and S$1.31 fair value estimate on FREIT. Ascendas REIT: Strength reflected in price Summary: Ascendas REIT’s (A-REIT) FY13 DPU totalled 13.74 S cents, up 1.3%. This is somewhat below our and street’s full-year estimates of 14.0-14.2 S cents. Excluding performance fee, however, we note that DPU would have grown 3.6% to 14.05 S cents, closer to our projections. Looking ahead, A-REIT expects the positive rental reversions to persist, albeit at a slower pace. Management also pointed out there is ~10% vacancy in the multi-tenanted portion of its portfolio, which may provide upside if these spaces are leased out. During the quarter, A-REIT announced the development of DBS Asia Hub Phase 2 for S$21.8m and two new asset enhancement projects totalling S$14.0m. These initiatives, together with the announced investments, are likely to maintain its stable performance in FY14, in our view. We incorporate the results into our forecasts and roll over our valuation to FY14. Maintain HOLD with a marginally higher fair value of S$2.63 (previously S$2.60) on A-REIT. Keppel Corporation: Secures US$226m jack-up rig contract from Falcon Summary: Keppel Corporation (KEP) announced that its O&M arm has secured a US$226m contract from Falcon Energy to construct a KFELS Super B Class jack-up rig. Recall that KEP won a US$820m contract for four jack-up rigs from Grupo R in Mar (KFELS B Class design) and a US$225m contract from Ensco in early Apr (KFELS B Class design). The latter figure includes the construction cost, commissioning, systems integration testing and project management costs. Meanwhile, the last time Keppel secured a KFELS Super B Class jack-up rig was in Mar 2011 for US$210m. This latest order brings KEP’s YTD orders to about S$2.2b, accounting for about 43% of our full year order win estimate. Maintain BUY with S$12.68 fair value estimate on KEP; the group will also be announcing its results on 18 Apr 2013. Far East Hospitality Trust: Agreement to acquire Rendezvous Grand Hotel Singapore Summary: Far East Hospitality Trust (FEHT) has entered into an agreement with The Straits Trading Company Limited (STC) to acquire Rendezvous Grand Hotel Singapore and Rendezvous Gallery (70-year old leasehold estate) for an estimated total cost of acquisition of S$270.1m. The acquisition will be financed by the proposed issue proposed issue of new stapled securities in FEHT to STC (S$68.0m), the Sponsor (S$67.8m), as well as debt facilities (S$132.2m). The pro forma effects of the acquisition for FY12 (27 Aug-31 Dec) would have been an increase in DPU from 2.09 S-cents to 2.12 S-cents. Pro-forma effect on NAV per stapled security as of 31 Dec 2012 would have been an increase from 97 S-cents to 98 S-cents. This is Far East H-Trust’s first acquisition since its initial public offering in August 2012. The master leasee will be a member of the Far East Organization group of companies. We maintain a HOLD rating but place our fair value of S$1.05 under review.     From UOB KH: Property – Singapore Record Monthly Developer Sales Heighten Risk Of New Measures Monthly developer sales have hit a record high of 2,793 units despite seven rounds of property cooling measures. This heightens the risk of additional measures which would weigh down the residential segment. We prefer deep value and diversified property stocks with exposure to the office and hospitality segments. OUE, Ho Bee, Suntec REIT and CD REIT are our top BUYS. Maintain OVERWEIGHT. Shipyard – Singapore Keppel Corp Secures Jack-Up Order And SOCAR Semi Duo Keppel has won a US$226m jack-up rig order from Falcon Energy. Separately, Upstream reported Keppel has been selected as the main contractor to build at least two semi-submersible rigs (we estimate worth >US$1b) for Azerbaijan’s SOCAR. Keppel’s contract wins ytd could rise to S$3b, potentially ahead of our expectation. Maintain MARKET WEIGHT on the shipyard sector, keeping Keppel as a BUY and Sembcorp Marine as a HOLD. Ascendas REIT (AREIT SP) 4QFY13: Looking Overseas To Offset Slowing Singapore Growth Results were in line with expectations. Positive rental reversions are expected to continue in FY14 and FY15 as expiring leases are 9-35% higher than passing rentals. AREIT continues to see near-term opportunities in China tier-1 cities while Iskandar Malaysia remains a medium-term opportunity, especially for light industrial space, as AREIT sponsor Ascendas jointly develops the industrial park with UEM Land. Maintain HOLD with a higher target price of S$2.86 (from S$2.73). Entry price is S$2.49. Keppel REIT (KREIT SP) BUY 1Q13: Best Grade-A Office Portfolio In Singapore KREIT’s results are in line, with the best Grade-A office portfolio in Singapore continuing to deliver higher occupancies (up 0.3ppt to 98.8%). With office rentals expected to bottom out in 2013 and to rise 8% in 2014, the key re-rating catalyst would be an accretive acquisition of MBFC Tower 3. We have raised our target price to S$1.64 (from S$1.57), mainly factoring in a 50bp reduction in required rate of return on improving office segment fundamentals adjusted for the risk of dilutive equity fund-raising. Maintain BUY. Singapore Airlines (SIA SP) Decent 6.8% Pax Traffic Growth For FY13 A good year for pax traffic but weak yields at parent airline level and weak loads at Silk Air could still depress full-year results. Maintain SELL. Target price: S$10.70. From Maybank KE: Yongnam Holdings: Start dancing Yongnam style! Initiate BUY; TP $0.45  YNH SP | Mkt Cap USD301.3m | ADTV USD1.6m  Initiate   at   BUY   and   Street-high  TP  of  SGD0.45  on  this  under-researched  name.  We think a major share price overhang has been  removed  with  the expiry of 365m warrants in Dec 2012 and the stock is  ready for a sharp re-rating.  With  a  leading  and  defensible  position  in  Southeast Asia for  structural  steel  and  strutting  assets,  we  believe  Yongnam  is  a  multi-bagger   in   the   making   as  it  rides  on  an  unprecedented  infrastructure boom in Asia.  Yongnam  recently announced it has formed a consortium with Japan’s  JGC  and  Singapore  Changi  Airport,  bidding  to  build  and  own  an  international  airport  in  Myanmar.  Winning  this project may open up  further opportunities in the Golden Land. Singapore Property: The Market Marches On; OVERWEIGHT Developers  launched  a record 3,489 homes for sale in March, which resulted  in  an astounding 2,772 homes (excl. ECs) sold barely a month after the last round of cooling measures. Projects  in  the  Outside  Central Region accounted for 68% of all sales.  From the top-selling projects, we reckon that investment demand remains  fairly  high.  Consequently,  we  believe  that  more  cooling measures  could  be  in the works, particularly on the back of the weak 1Q13 GDP numbers. We  reiterate  CapitaMalls  Asia  as  our  top  pick for its retail exposure.  We  also  maintain  our  BUY  recommendations on CapitaLand, Keppel  Land and OUE for their diversified exposures and possibility of significant divestments. Keppel REIT: Another Steady Quarter; HOLD TP $1.27 KREIT SP | Mkt Cap USD3.1b | ADTV USD1.9m KREIT  reported  1Q13  DPU of 1.97 cts/unit as distributable income grew marginally by 1% YoY to SGD52.2m, which was in line expectations. We expect KREIT’s portfolio performance to remain fairly stable for the rest of FY13. In addition, the possible acquisition of MBFC Tower 3 could  be  revisited  in  2H13,  should its occupancy rate cross 90% by then. Besides  the  risks of dilutive equity fund-raising, we also expect some  near-term  price  weakness  when Keppel Corp shareholders receive their  KREIT units as dividend-in-specie come 8 May 2013. Hence, we see limited  upside  from  the  current  share price. Maintain HOLD, target price raised marginally to SGD1.27. Ascendas REIT: FY3/13 results in-line; Reiterate HOLD; TP $2.93 AREIT SP | Mkt Cap USD5.5b | ADTV USD15.1m FY3/13 revenue at SGD575.8m, was 101% of ours and 103% of consensus estimate.  FY3/13  DPU  at  13.74  SG-cts  was  97%  of ours and 98% of consensus  estimates,  dragged  down  a  SGD7m  performance fee charge, payable to the REIT Manager, as the DPU growth in FY3/13 exceeds 2.5%. A-REIT  announced  the  development  of DBS Asia Hub Phase II to be fully leased to DBS Bank Ltd upon completion. It will cost SGD21.8m and will  increase  GFA  by  7,081  sqm.  AREIT  will  also  be  initiating enhancement work at Techpoint and the former Freight Links Building, at estimated costs of SGD7m each, to improve marketability. Based  on  our  estimates,  A-REIT  has  38%  of its FY3/14F GAV in business/science parks and 23% in high-tech industrial/data centres. We expect  these  two  segments to progressively increase in proportion as Singapore  outsources  its  lower  value-add activities to neighbouring countries. Reiterate HOLD with a TP of SGD2.92.  From DBS: Singapore Exchange  High volumes, low values Lowest volume-to-value ratio in 1Q13; trading volumes at its high but revenues to be weak Strong derivatives volumes but revenues hurt with shift to lower yielding products FY13-15F earnings cut by 10-13% on lower estimates for derivatives and other revenues Maintain HOLD, TP lowered to S$7.15 as we roll forward valuation base to FY14 EPS; 4% dividend yield should limit downside A-Reit  4Q13 results for Ascendas REIT in line. A-REIT continues to keep an active pipeline of development and asset enhancement projects (AEI), which are expected to drive earnings growth in FY14-15F. Maintain HOLD, TP raised to S$2.60 (Prev S$ 2.30) due to higher acquisition assumptions and slightly lower discount rates. From Phillip: Keppel Corporation Ltd Good news from new customer   Investment Actions? Keppel is currently trading at 12.7x FY13E, with a dividend yield of 4.1%. YTD Keppel has achieved approximately S$2.15bn worth of orders, or 36% of our S$5.9bn order win target for 2013. We continue to like Keppel, as we believe that it is well positioned in the O&M sector. We are keeping our earnings estimate, as the order win has been factored into our forecast. We maintain our Accumulate rating and target price of S$12.38, still based on SOTP valuation  From OSK-DMG Keppel Corp: USD226m Jackup Order From Falcon Energy (NEUTRAL, S$11.39, TP: S$11.21) Keppel has secured a USD226m contract from a subsidiary of Falcon Energy to build a customised KFELS Super B Class jackup rig. The latest order lifted its YTD order win to SGD2.2bn and net order book to SGD15bn. The YTD flow of new orders is within expectations and accounts for 43% of our full-year forecast. We maintain our FY13-FY14F EPS estimates and NEUTRAL rating on Keppel, at a TP of SGD11.21.  AREIT:Another Stable Set of Results (Neutral, S$2.86, TP: S$2.76) AREIT’s FY13 DPU of 13.74S¢ (+1.3% y-o-y) was in line with our estimate (-1.2% deviation). Revenue and net property income came in at SGD575.8m (+14.4% y-o-y) and SGD408.8m (+11.0% y-o-y) respectively. The increase in revenue was mainly due to additional contributions of rental income from completed development projects and newly-acquired properties during the year. We maintain our NEUTRAL view on AREIT with a DDM-based (COE: 7.3%, TGR: 1.0%) TP of SGD2.76.

Local Brokerages Stock Call 15 April 2013

From DBS:
Ezra - Recovery road still bumpy, maintain BUY, TP $1.56
2Q13 results for Ezra came in below expectations as utilisation
of assets remains sub-optimal in a seasonally weaker quarter.
Separately, Ezra announced a batch of contract wins worth
about US$120m from across its business divisions. This
includes subsea installation projects in West Africa and GoM as
well as OSV charter contracts. Subsea momentum continues to
build with FY13 YTD wins of US$760m. Our analyst has cut
FY13/14F earnings by 6%/20% to account for a more
stretched out revenue recognition schedule. Ezra’s recovery
story remains intact; maintain BUY, TP S$1.56 (Prev S$ 1.58).

SPH - REIT expectations provide support; maintain BUY,
TP S$4.75
2Q13 results for SPH were lower than expectations, dragged
by weak ad revenue. 7 Scts interim DPS was declared; we
maintain our DPS estimate of 24 Scts for the full year. The
evaluation of a property REIT is still in progress and is likely to
underpin share price but no mandate has been signed yet.
Maintain BUY, TP S$4.75 (Prev S$ 4.79).

From OCBC:
Singapore Press Holdings: Ad revenues impacted by cooling measures

Summary: SPH reported 2QFY13 PATMI of S$71.6m – down 14.7% YoY mostly due to a lower contribution from the Newspaper and Magazines segment. 1HFY13 PATMI now forms 45% of our FY13 forecast; despite 2Q being a weaker quarter cyclically, we now judge earnings to be tracking marginally below expectations as SPH’s ad revenues suffered the impact of recent cooling property and automobile measures. 1HFY13 rental income from Paragon increased by S$3.4m (up 4.5% YoY) from higher rental rates while occupancies at Paragon and Clementi Mall remained at 100%. The Seletar Mall remains on track to be completed by end of 2014. Management expressed that it is still in the midst of exploring a REIT listing, which continues to be a realistic event, in our view, given the size and quality of its retail malls and the potential for significant shareholder accretion. An interim dividend of 7 S-cents per share is announced. Maintain BUY with an unchanged fair value estimate of S$4.94.

Ezra Holdings: Delays in project execution and awards

Summary: Ezra Holdings (Ezra) reported a 17% YoY increase in revenue to US$247.1m and a 34% rise in net profit to US$29.7m in 2QFY13. However, we note that net profit in the quarter was bumped up by a US$30m disposal gain on fixed assets; excluding that, core net profit was minimal and below our expectations. The sub-par results were mainly due to lower vessel utilisation in the offshore support services segment and the subsea services segment. There is also a three-month delay for the Lewek Express, which will now start work in Jul/Aug 2013. According to management, uncertainty in the Eurozone has weighed on sentiment, and project execution and awards have been delayed. We have lowered our core earnings estimates due to the delays and possibly heightened project risks.  As such, our SOTP-based fair value estimate slips to S$1.10 (prev. S$1.30). Maintain HOLD.

From CIMB:

Ezra Holdings

Subsea substandard

UNDERPERFORM - Maintained | S$1.07 - Tgt. S$0.80

Ezra made a core net loss of US$0.3m in 2Q13, affected by low utilisation in both subsea and offshore segments. Stiff competition, slower pace of contract awards by customers, weak margins and higher tax rates all point to a grim outlook. Maintain Underperform. We had expected US$7m core profit for 2Q13. Ezra's 1H13 core profit of US$6.4m forms only 15% of our and consensus forecast. But its 2Q13 reported profit of US$29.7m was boosted by a US$30m gain on disposal of sale-and-leaseback assets. We cut FY13-15 core EPS by 11-18% on lower margins. Thus, our target price is reduced to S$0.80, still based on 10x CY14 P/E or 1 s.d. below its 5-year mean. 

Singapore Press Holdings

Tread carefully

UNDERPERFORM - Downgrade | S$4.60 - Tgt. S$4.32

We think it is still unclear if spinning off its prized property assets into a REIT creates shareholder value. This, coupled with the weak ad environment, suggests that the recent 10% run-up in the share price may be overly optimistic. 2QFY13’s earnings came in below expectations at 19% of our and consensus full-year estimates due to weaker-than-expected ad revenue. 1H13 formed 44%. We lower FY13-15 estimates by 5-9% but raise our SOP-based target price to reflect the appraised value of properties likely to be spun off into a REIT. Downgrade from Neutral to Underperform as we think the recent share price gains are unwarranted.

From UOB KH:
Ezra Holdings- 2QFY13: Large vessel disposal gain
offsets weak subsea margin. (EZRA
SP/BUY/S$1.08/Target: S$1.46)
Maintain BUY and target price of S$1.46. We value Ezra at 1.0x
FY14F P/B, -1SD below its long-term mean of 1.8x. 

Singapore Press Holdings- 2QFY13: Weaker advertising
revenue; mulling over retail REIT. (SPH
SP/HOLD/S$4.60/Target: S$4.50)
Maintain HOLD, pending decision on the retail REIT. Our target
price has been raised from S$4.30 to S$4.50. We have reduced
our discount to sum-of-the-parts valuation from 20% to 15%. 

DBS Group Holdings (DBS SP, D05) –
1Q13 results preview: Operationally a strong quarter
Last price: S$15.67
Target Price: S$19.90
DBS has benefitted from improved business sentiment with
robust loan growth seen to continue into 1Q13. Market-sensitive
sources of fee income have improved with more upbeat financial
markets. Net trading income, which is typically stronger in the
first quarter, is expected to improve in 1Q13 and NPL ratio and
credit costs are already fairly low compared to historical trend.
Maintain BUY and target price of S$19.90, based on 1.55x P/B.
Growth drivers include regional businesses and greater
contribution from high-growth emerging markets if DBS
successfully acquires Bank Danamon.
Technically, the stock could trend higher for a break above
S$16.00 to test S$16.80 should it be well supported at above
S$15.30.

SIA Engineering (SIE SP, S59) –
Attractive 4.5% yield with potential for a special dividend
Last price: S$4.87
Target Price: S$5.20
We estimate SIAEC will declare a 15 S cents final dividend when
it announces full-year results on 14 May, taking total payout to
22 S cents for FY13. At the current level, this translates to a
yield of 4.5%. There is also a possibility that the final dividend
could be higher than our initial estimate. Historically, the
company paid in excess of 100% of recurring free cash flow and
such a possibility cannot be ruled out, especially with SIA
needing funds. If half of the cash balance is paid out, SIAEC
could declare a 9 S cents special dividend, which would raise
the yield to 6.7%. We have a fair value of $5.20 on the stock
based on a dividend discount model. Maintain BUY.
From a technical view, the stock looks poised to trend higher
towards S$5.25 should it be well supported at above S$4.67.

Overseas Education (OEL SP, RQ1) –
Steady growth and decent yields
Last price: S$0.73
Target Price: S$0.88
This week, we initiated coverage on OEL with a BUY and a
target price of S$0.88. OEL is the holding company of Overseas
Family School (OFS), which is the third-largest foreign system
school in the country. We expect OFS to continue to benefit
from resilient demand for quality education as Singapore’s
foreign population continues to grow. The potential opening of a
new campus in 2015 will increase its student capacity by 22%.
We see room for them to increase tuition fees as they are still
15-25% below competitors’. With strong cash flow and balance
sheet, we expect the company to be able to retain its net cash
position throughout the construction of its new campus. OEL
has a dividend policy to distribute 50% of net profit for each
financial year. This translates to yields of 3-4%. Our fair value is
based on a discounted cash flow model.
Technically, the stock could trend higher towards S$0.88 should
it be well supported at above S$0.67.