Friday, April 29, 2011


Hi-P: DBS to review forecasts post 1Q11 results on 4th May, keeps at Buy and TP$1.43. Key client RIM, which contribute 30-35% of Hi-P’s sales cut forecast for quarter ending 28 May due to slower-than-expected demand for smartphones…

RIM expects sales to be below the prev forecast range from -6.0%qoq to +0.7%. Mgmt for Hi-P has not seen significant impact from Japan’s quake and existing supply is to fulfill orders up to May/June with tablet demand to be brisk.


Allgreen: 1Q11 results slightly above expectations.
Revenue surged 55.7% YoY to $242.8m attributable to all business segments, net profit up 142% YoY to $84.5m. Of note is the property devt segment which saw stronger take-up and higher progressive sales. Key project Cascadia@Bukit Timah (88% sold, with 77 units sold in 1Q11 alone), TOPed in 4Q10, allowing Allgreen to book the full amount of sales proceeds...

Also, Phase 1d of Pavilion Park and Skysuites@Anson were launched in Feb 11 and Mar 11 and are 27% and 21% sold, rptvly.
Investment properties such as Traders Hotel and Great World Retail and Serviced Apts registered good occupancies...

Gearing further improved to 0.14x, suggesting ample debt headroom for landbank expansion. But analysts have expressed concern about Allgreen’s inability to acquire new sites, as the developer was unsuccessful for the past 14 tenders, with their bids coming in close to bottom bids...

Citi maintains Buy, but lowers TP to $1.34 from $1.52, on rising concerns over policy risks.
MS, Macquarie maintain at Outperform, with TP $1.26, $1.44 rptvly.
Deutsche, JPM maintain at Hold with TP $1.12, $1.20 rptvly.

Tuan Sing

TuanSing: Rev at 1Q was $61.7m +49.0%yoy with profit at $5.5m +171.3%yoy. Strong results were due to increase from industrial services +39% to $53.7m and property sales from $2.9m to $8.1m this quarter. Property contributed $2.4m approx 42% of co’s net profit this quarter and was mainly due to rental from Robinson Towers and Intl Factors Building...

Due to accounting restatements, current annualized P/E at 19.0x from prev 8.0x, however restated rev from property sales will be recognized at a later period. NAV improved by 0.3c to 49.5c and trades at P/B of 0.77x with no news on its possible revaluation gains yet.


SunVic: Secures 5-yr sales agreement worth Rmb4.0b at current mkt price with existing customer. The delivery of acrylic acid (AA) in this will be effected pending the commencement of production of new AA plants in Taixing City, Jiangsu Province...

The new AA plants in Taixing City consist of 2 phases; phase 1 of 160k tons will commence in 4QFY2011 and phase 2 of 160k tons in 1H2012. As a guage, co reported FY10 rev of Rmb3.4b. Stock has seen 10.2% from low to high in 7 consec trading days of gains. Co currently trades at P/E of 3.8x


Noble: Appoints non-exec director Mr Li Rongrong who was prev China’s chairman of state-owned asset supervisory board. This follows China Invt Corp (CIC), China’s SWF investment into Noble and is positive on Noble’s ties to China. Goldman notes that Noble soared 8% in Sep 2009 when it was announced CIC took a stake in co…

In separate news, the Argentina govt has raided several cereal producers and exporters which include Noble, Cargill and Bunge in a tax probe. The purported unpaid taxes are approx $73m, a relatively small sum, for all the companies. Note that Argentina also recently accused Bunge of unpaid taxes of $252m which may indicate rising country risk

Jardine C&C

Jardine C&C: Goldman says 1Q11 results slightly above expectations, with net profit at US$251m (+41% yoy) making up 26% of its full yr estimate. Notes Astra-related profits were above expectations, but non-Astra profits disappointed. Group revenue increased 31% yoy to US$4.7b.
Stays Neutral on stock, keeps US$37 TP. Sees limited share price downside from current levels. Prefers JCC over Astra (which contributes 97% of JCC’s sum-of-parts value) given relatively more attractive valuations...

says market outlook remains positive. Notes that while there are concerns currently over supply disruptions to Astra’s automotive and heavy equipment businesses due to the after effects of the earthquake in Japan, believes conditions will normalise later in the year.
Stock trades at 10.8x P/E, 3.3x P/B.

Indofood Agri

Indofood Agri: good set of 1Q11 results, generally in line with consensus.
Net profit +66% yoy to Rp 514b, as gross margins expanded to 45.9% from 37.8% a yr ago. Revenue +38.6% yoy to Rp 2.9tr, mainly driven by higher commodity prices and sales volume for palm products and palm seeds as well as edible oils and fats products...

CPO prices averaged US$1,251/mt in 1Q11, +13% over 4Q10 average of
US$1,108/mt, and +39% over the FY2010 average of US$901/mt.
CPO production +14%yoy to 176k tons. FFB nucleus production and plasma production +13% and +29% yoy to 589k tons and 203k tons rptvly..

Mgt believes the positive fundamentals for palm oil are supported by tighter global inventory levels, as well as the improved global economic climate, underpinned by consumption growth from India, China, and demand for biodiesel driven by govt mandates in Europe. Also expects the demand for palm oil products in Indonesia to remain supported in the short to medium term by demand from the F&B industry and population growth...

Possible catalyst in PT SIMP listing, expected to IPO ~9 Jun on the IDX.
Stock trades at 13.3x P/E.
Pre results, the Street had a mix of Buy and Hold ratings with recent TP btwn $2.50-3.38.

SG Market

SG Market: Spore shares likely to open higher taking cues from stronger Wall Street overnight but trading is likely to be choppy ahead of the long weekend, STI is expected to face resistance at 3200 followed by 3230 & we may see sharp moves on either side just like yesterday’ trading. DBS may rise after reporting strong 1Q results.

Stocks in focus:
*DBS 1Q net profit +51.7% yoy to $807m, better than forecast $672m on smaller provisioning of $125m vs $355m in 1Q10.
*IndoAgri 1Q net profit in line, +66% yoy to Rp514b, revenue +38.6% to Rp2.9t reflecting higher ASPs of CPO & rubber as well as higher sales vol of palm products driving up gross margins to 45.9% vs 37.8%.
*Allgreen 1Q net profit beat expectations, +142% yoy to $84.5m, revenue +56% to $242.8m +56% on higher progressive sales recognition from The Cascadia as well as better occupancies & rentals at Great World Retail & Service Apts & Traders Hotel. NAV rose to $1.67.
*Tuan Sing 1Q net profit $5.5m vs $2m yoy, revenue +49% to $61.7m, mainly from the non-property segment, which grew 39% to $53.7m but with bottomline line buttressed by property earnings.
*Jardine C&C 1Q net profit slightly above estimates, +41% yoy to US$251m , revenue +31% to US$4.66b
*Technics O&G 2Q net profit +67% yoy to $5.4m, revenue +32% o $35m. Earnings boosted by better margins from fast tracked EPCC projects, orderbook stood at $130m with delivery till 1H12. Offers 3¢ interim div, bringing 1HFY11 div to 9¢ (incl 3¢ special div).

Thursday, April 28, 2011


Oxley: Co’s industrial project Oxley BizHub in Ubi saw a take-up rate of 60% during its phase 1 soft-launch of 364 units. The avg price was $677 psf with Singaporeans as a majority...

The project is within walking distance to Tai Seng and Macpherson MRT and has recreational amenities such as a swimming pool and gym, a rarity for any industrial property. From recent stats, the industrial sector saw factory rental increase 8.3% in 1Q11 and occupancy improved to 93.1% this quarter from 92.8% in 4Q10.

China Minzhong/Sino Grandness

China Minzhong/Sino Grandness: The Chinese govt has launched an emergency program to protect farmers halt produce price slump & stabilize the market after a large harvest brought down vegetable prices in many areas of China, causing huge losses for farmers. Veg prices plunged 9.8% from Apr 11-17. This sharp decline in veg prices may place a dampener on China-based agri stocks such as China Minzhong & Sino Grandness...

Raffles Medical

Raffles Medical: 1Q11 results slightly above consensus.
Net Profit + 15.7% to $10.6m YoY. Quarterly revenue broke another record at $64.4m, +14.7% yoy, on growth across all divisions. Revenue from Healthcare +14.4% yoy and Hospital Services +15% yoy. A rising patient load, wider range of medical specialties and improved operating efficiencies also contributed to improved EBIT of $12.8m, +15.2% yoy...

Balance sheet remained strong with net cash of $71m (~13.5cts/sh). NAV/sh climbed to 56.6 cts from 54.5 Scts at end-4Q10...

The Group completed the acquisition of Thong Sia Building, a 7-storey commercial block (42.7k sf) located in Orchard Road, on 15 Apr ’11. Mgt intends to establish a Specialist Medical Centre there with operations expected to commence in 2012. The Group also expects to apply for expansion of its North Bridge Road premises (additional 102.4k sf) by 3Q11. Financing would be by a mix of internal funds and borrowings...

CIMB retains Outperform rating with TP $2.64, pegged to 23x CY12 P/E. Continues to expect stock catalysts from the addition of clinics, expansion of medical specialties, higher foreign-patient growth, and higher intensity cases in the hospital segment.


DBS: 1Q11 results on 29 Apr before market open. RBS maintains Buy with TP$16.50 expects Net profit at +15.9% yoy but -9.2%qoq to $615m. House
likes DBS for its gearing to eventually higher interest rates and the potential positive ROA impact from restructuring. Valuation looks attractive at 11.7x FY12F PE and 1.19x FY12F PB.


UOB: 1Q11 results on 6 May, 1230pm. DB maintains Hold with TP$21.00 expects better underlying trends forecasts 1Q11 Net profit at $604m, inline with consensus $616m and -14% from the 4Q10 reported profit of $706m, as 4Q10 included a $124m post-tax gain on the sale of an equity interest. A better NIM outcome seems likely in 1Q11. Loan growth rebound set to continue

Straits Asia Resources

Straits Asia Resources: Obtained Borrow and Use License for the Northern Lease at Sebuku, which will allow mining activity and exploration work in the area.
Macquarie reiterates at Outperform with TP$3.40. Believes this devt is positive and transformational to the co, especially given i) potential reserves upgrades, ii) increasing long-term production and coal quality, and iii) lower aggregate production cost…

Says upon successful exploration, current reserve base of 130mt could be boosted by an additional 50-60mt. Expects SAR to achieve higher aggregate coal quality (6,200-6,300Kcal GAD at Sebuku vs. 5,950-6,200Kcal GAD at Jembayan). In the medium-term, tips production out of Sebuku to grow from 1.1mt in 2010 to about 4.5-5.0mt, leading SAR’s aggregate production to rise from 10.6mt in 2010 to 17-18mt longer-term. Also notes Sebuku is a lower cost mine (US$38/t) vs Jembayan (US$47/t), due to lower strip ratio of 4x at Sebuku vs. Jembayan’s 9-10x. Transportation distance is also significant lower at Sebuku (25-30km) than Jembayan at +/- 170km.
Goldman Sachs however, says issue of License is in line with co’s guidance and already baked into forecasts. Note market may react positively to news, but keeps Sell rating as believes that all the positives have already been priced in after SAR’s recent outperformance, and significant earnings risks going forward.

Koon Hldgs

Koon Hldgs: Announced yday, co has won precast contracts of $16.3m over 15-18mths for public housing projects. Outstanding order book stands at $53.2m and FY2010 rev was $74.8m. Co trades at current P/E of 3.6x

Q&M Dental

Q&M Dental: Obtained US$15m ($18.9m) in loans at 2.8% and LIBOR rate from IFC, a member of the World Bank. Of which $5m is a convertible loan at $0.69 per share. The loans are to fund expansion plans in the People's Republic of China. Co currently trades at P/E of 48.3x vs hist avg of 29.8x


ThinkEnv: To subscribe for 5.1m shares in African Stellar (ASWA), a Ghanaian co for US$5.0m ($6.2m) of which US$3.5m are interest free sh/h loans. ASWA has been conducting due diligence on 3 sites it has mining leases and is in adv negotiation to acq another 80% in another concession area. ASWA is involved in trying to obtain small scale mining licenses and has undertaken to produce 1.5k ounces per mth before June 2012.


SATS: Acquires 40% stake in catering co Adel Abuljiadyel Flight Catering (AAFC) in Saudi for US$18.5m (approx $23.1m). Price was based on independent valuation and has been paid in cash. Target co had rev of US$11.0m in FY2010 and serves both private jets and airlines such as Cathay and Malaysia Airlines...

SATS will appoint the CEO, CFO and executive chef in AAFC which has presence in Saudi’s 2 busiest airports. DB expects any earnings contribution to be offset by integration costs and maintains Buy TP$3.80

BH Global Marine

BH Global Marine: 1Q Rev was $34.9m +81.8%yoy +16.9%qoq with net profit at $3.8m +24.7%yoy +100.0%qoq. Spike in rev was due to new segment Engineering Services which contributed $13.4m, 38.5% of share of rev compared to $0.1m a year ago. All other segments also showed growth, Supply Chain Mgmt +7% yoy and Manufacturing +34%yoy due to Middle East orders...

Co will continue to develop its new business segment and looks to expand in Indonesia, Middle East and India. It expects rising oil prices to drive growth opportunities for the group. EPS was 0.78c and co trades at annualized P/E of 12.7x.


SabanaREIT: DPU better than forecasted 8.63c in prospectus, 1Q at 3.04c with annualized DPU at 8.81c. Net property income came in at $22.9m +0.7% from forecast. At current price of $0.945, annualized DPU is approx 9.3% and current P/B is 0.9x. Co’s leverage is at 24.9% with long-term target at 40% and weighted avg lease term is approx 3.5yrs (60% of leases expiring in 2013 and 40% in 2015).


UIC: 1Q11 figures not as rosy as 77% owned subsidiary, SingLand.
Net profit -21% yoy at $46.9m, as revenue tanked 23% to $196m from a restated $253m.
Topline was hit by the fewer sales of trading properties this quarter compared to last year. Between Jan – Apr ‘10, UIC completed One Amber, Grand Duchess and Tianjin Jun Long Square. As a result, turnover from properties held for sale declined 53% to $62.5m...

Where revenue contributions improved were from its hotel operations (Westin Tianjin Hotel and Pan Pac Spore), which increased from $26.5m to $32.8m.
Stock trades at 1x P/B.
Pre-results, DBSV has a Fully Valued rating with $2.38 TP.


SingLand: 1Q11 results generally in-line.
Net profit grew 2% to $48.8m, as revenue for the office landlord climbed 29% to $138m from a restated $108m.
Similar to its property peers, SingLand adopted INT FRS 115 which resulted in 1Q10 revenue and net profit being reduced by $8.6m and $0.5m rptvely…

SingLand's improved topline came from stronger sales from trading properties. It more than doubled to $48.4m from $19.3m, due to the additional units sold and higher % of completion at The Trizon residential project.
Pan Pacific Spore hotel also contributed to the better revenue results, with higher room and occupancy rates translating to a 12% gain in revenue to $28.5m...

Affecting bottomline was the thinner share of contributions from associated companies from $11m to $8.2m, due to the absence of contributions from One Amber residence project (completed in Apr ’10).
Mgt expects the Spore office rental market improve amidst healthy take-up rates. Also believes the retail leasing market is likely to remain stable especially in the suburban malls, underpinned by good catchment demand…

Stock trades at 0.7x P/B. CIMB believes this appears to price in all its office assets at near-distressed levels, including Singapore Land Tower at $1.5k psf, SGX Centre at $1.3k psf, Clifford Centre at $1.2k psf and Gateway at S$0.9k psf. Reiterates Outperform with $10.22 TP.


Yangzijiang: 1Q11 results above consensus.
Record high net profit of Rmb 955m, +63% yoy, on the back of revenue of Rmb 3050m, +14% yoy. With its new Changbo yard, YZJ delivered a total of 17 vessels this qtr, up from 10 vessels delivered in 1Q10…

Gross margin expanded to 27.1% from 23.3% yoy, as the Group continued to work through the higher margin contracts secured prior to the financial crisis.
YZJ also benefited from doubling of other income to Rmb 281m, driven by the increased invmts in held-to-maturity financial assets, as well as a 210% jump in other gains to Rmb 124m, due to positive mark to market valuation for outstanding contracts denominated in Euro…

Ytd, YZJ secured 14 orders with aggregate value of US$512m. Order book stands at 131 vessels valued at US$5.4b.
Mgt remains confident on continued growth and profitability in 2011. Plans to increase capacity through additional stake in its Xinfu yard (from 20% to 60%). Over the next 3 yrs, also plans to invest Rmb 4b to convert the Xinfu yard to have annual capacity to build 10 very large vessels, ie VLCCs or similarly large containerships…

Stock trades at 10.8x P/E, vs Cosco’s at 21x, and Rongsheng’s 18.8x.
Pre-results, the majority of Street had Buy ratings with recent TP ranging btwn $2.30- 2.69.

SG Market

SG Market: Spore shares may advance tracking firmer Wall Street close but broader market indicators pointing to limited upside, mainly driven by additional catalysts from corporate earnings. Expect STI to trade between 3155-3230 range. *YZJ 1Q net profit surged 63% to Rmb954.9m, revenue +14% to Rmb3.05b on increased number of vessels under construction & improved efficiency. 17 ships were delivered vs 10 in 1Q10. Gross margins expanded to 27.1% from 23.3%; profits also boosted by interest income & forex gains. Secured 14 shiipbuilding contracts worth US$512m in 1Q11, bringing total orderbook to US$5.4b comprising 131 vessels.
*Spore Land 1Q net profit +5% yoy to $58.2m, revenue +29% to $138.3m from a restated $107.6m on higher room & occupancy rates from Pan Pacific. Contributions from associates -25% to $8.2m on absence of contributions from its One Amber residence project which was completed in Apr 10. End Mar 11 NAV stood at $10.11/share.
*UIC 1Q net profit -17% yoy to $67.6m, revenue -23% to $195.5m from restated $252.9m as property trading revenue declined -53% on fewer sales. Hotel revenue rose 24% to $32.8m. End Mar 11 NAV stood at $2.76/share.
*Sabana REIT 1Q DPU of 3.04¢ exceeds expectations, resulting in annualised DPU of 8.81¢.
*Straits Asia finally obtains Borrow & Use License for Northern Leases at Sebuku mine. Exploratory & mining work can now commence, which will bring aggregate prodn from 10.6mt in 2010 to 17-18mmt over the longer term.
*SATS acquires 40% stake in Saudi in-flight caterer for US$18.5m.
*Koon Holdingss secures new precast projects totalling $16.3m.
*Think Environmental buys 51% stake in African gold mining venture for US$5.0m
*GMG Global reports that subsi in Ivory Coast has resumed operations on 26 Apr 2011.
*Boustead has acquired 100m shares or 2.3% of Bio-Trest at $0.04 each.
*Q&M Dental obtains US$15m investment, comprising US$10m senior loan & US$5m convertible loan, from IFC, an affiliate of World Bank to fund its expansion plans in China.

Tuesday, April 26, 2011


STX OSV: The co has clarified that while parent STX Europe is continually exploring strategic opportunities in relation to its interests in its subsidiaries including, STX OSV, it have to comply with a 12 mth lock-up period for its stake in STX OSV which ends on 12 Nov 2011. However, they can be granted exemption from the lock-up after 6 mtths of the IPO only with the prior written consent of Goldman Sachs. As of to date, STX Europe has not made any firm plans to divest its stake in STX OSV

However, STX can still offer the shares for sale in May 11 if Goldman approves. Nobody is any the wiser with this open ended answer, which still leave room for a potential sale next month.

IPO: Perennial China Retail Trust

IPO: Perennial China Retail Trust has set a lower indicative price range of $0.70-0.76 for its planned IPO to raise up to $840m. The trust is looking to offer 1.1b shares, of which 50% will go to cornerstone investors. Previously, Perennial had counted AIA Group & UK Prudential, CBRE GRES, Lion Global Investors among its cornerstone investors.

Pua Seck Guan, the ex CEO of CapitaMall Trust, is the founder of Perennial Real Estate, which is involved in real estate & related activities including fund mgt, asset mgt & retail mgt. Perennial’s property portfolio will initially comprise of retail malls in China, offersing pure-play exposure to the growth potential in retail rental & capital values in China, which is driven by urbanization & growth in disposable incomes.

Proceeds from the IPO will go toward financing the acqn of shopping malls in China, repaying debt & general working capital. Citigroup, DBS, Goldman Sachs & Stanchart are joint global co-ordinators of the deal.


M1: IIFL initiate with Add Call and $2.64 TP. Note of grim battle for capturing NBN. Upside and grp has an opportunity to diversify and accelerate rev growth, thanks to the levelling of the playing field via the NGNBN, content sharing and NIMS. Project 3yr (2010-2013) CAGR of 6.9% in rev, 6.4% in EBITDA and 8.3% in EPS. Strong data growth expected, but voice rev to shrink, while corporate data is a promising opportunity.


Property: URA private home statistics show highest supply pipeline since 1999 even as prices climb. Of 68.9k uncompleted private units in the pipeline, approx 34.2k were unsold (3 yrs worth of inventory, avg annual being 11.4k sold). Prices also rose with mass-mkt up 3.1%qoq, mid up 2.0% and prime up 1.1%...

Of note prices are now higher than peaks in 1Q/2Q08. Developer sales remained healthy at 3.6k units 15% below 4Q10 but value of sales at total of $2.9b was 44% lower than 4Q10 with smaller units in focus. GS recommends Buy UOL (TP $4.95) and CAPL (TP $4.88) as sector top picks. CIMB rates sector as Underweight with key Underperforms as CityDev and Allgreen..

Of note prices are now higher than peaks in 1Q/2Q08. Developer sales remained healthy at 3.6k units 15% below 4Q10 but value of sales at total of $2.9b was 44% lower than 4Q10 with smaller units in focus. GS recommends Buy UOL (TP $4.95) and CAPL (TP $4.88 ) as sector top picks. CIMB rates sector as Underweight with key Underperforms as CityDev and Allgreen.

Hutchison Port Holdings

Hutchison Port Holdings: JP Morgan initiate at O/W with $1.15 TP. Note payout is well-supported by steady cash flows from mature ports, with substantial part of growth capex pre-funded. Add that grp has a premium container ports capable of delivering consistent performance despite concerns over moderating outlook for the captive hinterland.

Hutchison Port Holdings: Morgan Stanley Initiates at E/W with $0.98 TP. Note that Trust is an attractive Yield Play with limited near-term upside. Add that HPH Trust’s 100% DPU payout policy offers an attractive yield of 6%, but e find the stock fairly valued vs peers. Based on house 2011 annualized DPU of US$0.06/share, Trust offers a 6.2% yield, similar to 2011E yields for REITS listed on SGX, while its FY11E EV/EBITDA of 16.3x exceeds those of such shipping peers as COSCO Pacific.


SG REITS: UBS has REITS report. Note that SG REITs currently trading at 6.4% 2011E yield (393bps above 10yr bonds) with 2010-2014E DPU growth at 1.9% and Hospitality REITs posting the highest growth at 8.2%. Top picks are CDL HT for upside in hotel room rates, CMT and FCT for retail exposure, and CCT as a beneficiary of the office rental recovery.

SG Banks

SG Banks: Citi has 1Q11 SG banks preview report. Expect robust results driven by strong loan growth to dominate the 1Q11 reporting season, offset by further slight NIM slippage. Add that business loan growth is broad-based and more capex related with pipelines looking firm, with strong mortgage drawdowns. Add that strong 1Q11 flash GDP data suggests healthy fee growth and a strong qtr for equity raising and likely stable wealth mgmt sales…..

Costs generally gap down in 1Q from seasonal 4Q highs and there appears to be no material asset quality concerns. Forecast 1Q11 Net Profit results of, DBS at $700m, UOB at $650m and OCBC at $550m. House has by calls on DBS and OCBC, but Hold on UOB.


STX OSV: CS maintains O/P with $1.55 TP. Note of overhang from potential share placement and believe there could be a placement of shares by STX Europe after 11 May 2011,which is likely to be a dampener to the share price in the near term, but increased liquidity should be beneficial in the medium term….

Add that STX Europe holds 69% of shares outstanding of STX OSV, and could raise $260m if it maintains its majority stake post the placement. Remain confident of grp’s underlying fundamentals of the business, noting that order wins YTD stood at Nok2.5b, and expect contracts for 8 LPG carriers worth US$536.3m (Nok3.2b) to become effective following financing approval from Brazil’s Merchant Marine on 12th May. 1Q11 results will be on 12th May.

Comfort DelGro

Comfort DelGro: acquired new site for its 3rd driving school in Liangjiang New Business District – a new economic development hub – in China. The 44.7k sm, 3 storey building is expected to be completed by year end, and will house 120 vehicles and cater to an initial mthly avg of 700 students for saloon cars, buses and trucks, similar to its existing Chongqing driving school. Total investment cost est at Rmb 165m (S$31.2m)…

Mgt expects demand to grow due to increasing affluence and points to the 250k new licenses issued last year in Chongqing alone as a sign. Move is in line with the co’s aim to derive 70% of revenue from overseas within the next 4-6 yrs.
Stock trades at 14.1x P/E, vs local peer SMRT’s 19.3x.
The majority of Street has Buy ratings with recent TP ranging btwn $1.75-1.95.


NOL: CEO to resign by end of yr and remain as Senior Adviser. New CEO will replace him on 1 Jan 2012 . The new CEO, Mr Ng was the ex-SAF Chief of Defence Force from 2003-2007 and most recently headed Temasek's Energy & Resources portfolio. Mr Ng is also a graduate from Cambridge with an MBA from Stanford.

CDLH Trust

CDLH Trust: Stable and in-line results. Co reports 1Q results with rev at $32.3 +21.4%yoy and net profit at $23.6m +10.0%yoy. Distributable income was at $22.8m with DPU of 2.4c a 2.6% increase yoy. Growth was attributed to improved performance from Sg hotel and full quarter contribution from Aus hotels...

Occupancy rose 1.4% points on a yoy quarterly basis to 85.7% with both rates and RevPAR improving by more than 10%. Co is positive on prospects with STB’s forecast of 7.9% 5-yr CAGR in visitor arrivals vs 5.4% from 2005-2009. DPU represents annualized yield of 4.7% at current price of $2.05 but will be paid out only on a semi-annual basis together with 2Q results.

Wing Tai

Wing Tai: Announced that it has signed a JV agreement with Singbridge Intl to jointly develop a residential project in the Sino-SG Guangzhou Knowledge City, China. Wing Tai will hold a 40% stake in the project. Wing Tai's JV will be on a 10-ha start-up area with a GFA of more than 268,000 sqm, expected to comprise about 2,000 homes. No other details have been disclosed…..

Projects within a 10km radius are fetching ASPs of about Rmb6,500-7,000 psm, while Singbridge had officially secured 17.8 ha of land on 15th April at an average of RMB433 psm. Assuming Wing Tai's JV is carved out from this 17.8 ha of land, total land cost for the 10-ha JV project works out to a mere Rmb116m (or $22m). Kim Eng estimate the project to have a pre-tax margin of about 30%, with a small RNAV accretion of 2c/share.


GLP: Could see some interests, after Co. announced that it is tapping into the burgeoning offshore Rmb mkt with a plan to offer as much as Rmb3b (S$572.8m) of fixed rate notes. Offering is part of firm's US$2b euro MTN programme, under which grp can issue notes denominated in any currency. Net proceeds will be used for general corporate purposes…..

Grp add that issuing notes in Rmb also makes sense as grp is looking to expand its operations in China, and income received in RMB will better align with Co’s issuance of Rmb denominated notes, while investor interest in Rmb has risen as the currency strengthens, and Beijing works towards making its currency more global. CICC, JP Morgan, Goldman Sachs and Citi are dealers to the Rmb notes.


CapitaLand: 1Q11 results largely in-line, adjusting for the new acctg policy. Similar to Keppel Land, CapL adopted INT FRS 115 wef 1 Jan 2011, restated 2010 accounts for comparison. This means income from overseas residential projects and Spore projects under the deferred payment scheme is recognized on a completion-of-construction basis, vs %-of-completion previously. Therefore income recognition will be lumpy and back-ended...

1Q11 net profit came in at $101.5m, vs restated 1Q10’s $29.8m. Revenue was $611.5m, +39% yoy, mainly due to higher contributions from devt projects, incl residential projects such as The Interlace and The Wharf Residence in Spore, Beau Residences and The Riviera in China; as well as commercial, industrial and residential projects in Australia...

While China residential sales was the major contributor to Group EBIT at 27%, Spore residential experienced the largest YoY growth in EBIT to $58.7m - a 350% improvement.
Mgt remains fairly confident of CapitaLand's planned launches this year, be it in Singapore or overseas. Also remains committed to deploying its capital towards accretive acquisitions in its core sectors and markets.
Balance sheet remains robust, with $6.3b in cash and a net gearing of only 0.2x...

Stock trades at 1.04x P/B, below the historical 5-yr avg of 1.6x.
Pre-results, the majority of Street had Buy ratings with TP ranging btwn $3.41 – 4.30.

SG Market

SG Market: Spore shares may open slightly higher although there are very few global cues at present with European markets shut on Mon, so price action is likely to be sideways with the STI trading between 3140-3230 range in the near term.

Stocks in focus:
*Capitaland 1Q net profit +241% yoy to $102m vs restated $29.8m (prev $115m) on new accounting policy. Revenue +39% to $611.5m from higher sales of residential projects in Spore, China & Vietnam. Book NAV stood at $3.16.
*Global Logistic Properties plans to offer Rmb3b fixed rate notes, enabling it to tap an additional source of funding & match its borrowings against its China exposure.
*NOL current CEO Ron Widdows will be replaced by Spore's ex-defence chief Ng Yat Chung, who will be joining from Temasek Holdings. Case of new hand taking over from old shipping hand.
*Wing Tai has formed a JV with Temasek’s Singbridge to develop a residential project in the Sino-Singapore Guangzhou Knowledge City. Co will own a 40% stake in the project which will be developed in phases over 5 yrs on a 10-ha site. It will have a GFA of more than 268k sqm & ~2k quality residential units.
*Kreuz has secured US$24.8m worth of orders - a US$2.4m subsea installation contract from a leading offshore co in the O&G business in East Asia & a US$20m subsea installation works from Swiber.
*TEE Int’l clinched 2 new contracts worth $11m from Citibank to boost its engrg orderbook to $298.1m.
*ComfortDelgro is setting up its 3rd driving school in China for Rmb165m.
*Hyflux 6% preference shares will be debut today with 10 pref shares equal to 1 board lot.
* Keppel Corp: goes XA today. Based on yday’s closing price of $12.90, the Theoretical Ex-Price adjusted for dividend ($0.26/sh) and bonus issue (1-for-10) is $11.49.

Monday, April 25, 2011

China Minzhong

China Minzhong: Macquarie visited the co’s processing facility and organic cultivation base in Putian, Fujian. Believes margins have uplift potential, as mgt intends to boost organic veg land use to 1/3 of total land, from 10% currently. Notes organic veg have 2-3x the ASP of regular veg and earn 70% gross margins compared with 55% on non-organics…

Says mgt also considering increasing the land acquisition target from the current 30k mu to 50k mu pa. Notes that although this could lead to a higher growth trajectory, there is also a risk of further equity raising (est US$50-250m) as debt financing is not available for land acquisition…

Adds, Minzhong’s branded F&B pdts (beverage and instant vermicelli), which make up ~3% of top line, are now sold in Fujian and 5 other neighboring provinces. Notes these are well represented in the supermarkets and hypermarkets it visited, and could be a new growth source.
Pips Minzhong as top pick in the agri sector. Keeps at Outperform with TP $2.20 based on 10.5x PE, vs current PE at 8.5X.

Genting SP

Genting SP: BOA Merrill Lynch note that share price broke out of $2.20 on strong vol. Add that stock closed at $2.21 last trading section on Thur with high volume. Main driver is qtrly result due in 2 weeks, which house expect it to be likely solid, with main kicker on talk that Casino Regulator soon may approve junket operation after General Election taking place on 7 MAY, which may bring on another round of earning upgrades / rerating. House remains a buyer with $2.60 TP.

HPH Trust

HPH Trust: Goldman Sachs initiates at Buy with US$1.16 target.
Forecasts 10% revenue CAGR and EBITDA CAGR for HPHT in 2010-14E, supported by 7% port volume and 1-3% tariff increases each year. Sees growth potential in its portfolio ports from,
i) pricing power on trade recovery and limited new supply in the Pearl River Delta region;
ii) gradual expansion of the catchment area outside Guangdong; and
iii) accelerated intra-Asia trade, driving port volumes and tariff increases…

Notes HPHT’s 100% payout policy will allow it to offer a regular and growing dividend stream. Believes HPHT is attractively valued, offering 6.4% 2011E DPU yield vs 5-6% for high-yield HK/SG stocks. Notes HPHT’s 6.6% operating cash flow yield is also above 4.9% for China Merchants, the closest port comparison. Adds, should HPHT be able to renew its concession rights with no significant change in terms, the DCF value of HPHT to perpetuity would rise to US$1.41/sh…

Key risks are
i) Higher interest rate – every 1% rise would cut 2011E DPU by 5%;
ii) distribution payout constrained by “trapped cash” issue from 2016;
iii) macro downturn – 1% change in port volume would cut DPU by 1.2%.

Thursday, April 21, 2011


Noble: Nomura maintains Buy on $2.75. Co believes Glencore IPO should not be viewed as negative for Noble. There have been concerns that Glencore’s IPO at 10-11x and 16x CY11 (calendar yr) earnings may look cheaper than Noble’s 15x CY11F P/E and investors might sell Noble to fund Glencore...

Nomura sees difference in offerings and both give complementary commodity and value chain exposure. Notes that Noble has high share of supply chain, Agri and ex-metals and minings businesses whereas Glencore is much more metals & mining based. Glencore’s listing if successful could also drive up valuations for Noble as well.


MLT: acquires Iljuk Gyeonggi Centre (IGC) in S Korea for KRW22b (S$25.5m) in its 3rd acq this yr. IGC, which consists of 2 blocks of 3-storey dry warehouses, is located in Geyonggi-do, within a warehouse and distribution cluster. It has a GFA of 23.4k sm and an initial NPI yield of 9.3%.The property is leased to Seol Logistics under a master head lease for 5 years with built-in rental escalation of 3.5% pa. Deutsche estimates a modest 0.4 - 0.7% accretion to FY11 and FY12 DPU rptvely…

Post acq, MLT will have 3 properties in S Korea (2.5% of gross revenue) and its portfolio will increase to 97 properties valued at $3.6b.
Deutsche keeps at Buy, with TP $1.06. Says valuations attractive at 7% FY11E yield.


Ezion: CIMB Technical Buy Call on counter. Prices consolidated in flag pattern over past few days, hitting low of $0.695 before bulls started to set in. Currently, it is just trading a tad below resistance channel. Looking at chart, house think a breakout could materialize. 30-day SMA has swung above longer term 50-day SMA, suggesting that momentum is picking up. MACD is flattish while RSI has hooked upward. If the $0.725 level is taken out, the following resistances are $0.76 and $0.815….

Recommend traders may start to accumulate now but always place a stop at below $0.695, which is its previous swing low. A break below its MA at $0.685-0.67 would suggest that this rebound is a bull trap.

Post acq, MLT will have 3 properties in S Korea (2.5% of gross revenue) and its portfolio will increase to 97 properties valued at $3.6b.
Deutsche keeps at Buy, with TP $1.06. Says valuations attractive at 7% FY11E yield.


Kreuz: CIMB has Technical Buy Call. Note that prices broke out of its flag resistance yesterday on rising vol. There is a good chance that prices may swing back to test its previous high of $0.44 again. If this level is taken out, the following resistances are $0.475 and $0.495. Add that technical indicators are showing signs of improvement, with MACD poised for a positive crossover while RSI too has hooked upward…..

Recommend aggressive traders may start to nibble now to ride this breakout run. However, always place a stop at below $0.39, its previous swing low. A fall below its 50-day SMA would indicate that the rebound from its March low is exhausted.

TiongSeng & CDL

TiongSeng & CDL: Tiong Seng signs LOI from CDL's subsi Millennium & Copthorne for construction of 8 condo blks of 5-stories each, total of 150 units at the Glyndebourne Condo in Dunearn. Contract is worth $104m. Co’s order book is est at $1.2-1.25b. Our in house maintains Buy at TP$0.33 on contract win.

SG Banks

SG Banks 1Q11 Earnings Preview: Credit Suisse maintains mkt weight. For 1Q11 preview, tip UOB to show the best momentum. Note that banks 1Q11 results geings next Fri (DBS 29 April, UOB 6 May, OCBC 12 May) and expect overall net profit to be up 10% QoQ, 5% YoY helped by good momentum in loan growth, fee income but partly offset by margin pressure. Add that Loan growth momentum should continue to be strong reflecting strong YTD system loan growth across SG banks’ core mkts…..

Caution of margin pressure which could continue through 1H11, driven by funding costs in Hong Kong for DBS and pricing pressure in Malaysia/Indonesia for UOB/OCBC. Fee income growth should continue to be robust, driven by strong market volumes and loan growth. Conclude that UOB trades at a 6% discount to OCBC on P/B, despite superior ROE.


Olam: IIFL retains Buy Call but cut TP cut by 15% to $3.77. Expect 30% CAGR of core earnings in the next 3yrs, but tune down target multiple to 20x P/E, as Asian interest environment has become less conducive to leveraged stocks.


Telco: Spore and Msia announced plans to cut roaming charges by 20% for voice and 30% for SMS to enhance connectivity between the countries. The first set of rate cuts will come into effect May 1, followed by 2nd round of reductions in May 2012 which combined, could lower rates by up to 50% in total. Data roaming is next on the govts’ agenda…

Local telcos currently charge consumers $0.70-1.00 /min for receiving a Spore call when in Msia. This will be slashed 20% to $0.56-0.80 from May, and to $0.49-0.70 a yr later. The cost of sending SMS will be halved, from $0.62 now to $0.42 next mth and to $0.30 a yr later…

Overseas roaming contributes around 15-25% of local telcos' mobile revenue, with Msia the top mobile roaming destination, and accounting for the bulk of int’l roaming traffic among local cellphone subscribers.
The impact on earnings of this rate reduction will depend on 3 factors:
a) price elasticity of demand;
b) higher data roaming from the rise in smartphone penetration.
c) rise in Singapore-Malaysia travel…

Goldman notes M1 (Neutral, $2.40 TP) will be most impacted, estimates roaming accounts for 12-15% of M1’s revenue, which would translate to a 3-5% EPS decline assuming traffic patterns do not change.
Says StarHub (Sell, $2.30 TP) will experience a 2-3% EPS decline.
And believes SingTel (Buy, $3.70 TP) would be least impacted, with only 1-2% EPS decline given SingTel Mobile accounts for only 10% of Group revenue.


FirstShipLeaseTrust: 1Q2011 rev at US$23.9m -2.4%yoy with a net loss of US$2.0m. Co also posted a loss of US$0.9m in prev quarter. FSL maintained DPU at US$0.95 same since 2Q2010 but a 36.7% decline yoy, an approx annualised yield of 11.5%. Lease revenue from 21 vessels on charter was 87% of rev which fell partly due to 2 vessels earning $0.7m less than 1Q last year and weak freight rates...

Despite series of losses, co still has a positive current ratio of 1.3x but high net gearing of 1.2x Co has remaining contracted rev of $575.7m with an average lease term of 6.9 yrs.


CMT: Posts 1Q2011 rev of $154.0m +10.7%yoy and net profit of $82.4m -0.5%yoy. Distributable income rose 3.0%yoy to $73.2m with DPU of 2.3c approx annualised yield of 5.0% slightly lower than DPU of 2.4c in 4Q2010. Higher rev was due to Clarke Quay and higher rental rates achieved…

Rents were 7.5% higher than prev yr and occupancy rate was 99.2% compared to prev quarter at 99.3%. Co has began asset enhancement works in Atrium@Orchard to increase retail space by 6 times by 3Q2012. Works in JCube are progressing well and mall is expected to open in 1Q2012. Co expects improved economic conditions to benefit retail sales in Sg...

Houses maintaining Buy or positive calls include RBS (TP $2.15), Citi (TP $2.00), CS (TP $2.22), JPM (TP $2.15) and UBS (TP $2.06). DB maintains Hold at TP $2.00. Houses maintaining Underweight and Reduce include IIFL at TP $1.55 and MS with TP $1.80

First REIT

First REIT: Announced 1Q11 results which were within expectations and slightly ahead of mgt forecasts, with 1Q11 rev at $14.6m, +95.6% YoY and +92.1% QoQ. Distributable income at $9.9m, +88.5% YoY and +83.3% QoQ. However DPU at 1.58c, -16.8% YoY and -19.4% QoQ due to a rights issue in Dec10 which boosted share units to 625m from 276m…..

Strong rev performance was on back of recently acquired properties. During the qtr, FIRT announced divestment of Pacific Cancer Centre to Fortis Global Healthcare, which provided a $8.3m net gain, helping lower gearing to 13.8%. Going forward, grp aims to raise asset base from current $584.6m to $1.0b in the next 2-3 yrs….

We note that at current price, REIT trades at 0.95xP/B, and annualized yield of 8.6% vs historical average of 0.77x P/B and vs larger peer Parkway Life REIT of 1.21 P/B and 5.6% yield.

Ascott Residential Trust

Ascott Residential Trust: Announced strong set of 1Q11 results at top end of analyst estimates, with rev for 1Q11 at $67.3m, +55% YoY and -7.6% QoQ, while Distribution Income at $24m, +133% YoY and flat QoQ. DPU for period at 2.14c exceeded management expectations of 1.71c, and +29% YoY. Increase in rev and gross profit mainly due to contributions from 28 properties acquired by Ascott Reit in Oct10, partially offset by divestment of Ascott Beijing and Country Woods....

Grp noted that portfolio in Tokyo had minimal damages from 11thMar Jap earthquake and do not expect material financial impact. Going forward, grp has guides for overall FY11 RevPAU to be higher vs last yr, led by SG and UK portfolios, while on-going asset enhancements in China, Vietnam and UK will be completed in phases in 2011 and will increase returns of portfolio…..

We note that at current price, grp trades at 0.93x P/B and 6.6% forecast yield, vs historical average of 0.86x and vs closest peer CDL H-Trust of 1.3x P/B and 5.8% yield, while gearing ratio at 41.1% maintains well within the 60% gearing limit allowable, giving headroom for further acquisitions. CS maintains Neutral with $1.30 TP and Morgan Stanley maintains O/W with $1.35 TP, on back of recovering RevPAU trends and a promising pipeline.

Keppel Corp

Keppel Corp: 1Q11 results above consensus.
Net profit at $346m, +7.8% yoy. The surprise came mainly from the O&M Ebit margins which stayed high at ~21% (vs estimates of 15%), despite the lower qoq mix of supposedly higher margin pre-crisis orders. In addition, Property grew 14% yoy to $167m, and Infrastructure grew 38% yoy to $51m, recovering from the difficulties and write-downs of its Qatar project in 4Q10…

KEP’s O&M order book momentum has been strong, with ytd order wins totaling $5b. Current orderbook stands at $7.5b, up 63% from Dec ’10 total of $4.6b.
Consensus FY11E new order estimates now lifted to ~$7.5b. A number of analysts have also upgraded (O&M) margin forecasts, on view that post-crisis order margins likely better than previously expected.
The majority of Street has revised TP upwards, keep Buy/ Outperform ratings.
Post results, Street TP range btwn $13.42 – 15.60

SG Market

SG Market: Spore shares likely to continue yday’s surprise run following Wall Street’s lead with STI poised to test Apr’s high of 3187. KepCorp is also set to take a crack at the $12.80 resistance &head for next level at $13.50 following good set of 1Q results & positive guidance from its offshore segment. SingTel will be most impacted by cut in S’pore-M’sia call charges.

Stocks in focus:
*KepCorp 1Q results in line; net profit $346.2m +7.8% yoy, revenue $2.42bn -0.1% yoy on strong offshore & infrastructure contributions. New orders secured hit qtr record of $4.5b, bringing orderbook to $7.5b till 2014.
*CapitaMall Trust 1Q resuls in line; 1Q distributable income $73.2m +3% yoy, DPU 2.29¢
*Ascott Reit 1Q results above expectations; distributable income $24m +133% yoy, DPU 2.14¢
* First Reit 1Q results in line; distributable income $9.9m +88.5% yoy, DPU 1.58¢
*First Ship Least Trust 1Q distributable income US$5.7m, DPU US0.95¢
*Telecoms: Spore-Msia mobile call charges to fall, data roaming could follow; likely impact on SingTel

Wednesday, April 20, 2011

Heeton & KSH & Tee Intl

Heeton & KSH & Tee Intl to launch luxury residential dev The Boutiq at Killiney Rd today with stakes 45%, 35% and 20% respectively. The development is approx 40k sq ft and has seen take up of 75% of its phase one launch of 52 units at $2,350 psf. A total of 130 units with ranging from 506 – 2853 sq ft are expected to be launched from this development...

Recently the consortium has also acquired Macpherson Green at $105m and Camay Court for $30.5m in March.
Currently, Heeton trades at P/B of 0.5x,
KSH at 0.7x P/B and
Tee Intl at 1.6x P/B with 5.1x current P/E.

Genting SP/Gaming

Genting SP/Gaming: RBS note that SG on track to overtake Vegas as 2nd largest gaming center. House forecasts gaming rev is set to rise by 25% to $6.4b, placing vs the Las Vegas Strip, which is forecast to earn $6.2b. Analysts note that the voracious appetite for gambling among Asians and their growing wealth will drive momentum in SG's casino sector for yrs to come. This is a stark contrast from the Vegas Strip, which has seen a slump in rev for 4 consecutive mths….

Add that blazing performance of the MBS and RWS is also due to the patronage of local Singaporeans, who made up about 60% of the casino customers last yr, despite a $100 levy. CLSA believe that junkets will eventually get licensed given the very significant business opportunity and estimate SG gaming rev of $8.1b next yr.


SGX: Full day trading to start in 2Q. 3Q Results were generally in-line with net profit at $67m, which was approx $77m excld merger costs and gains from disposal. Derivative revenues showed a gain of 14.1%qoq which offsets securities revenue which fell 9.1%qoq...

Houses maintaining Buy are DB, cuts TP to $9.50 from $10.50 and UBS cuts TP$9.30 from $9.70. CIMB maintains Outperform with TP$10.12. JPM maintains Neutral and CS maintains Neutral as well but cuts TP to $9.00 from $9.40. IIFL maintains Reduce TP$7.40.

Strategy/Election (Citi)

Strategy/Election: Citi views election as a vote on Singapore’s long-term growth plans. Note that growing concerns over the social ramifications of the widening income gap may moderate future growth rates. Like big cap stocks that are mid-to-late economic cycle plays…..

key picks include KepCorp as a proxy for rising demand for replacement rigs; DBS Bank as a representative of banks here that feature a strong equity base and have diversified their earnings base; and GLP and SIA on attractive valuations. See value in real estate developers, like WingTai, which is near bottom end of trading range. Add that strong vote in elections could be strong catalyst for real estate developer stocks given implications of continued immigration to fuel growth.


Strategy/Election: UOB Kay Hian examines potential key beneficiaries for upcoming election. Note that the PAP ‘manifestos’ key thrusts include:
1) Widen the range of universities, polytechnics and ITE programmes,
2) Invest S$2.5b in continuous education and training,
3) More new, high-quality and affordable HDB homes,
4) Invest $60b to double Singapore’s MRT networks, and
5) Build new hospitals and partner employers to help elder citizens stay employed.

Identifies key election potential beneficiaries as
Raffles Medical (TP $2.81),
Comfort Delgro (TP $1.80),
SMRT (TP $1.95),
BBR Holdings,
Chip Eng Seng and
Raffles Edu.

However over all, house see limited impact from upcoming election and view any major market weakness on external uncertainties as buying opportunity. Top picks for FY11 are OCBC, OUE, StarHub, Ezion, Keppel Corp, A-REIT and CDLH-T

SG Banks 1Q11 Preview

SG Banks 1Q11 Preview: Morgan Stanley tips DBS as Most Preferred bank, while risk reward Favours OCBC. Note that SG banks Q1 reporting starts on May 29 with DBS the 1st bank to report and should show the strongest YoY revenue growth (+2.6%). DBS remains as top pick with $17.20 TP and 18% upside potential. Note that UOB has had a good qtr, but risk/reward is now tilted towards OCBC. Tip OCBC to post stronger YoY and QoQ revenue, pre-provision operating profit and PBT than UOB.


SIA: RBS reiterate Hold with $16.20 TP. Note that grp reported FY11 weaker than projected traffic numbers, while load factors across all route regions fell last mth. Expect SIA to report weak earnings for the Jan-Mar qtr, but see some support for SIA’s share price in the near term. Believe pace of fuel price increases has moderated, and SIA’s stock has risen 8% in the last month vs 5% rise in the STI index. Forecast div yield of 5.7-7.1%.


F&N: IIFL initiate Buy with $7.56 TP. Expect new shareholder to drive consumer unit with property here to stay, Property business contributes 63% to FY11 SOTP value. Recurrent income from commercial and REIT assets, and its exposure to the esidential market in Australia are welcome stabilisers. Tip more divestment of commercial assets into REITs in the near term to free-up capital for further investments.

AIMS AMP Capital Industrial Reit (AAReit)

AIMS AMP Capital Industrial Reit (AAReit): FY11 results largely in-line. Net property income +31.3% as a result of acquisitions, while distribution income grew 66.5% to $37.2m. DPU however fell 61.3% to 1.98cts due to its enlarged share capital.

Macquarie notes that over the past two yrs, AAReit has right sized its balance sheet with a couple of rights issues and a pte placement; gearing of 32% is comfortable with interest cover of 5.7x, well above the min of 2.5x under bank loan covenant
Says AAReit, which has a portfolio comprising 26 Spore industrial properties, is trading at a 20% discount to its book value of $0.27, and offers a stable DPU yield of ~10%. Believes AAReit is a deep value small cap S-Reit that should appeal to high yield funds without liquidity constraints. Keeps Outperform rating and $0.27 target.


Wilmar/Noble: China National Grain and Oils Information Centre (CNGOIC) highlighted that Chinese soybean buyers have cancelled 6-8 soybean cargoes since Apr for delivery in Jun-Jul and have deferred about 20 cargoes for Jul-Sept shipment, if margins remain negative in the short term….

The cancellations came as Beijing agreed to release 3m ton of state soybean reserves to some crushers who are required not to raise retail prices of soya oil to help tame food inflation. Beijing offered the soya to those crushers about 23% lower than near-mth imports. CNGOIC highlights that stocks of imported soybeans at ports stand at a high level of 6.5m ton, exceeding China's 1-mth imports of 3-5m/ton fabrication and infrastructure.

CapitaCommercial Trust

CapitaCommercial Trust: 1Q11 results in-line.
Net property income of $69.9m fell 10% yoy due to reduced revenue from Starhub Centre and Robinson Point, higher vacancies in 6 Battery Road (due to ongoing asset enhancement works), and negative rental reversions as peak 2008 rents roll over. Portfolio occupancy fell 1.1 ppts to 98.2% and avg office passing rents dipped 8% to $7.94 psf. DPU of 1.84cts (-4.6% yoy), which translates to annualized yield of 5.2%...

Nevertheless, the proposed 40/60 JV with parent, CapitaLand to redevelop Market Street Carpark into a Grade A Office building should take centre stage. The JV structure is to accommodate the restriction of not more than 10% of its asset base in development projects (~$600m). Est total project cost is $1.4, or ~$1900 psf based on ~720k sf of NLA . This is lower than recent transacted prices for buildings like Capital Square, One Finlayson Green and Prudential Towers…

Expected completion is by end of 2014, when supply is expected to be relatively tight. Mgt guides for 6% stabilised yield, translating to net rent of ~$9.50psf/mth, or gross rents of ~$12–13psf/mth, in line with Street estimates. The majority of Street views this redevelopment positively.
CCT’s current gearing stands at 27.8%, and mgt does not expect gearing upon completion of the project to exceed 31%...

This would provide CCT with headroom of up to $1b for further acquisitions before reaching ~40% gearing.
The majority of Street maintains their Buy/ Hold ratings, with only JPM at Underweight. Street TP ranges btwn $1.40 -1.81.

Straits Asia

Straits Asia: Announced strong set of 1Q11 results, at the high end of analysts’ estimates. Rev at US$213.7m, +39% YoY and +3.1% QoQ, while Net Profit at US$41.4m, +269% YoY and +35.4% QoQ. Strong performance attributed to increased coal production and slight increase in ASP, as grp’s both mines increased production, assisted by lower then average rainfall. ASP at $82.16/ton, +14.7% YoY and +8.7% QoQ, but way below international prices of US$115-144/ton throughout 1Q11….

Gross Profit Margins for 1Q11 expanded to 34% vs 20% YoY as cash costs / ton fell on back of improved contract rates from PAMA, and lower strip ratios in both mines. Topping off a very successful qtr, the new line 2 load-out at Jembayan loaded its first coal barges at end of Mar, which will mitigate effects of cost pushes in other areas of operations as the line ramps up and the use of temporary load out facilities is discontinued....

Moving forward, grp remains upbeat on prospects with Jembayan mines tipped to reach another yr of record production in FY11, with positive progress towards the issue of licence for the Northern Leases at Sebuku. Cash costs of mining are however expected to increase due to expected higher fuel prices and increase in Jembayan’s strip ratio to its annual target. Coal prices will still be driven mainly by import demands from India and China and are expected to remain at or about current levels.

We note that at current price valuations are undemanding, with grp trading at an annualized 14.1x FY11E P/E vs its historical average of 24x. Macquarie maintain O/P with $3.40 TP, UBS maintains Buy with $3.40 TP, while Goldman Sachs maintains Convited Sell Call with $2.00 TP, despite stellar qtr performance.

Keppel Land

Keppel Land: Relatively in-lind results 1Q2011 rev at $357.9m +236.1%yoy +27.2%qoq with net profit at $92.1m +45.5%yoy -89.1%qoq. On a pretax basis and excld one-offs profit was down 8.2%qoq but was partly due to an accounting policy change of recognizing overseas dev projects on full completion basis vs progressively...

Increase in rev was attributed mainly to a gain of $253.1m in the property trading segment from Elita Promenade in Bangalore, and other Sg projects including the new launch of The Lakefront Residences in Nov 2010, Madison and Reflections…

Co also recorded a one-off gain of $24.4m in the divestment of Keppel Digihub.
Further developments include Sengkang MRT site (622 units) due later this yr. Overseas rev also constituted 61.7% of total rev and co expects to launch over 4000 units in China this year…

On the office front, Ocean Financial Sector has increased pre-commitment to 82.3% as at end-Mar 2011 and together with new acquisitions in Prudential Towers and Capital Square could possibly lead to more divestment opportunities to K-REIT over nxt 12-24 mths. Highlights that both Sg and China sales were weaker in seasonally slower 1Q and likely due to policy tightening measures. 1Q EPS at 6.3c and NAV was at $2.91. Co trades approx 1.5x P/B…

UBS maintains Buy with TP$5.08. Nomura maintains Buy with TP$5.56. DB maintains Buy TP$.5.08. JPM maintains Neutral with TP$4.70. MS maintain Equalweight with TP$4.63. CS maintains Neutral with TP$5.04. GS maintains Neutral with TP$4.90.

SG Market

SG Market: The STI may see a little bounce today, helped by Wall Street's uptick on upbeat earnings. STI fell for its 4th straight session yday, losing 1.5% since Apr 13 & currently sitting at support around 3120. Near term focus will be on earnings as we enter the reporting season but results released so far have been somewhat neutral. With GE date set on May 7, that may generate some interest but the impact on mkt will be limited unless the outcome is significant & focus will likely remain ex unless the outcome is significant & focus will likely remain external devts.

Stocks in focus:
*KepLand 1Q results in line; net profit $92.1m +46% yoy, revenue $357.9m +236% yoy
*Straits Asia results way above expectations; 1Q net profit US$41.36m vs US$11.2m yoy, revenue US$213.7m +39% yoy on prodn gains
*CapitaCommercial Trust 1Q distributable income $52.1m -4.1% yoy, DPU 1.84c
*Capitaland/CapitaCommercial Trust to jointly redeveloping Market St Car Park.

Tuesday, April 19, 2011

Mapletree Commercial Trust IPO

Mapletree Commercial Trust IPO: Public offer begins today and closes on 25th Apr. Expect to commence trading on 27th Apr. IPO appears fairly priced at 5.7% yield and 1.0x P/B vs retail/office S-Reit average of 5.9% and 0.9x. Note that retail Reits command higher P/B multiples vs office peers (1.02x vs 0.8x). Given short average lease to expiry of 2.8 yrs and rental step-up in 2012, DPU expected to grow >10% next yr and 9.5% in FY13. ..

IPO has been well received with placement tranche 9x oversubscribed.

Kindly copy and paste the following link into a new browser to access KE Live’s factsheet on the IPO:

*S'pore President dissolves Parliament on the advice of PM

Genting SP

Genting SP: Goldman Sachs upgrades to Neutral from sell, raises TP to $2.05 from $1.70. Says confidence in a sustainable run rate for Spore’s gaming market (GGR) is on the rise, tips mkt to expand to $7.9b by end FY11. Forecast is 7% ahead of its previous forecast, and 15% above annualized 4Q’s mkt size of $6.9b. Notes the incremental demand will be VIP driven (est +18% yoy growth vs mass mkt +12% growth).

Reverses view that Chinese VIPs are captive to Macau, believes RWS’ VIP volumes are at the high end of Macau at est rolls of US$6.1b /mth in FY11E, vs Macau peers of US$4.8b. Notes that overall, RWS has better profitability, with daily gross revenues amongst the highest in the industry at $12.1m in FY11E, vs Macau peers of US$4.5m...

Adds, GENS is arguably the more dominant operator in Spore, and should maintain its 56% market share, ahead of earlier expectations of an even split.


NOL: -1.1% at $1.88, extending yday’s 2% decline.
Drewry Maritime says the US$240b container shipping industry is set for a bust this year, ending its shortest growth cycle in at least 15yrs. This is a sharp reversal from the US$8b Ebit Drewry had estimated the industry to make in 2011, back in Dec last yr…

Notes that shipping lines are cutting rates to compete for orders as they launch ships faster than demand growth. Freight rates climbed 29% and volumes grew 13% last year on a global economic recovery, but in 1Q this yr, freight rates btnw Asia and declined, causing “some panic” among lines. House tips rates for east-to-west trade, excluding fuel costs, to slide by 13% for the full year.


Sunvic: Technically, the long term uptrend is still intact, however the recent failure to make a new high beyond $0.80 suggests that a near term reversal may be takng place. This scenario is further corroborated by the fact that technical indicators have also begun to hook downwards.
Expect a pullback towards near term support at $0.70...

However given that this stock is trading at just 3.4x P/E, long term investors may consider buying on weakness. Technically, downside may be limited given the firm support level at $0.60.

Technicals indicate likely dip in counter over nxt few days. Stochastic turning downward after trading in overbought region and MACD turning negative. Resistance at $0.79 with support at $0.70, prev bottoms and 100 day SMA. Long-term trend still appears to be positive and nxt catalyst likely to be earnings, est results release on 13th May. Co still trades cheaply at slightly over 3x current P/E.


O&M: DBS expects sector to post net earnings growth of 23%yoy in 1Q11 with Cosco and SMM to lead growth this quarter. Cosco (Buy TP$3.16) is expected to grow 88% on higher shipbuilding sales and margin recovery. SembMarine’s (Buy TP$6.63) growth is expected to come from high margin projects which will boost EBIT margins to 20% vs 1Q10 margins of 11.7%...

House highlights impressive order wins for offshore yards amounting to $6.2b in 1Q almost meeting 2010 full year wins of $6.3b. Earnings upside is expected to come from higher order wins from KepCorp (Buy TP$14.63) and Cosco, better than expected EBIT margins and faster than expected recognition of projects secured in 4Q10…

Small caps in sector likely to bottom but recovery from new deliveries likely to be capped. Ezion (Buy TP$1.09) is top pick in sub-sector with 2 new liftboats in 1Q11. Other cos covered are SembcorpInd (Buy TP$6.10), YZJ (Buy TP$2.60), CH Offshore (Hold TP$0.60), Swiber (Hold TP$0.83) and Mermaid Maritime (Hold TP$0.46)


STI: Down 0.6% at 3126.46 amid lower regional markets, after Wall Street's fall after S&P cut its outlook on US govt debt and warned about a weak US fiscal profile. Phillip Securities note that ‘the negative close and not-so-good sentiment from the US session is likely to spill over into the Asian session as a whole today, placing downward pressure on the STI in the process.…..

Add that a push below the support zone at 3133/3125 would give the STI more directional impetus, with next support at 3100/3095 and then 3080/3075; resistance is at 3150 before 3179/3187. Market vol is fairly low, at 153m shares worth $190m, with around three decliners per gainer. SGX is down 1.4% after its weaker-than-expected 3Q results, OCBC is off 2.5%, StarHub is down 2.5% and Golden Agri falls 1.4%. There are 15 decliners in the 30-stock STI benchmark.

Monday, April 18, 2011

Wheelock Properties

Wheelock Properties: CIMB has Technical Buy Call. Note that the stock appears to be consolidating within its large triangle pattern. With prices now sitting just above the triangle support, it is a good level to get long here as the cut loss point is nearby. The technical landscape is neutral, but MACD has signaled a golden crossover but remains below in negative territory while its RSI is still flat. Both could mean that the stock is still in consolidation….

Recommend traders buy now with a stop placed below the recent swing low of $1.82. A breakout above $1.95 would likely see prices rally towards $2.05 and $2.12-2.15 next.


ForelandFabrictech: Co intends to seek a dual listing on KRX by way of issuance of new shares and has appointed Hana Daetoo Securities as its Bookrunner. Proposed dual listing is preliminary in nature and no application has been submitted to date. Co is 2nd China fibre co after Gaoxian to seek a dual listing, remains to be seen if KRX will approve listing or if interest in counter will be sustained.


Longcheer: Profit warning. Co expects to post a loss for both 3Q and 9M ending 31 Mar 2011 results.


Mewah: JP Morgan initiate with O/W rating and $1.30 TP. Expect capacity growth and margin expansion to drive earnings growth of 16% CAGR over FY11E-13E. Expect improved economies of scale as refining capacity increase 19% by 2H12. Believe grp may leverage on its distribution network to enter into the processing and distribution of related food products, further capturing downstream distribution margin.


Ezra: DnB NOR: reiterate Sell with $1.45. Add that new subsea contracts are positive, however, the impact is smaller due to lower initial order book. Lowers FY11E EPS by 5%, current subsea backlog of US$254m and target of US$1b over the nx 12-18mths, imply new order intake of USD750m vs new order estimate of US$550m over the same period. House would be positive if target is not achieved at the expense of margins, however currently, uncomfortable to increase the values of Ezra's subsea fleet.


Cosco: Citi maintains Buy with $3.00 TP. Reaffirm view that consensus has underestimated Cosco’s strong transition from a ship to a rig builder. Orderbook has momentum to accelerate further, catalysts emerging via wins in FPSO, windmill installation vessels and rigs, which should boost offshore contribution to reach 80% in 2011 (vs 20% in 2007), enhancing margin resilience. Add that fundamental recovery is not yet fully priced in.


STX OSV: Goldman Sachs note that STX OSV (TP $1.55) may be the only genuine bet for 1Q11 earnings season and house remains buyers of Kepcorp (especially on dips) and sellers of Sembcorp Industries (especially on strength). Note that the mkt continues to underestimate STX OSV’s margins and so are buyers of the stock, especially ahead of 1Q11 results season.

Straits Resources

Straits Resources: Goldman Sachs add grp to Conviction Sell list with $2.00 TP. Believe that mkt expectations are too high and house 2011E-12E net profit estimates are 32%-37% below Bloomberg consensus, driven by lower ASPs (which are in line with Co. guidance) and higher costs (as Co. recently raised the strip ratio for the Jembayan mine), which are the highest vs ASEAN peers….

Conclude that SAR screens as the most expensive thermal coal stock globally at 19.8x FY11E P/E and 11.7x FY11E EV/EBITDA, at a 27/30% premium to ASEAN peers respectively. This compares with mid-cycle P/E and EV/EBITDA of 12X and 8X respectively, with Co’s growth also subject to issuance of mine permit by 1H11.


OSIM: Announced that is has acquired 35% stake in TWG Tea for $31.4m and has also formed a JV with TWG for North Asia in which OSIM has a 60% stake. Acquisition in line with the Co’s strategy of expanding its luxury brands portfolio and tap into the growing demand for such products in middle to upper income households especially in China…..

Given the lack of financial details of TWG, Macquarie believes acquisition is positive for Co. and should be value accretive. Add that given small size and nature of acquisition, investor concerns should subside. House reiterate O/P call on Co. with $2.06 TP. Note that Co has more than sufficient cash to meet expansion plans for 3 of its brands – OSIM, Richlife and TWG. At 12.5x FY12 P/E (ex-cash), stock is at large 50% discount to China consumer names.


OUE: Announced its latest hotel acquisition and development plan, which will significantly boost its presence in SG's burgeoning hospitality landscape, a sector which most analysts agree will continue to see strong growth. Grp will buy 100% of LC Airport Hotel, which owns the 320-room Crowne Plaza Changi Airport Hotel, for $250m, in addition to an adjacent plot of land for $43m…..

Note of a proposal to develop further 200 rooms for $37m on adjacent plot and that acquisition potentially increases grp’s SG room count by 31.98%. The vendors are LC Dev and Runway 38, each owning 50% stake in LC Airport. Technically, Apr8's intraday high of $3.24 may provide some technical resistance. UOB Kay Hian maintains Buy with $4.30 TP, CIMB Maintains Buy with $4.16 TP, CS maintains O/P with $4.20 TP and Morgan Stanley O/W with $3.45 TP.


Property: GS issues note on Mar property data. Developers sold 1,386 priv homes excld EC in Mar, +25.4% from 1,105 homes in Feb reversing 3 mths of declines. Take up of new projects were better compared to Feb (77% in Mar vs 51% in Feb). Mid-end sales were up 120% mom to 492 units making up 35% of new priv sales vs 20% in Feb. Prime segment was up 85% mom making up abt 19% of sales...

Mass-end declined 15%, 46% share of sales against Feb’s 67% While secondary mkt show similar positive sentiment, residential outlook for 2011-12 is expected to be soft due to signs of softness in 1Q11 rentals and risk of demand-supply imbalance in 2H12…

Price falls of 5% and 10% expected in 2011 and 2012. GS rates UOL as Conviction Buy with TP$5.80.


Guocoland: 3Q results below expectations, with rev at $96.0m -10.7%yoy, -41.0%qoq and net profit $2.0m -78.7%yoy, -63.0%qoq. Lower contribution from dev projects in China weighed on topline revenue and rising administrative costs from China operations (+53.4%yoy, +16.0%qoq). Future outlook remains challenging and housing statistics in 1Q suggest Sg property mkt continues to cool. Co trades currently at P/B of 1.1x vs hist avg of 1.3x


SIA: released Mar operating data.
Pax air traffic (RPK) -3.6% yoy, which coupled with +6.4% yoy increase in capacity, resulted in pax load factor declining by 7.6ppt yoy to 73.2%. For the qtr ending Mar, pax load factor was 75.5% (vs Dec qtr breakeven 71.1%).
For cargo, traffic (FTK) +0.9% yoy, while capacity expanded by 6.9% yoy. Cargo load factor fell by 3.9ppt yoy to 64.5%.
Separately, wef 21 Apr, fuel surcharges of btwn US$4 -32 per sector will be levied.

Citi says the fall in Mar pax traffic (partly due to shift in timing of Easter, and Japan earthquake) may imply downside risk to 4QFYMar11 forecasts. Adds SIA’s decision to implement a 4th round of fuel surcharges since Dec suggests this may be a further dent to earnings (every US$1/bbl change impacts earnings by ~2.2%). Stock trades at 1.2x trailing P/B. Still, house keeps Buy call and $16 target.


M1: 1Q11 results marginally ahead, but operational trends not strong.
Net profit at $43m, +8% yoy, on lower than expected depreciation and finance costs. But revenue growth slowed to 4% yoy, as incremental impact of M1’s smartphone focus waned.
Post-paid and pre-paid ARPUs remained under pressure and were down 6% and 5% yoy rptvly, although this was mitigated by data ARPU +4% yoy to $21.8 as data’s share of ARPU climbed to 34.7% (vs 4Q10’s 33.3%)…

Mgt maintained guidance of FY11e net profit growth and 80% div policy, but commented that smartphone penetration now at “mass-market level” (60% of M1’s post-paid base), which could suggest further ARPU upside may be limited going forward.
1Q11 net adds of 23k was an improvement from 4Q10, but is substantially lower vs recent quarters in the past 2 years, and also suggests acquisitions may have peaked...

Main silver lining was in its fibre growth, as Spore NBN expanded to 16k customers at end Mar, of which M1 managed to capture one-third mkt share.
Deutsche keeps at Sell with TP $1.90, while HSBC downgrades to Underweight from neutral with TP $2.48, on lack of short-term growth catalysts.
Goldman, Credit Suisse keep at Neutral with TP $2.40, $2.66 rptvely.
Macquarie, Nomura, Citi, Morgan maintain Outperform/ Buy with TP ranging btwn $2.72 – 3.00, largely on NBN upside.

SG Market

SG Market: Spore shares may open higher in tune with strong closing on Wall Street but expect STI to remain rangebound between 3187 & 3120.

Among stocks in focus:
*M1 1Q results net profit $42.5m +8.2% yoy, revenue $257.6m +3.5% yoy, slightly ahead of expectations due to lower handset subsidies & depn but outlook seems a little murky
*OUE buys 320-room Crowne Plaza Changi Airport from LC Dev/Runway for $299.5m, plans to develop another 200 rooms on adjacent site
*SIA Mar passenger load factor 67.3% with cargo load factor 64.5%
*GuocoLand reports 3Q netprofit of $2m -79% yoy on lower contribution from development projects in China
*LongCheer warns of 3Q & 9MFY11 losses

Friday, April 15, 2011


BioSensors: UOB kay Hian note that Biosensors broke out of its prior resistance level of $1.25 and closed at a 5-yr high of $1.31 yesterday on the back of higher trading vol. The ADX indicator bottomed out at the beginning of the mth and began to turn upwards, with the DIs positively placed. Support is at $1.11 while resistance is at $1.41.


BrightWorld: Co has secured contract to produce 4 units of stamping machines for Rmb10.9 to Shenzhen-listed co Jiangyin ZhongNan, to be used for manufacture of valves. Co has also secured a Rmb13.4m stamping machine order from Shanghai-listed Changchun First Auto Works, to be used to produce steel wheels. Co’s order book was Rmb270m as of 16 Feb 11 and FY2010 rev was approx Rmb1.0b. Co’s fwd P/E is at 8.2x vs hist avg of 5.9x

SG Strategy

SG Strategy: Deustche note that 1Q GDP off to a strong start at +8.5% YoY, far exceeding expectations. Re-centering of the SGD policy band suggests near term upside Improving GDP growth supportive; Stronger SGD benefits domestic plays Market valuations remain moderate and house remains positive on conglomerates, office landlords….

Remain O/W on conglomerates (SembCorp and SembMarine are preferred) where a surge in order books should more than offset the impact of a stronger SGD. Also favor domestic asset plays such as REITs/landlords (KepLand, Ascendas REIT) which are less exposed to policy tightening in housing market, and SGX on attractive valuations and a refocus on driving organic growth. House is U/W telcos, developers and container shipping.

Credit Suisse tips key Inflation winners and losers in SG. Note that Co’s with high materials or wage costs, low margins and limited pricing power to pass through the incremental costs are most impacted, which include HL Asia, Amtek, SATS, NOL, Wilmar and ST Engg…..

Beneficiaries include Midas, DBS, Straits Asia, Yongnam and Genting SP. Add that Wage is probably the cost component that affects most number of Co. in SG, given G’s high wage cost base. Those most affected by rising wages are SATS, ST Engg, CD and Raffles Medical.

First Resources

First Resources: UBS Initiate Buy with $2.04 TP. Note that first growth upstream exposure makes grp a good proxy for the CPO price. Entering a phase of high production growth FR stands out among its peers in Indonesia as it paid 30% of earnings as div in 2009 and 2010. Grp payout policy makes it a good pick for investors looking for a balance between div and growth and opportunity through reinvestment.

Tiger Airways

Tiger Airways: UBS INITIATE with Sell Call and $1.50 TP. Tip LLC as most vulnerable carrier. Add of at least 3 competitors on each of its key routes which competes directly with grp. Concerned about Tiger’s profitability in FY12/13 and doubt Co’s ability to maintain its disciplined strategy of growing business…..

Note that Co. does not levy any fuel surcharge and estimate it has hedged around half of its fuel consumption for nxt 5 qtrs. Estimate Co’s FY12 post-hedged fuel price will increase 19% YoY and its non-fuel unit costs will decline 1%, but that interest costs will rise as it takes more planes onto its balance sheet.


CRCT: 26.9% owned by CMA. Co reports 1Q2011 results with rev at $30.9m, +4.7%yoy +2.5%qoq, of which gross rental income made up $28.9m +3.9%yoy +3.5%qoq. Net profit was $11.5m -0.2%yoy -81.5%qoq. Profit for last quarter was distorted due to revalution gains ($66.4m) and taxation provisions (-$18.5m)…

Income available for distribution rose 1.0% to $13.5m. Results were better due to higher occupancies achieved and higher tenant sales on several malls after completion of asset enhancement. A stronger SGD against RMB also added $1.4m yoy. Trust pays semi-annually with div yield of 6.6% which current results appear to be in-line with.


K-Green: Co records 1Q11 rev of $18.2m, 3.7% lower than projection of $18.9m but net profit of $3.5m was 5.4% higher than projected $3.4m. Variation in rev was due to shift in schedule of flue gas upgrading works. Net assets decreased by $21.8m mainly due to distributions to unitholders in Dec of $27.1m...

K-Green has a semi-annual distribution policy and the nxt distribution will be for 1H Jun results. Projected DPU is approx 7.5%. Highlight that co’s main asset Senoko Incineration plant has a 15 yr concession from Sept 09, and cashflows may dip after that.

Sim Lian

Sim Lian: Announce that it has submitted a tender for land parcel at Tampines Central 7 for Executive Condominium Housing Development and has emerged as the top bidder with a tender price of $278.8m If Co. is awarded the land tender, it would likely build an estimated 660 units on this site. The units will be a range of two to four bedroom apartments. The tender is currently under evaluation by HDB….

Deutsche maintain cautious stance on the residential developers with preference for the commercial players such as KepLand, CCT and Suntec.


Ramba: Announced that it has entered into an agreement for placement of approximately 43.6m shares to raise $22.8m. Placement price at $0.54/share represents a discount of 7.5% to weighted average price of $0.584 for trades done on 13th April. Placement shares will comprise approximately 39.8m new shares and 3.8m treasury shares and represent 18% of enlarged issued and paid-up shares capital of Co….

Proceeds will be used to provide working capital for exploration and devt of grp’s oil and gas business, which includes drilling and seismic activities. We note that total weighted average price following the enlarged capital should give a simple average of $0.57/share based on the weighted average price on 13th April.


K-REIT: Announced strong set of results which were inline. Property Income at $18.7m, +2.5% YoY and -12.6% QoQ, while Distributable income at $24.3m, +36.1% YoY and +4.7% QoQ. DPU for 1Q11 grew 34.6% YoY and 4.7% QoQ to 1.79c or 7.26c (5.5% yield) on an annualised basis respectively. Increase due to NPI which rose 7.6% and results of associated companies which increased 194% to $6.1m for 1Q11....

Increase in NPI was supported by contributions from the 50% interest in 275 George Street and office tower at 77 King Street, both in Aus, while significant increase in share of associates due to acquisition of 1/3 interest in BFC Dev, the holding Co. for MBFC Phase 1, which was acquired on 15 Dec10....

We note that REIT continues to maintain well-balanced lease profile with no more than 14.3% of portfolio expiring within a yr from 2011-15 and WALE for the portfolio stood at 8.7yrs. Gearing stood at a comfortable 37.4%, giving headway for further acquisition, and debt weighted average term to maturity stood at 3.9 yrs. At current price, grp trades at 0.88xP/B and an annualized 5.5% yield vs peers Suntec REIT at 0.85x P/B, 6% yield and CCT of 0.95x P/B, 5.46% yield....

Going forward, REIT tips office rental rates to maintain its uptrend, and will continue to optimise the performance of its assets, while pursuing opportunities for strategic acquisitions that will complement portfolio. CIMB maintains Neutral with $1.52 TP, while CS O/P, with $1.75 TP.


CapitaLand: to buy 40% stake in Surbana (wholly owned by Temasek Hldgs) for $360m.
Surbana is the corporatized arm of HDB. Besides its strong track record in planning, designing and project mgt for Spore's HDB projects, Surbana is also a township developer in China, with projects in Shenyang, Xi'an, Chengdu and Wuxi, with a GFA of ~6m sqm.

CapL will fund the transaction with internal funds and available cash. Expect market to view this acquisition positively, as i) CapL can leverage on Surbana’s expertise in large scale mass mkt residential projects to execute its low cost housing projects in China, ii) this shows that mgt is proactive in deploying its excess cash (~$7b) and committed to its guidance for $5-6b in new investments for the group this year.
Street currently has mixed ratings, with 3 Buys and 2 Underperforms in Apr. TP estimates range btwn $3.41 – 4.30.

Thursday, April 14, 2011

Sino-tech Fibre

Sino-tech Fibre: Auditors have noted certain discrepancies in invoices btwn co and suppliers. One of its sales managers in China has been uncontactable to ascertain the reason for the discrepancies and police have been called in to assist. As of yet, there has been no satisfactory explanation. Results on the 15 of Feb may be subject to change pending this issue. No amt was stated in the current announcement.

Sabana REIT

Sabana REIT: Announced that its CFO, has resigned and left the company to pursue his personal interests (Potentially seen as a Red Flag), replacement is Ms Tan Chiew Kian, who was previously the CFO of Singapore Medical Group and Sembawang Kimtrans …..

UOB Kay Hian note that with change of senior executive so soon after the Co’s listing, foresee possible execution delays in Co. obtaining its credit rating and announcing initial acquisitions. House however do not foresee direct impact to REIT’s portfolio as properties will remain under care of the trustee. Sabana’s rentals for the first 3 years of operations are also protected by master-lease agreements with locked-in rentals…..

Add that div yield of 9.2% is both attractive and a hurdle. REIT’s current div yield of 9.2% provides downside support for its share price but would also make it difficult for Co. to acquire further properties on a yield-accretive basis. Sabana’s div yield is also 110bps above current average industrial S-REIT yield of 8.1%, implying a 14% upside in the share price just from reversion to mean. House maintains Buy with $1.15 TP.


Transport: Yday’s report, Deutsche reinstates Hold on SMRT with TP$2.00 and Buy on ComfortDelgro with TP$1.90 with latter as preferred exposure to Sg transport. Positives for Comfort include improving growth profile supported by increasing profitability of domestic rail business and overseas contributions...

Population shifts (housing completion in North-east) is expected to drive NEL ridership growth and operational efficiency gains as well. House is cautious on SMRT due to near-term net profit contraction due to Circle Line costs. Notes that co trades at 30% P/E premium over Comfort and has lack of near-term catalysts but highlights defensive


Techcomp: Co has submitted an application to SEHK for dual listing of shares in HK. Co is still in preliminary phase and may not carry it out. Co is in the business of mainly distribution of laboratory equipment in China but does production as well. Trading at current P/E of 8.5x against hist avg of 7.4x.

Beng Kuang Marine

Beng Kuang Marine: 70% owned subsi Ocean Eight Shipping (OES) has secured its first long term 5 yr shipping contract worth US$18.9m. OES will provide a livestock carrier to ship live cattle from Aus to Indo and other parts of Asia from 1 Dec 2011 till 30 Nov 2016. Co has current P/E of 33.7x much higher than hist avg of 10.7x.


UMS: Applied Materials (AMAT US), which owns a 5.25% stake and contributes ~ 60-80% of sales to UMS, has signed a research collaboration agreement with Spore’s Institute of Microelectronics (IME) with the aim of driving innovation in advanced packaging, a key growth mkt for the semicon industry. AMAT will share the cost of the R&D center with EDB and A*Star...

The centre will allow AMAT to strengthen its capabilities in Asia, where 75% of its customers are based.
UMS trades at 7.2x trailing P/E, slightly below to other precision module mnftrs, like Frenchken 7.4x, and HISAKA 8.9x.
CIMB and Sias Buy ratings on the stock, with TP at $0.91, $1.05 rptively.


CMA: Deutsche issues note maintaining Buy with TP$2.55 on MOU with Parco to explore business collaborations in China and Japan. This will improve co’s efforts to bring Japanese retailers into Asia mkts, explore opportunities for investment and grow the business in Japan where CMA has 7 malls. Parco’s network includes 20 malls in key cities in Japan and 1 property Millenia Walk in Sg...

House sees this as positive move and will enable it to maintain its competitive edge by maintaining a diverse tenant mix and minimize leasing risk. CMA has rebounded from its historical low of $1.57 and appears to be finally breaking out of its downtrend. See support at $1.83 and may be worth a look after it corrects from current overbought state.

Sri Trang

Sri Trang: Standard Chartered INITIATE coverage with OutPerform rating and $1.65 TP. Note that grp is one of the largest rubber processors globally and operates an end-to-end supply chain from rubber plantations to end customers. Tip Co to achieve a net profit CAGR of 14% as a result of strong vol growth and robust profitability…..

Add that with sales volume in 2010 comprising 8% of global consumption, Sri Trang could well be world’s largest global rubber processor. Expect vol growth of 18% p.a. and Sri Trang’s global market share to reach 12%. Valuations appears compelling with grp trading at of 9.3x FY11E P/E while agricultural processor peers are trading on an average 11x P/E.


SPH: Announced 2Q11 results, which were in-line, albeit at the lower end of estimates. Rev at $287.8m, -9.7% YoY and -10% QoQ, while Net Profit at $75.4m, -33.5% YoY and -35.6% QoQ, due largely to the sale of Sky@eleven at 2Q10. Excluding One-Off Sale, Group operating rev rose by $20.5m, +7.7% with increases across all business segments....

Operating rev for Newspaper and Magazine segment remained healthy at $234.3m, +5.2% YoY and Print ad rev at $176.3m, +6.6% YoY, driven by strong showing in Display and Recruitment ads, while rental income from Paragon increased 12.9% as a result of higher incremental rental from façade enhancement, while Clementi Mall registered its maiden income in Jan11....

Operating rev for Newspaper and Magazine segment remained healthy at $234.3m, +5.2% YoY and Print ad rev at $176.3m, +6.6% YoY, driven by strong showing in Display and Recruitment ads, while rental income from Paragon increased 12.9% as a result of higher incremental rental from façade enhancement, while Clementi Mall registered its maiden income in Jan11....

Result brings 1H11 rev to $606.5m, -9.8% YoY and Net Profit at $177.7m, -31.1% YoY, on track to meet FY11 rev estimates of $1.23b and net profit consensus estimates of $400.5m. Going forward, grp remains positive on prospects and tip print ad rev to move in tandem with the performance of the SG domestic economy, and expect its 2 property assets to contribute a steady stream of rental income to Grp....

At current price, grp appears fairly priced, trading at an annualized 18.1x FY11E P/E vs historical average of 15x. Co has declared an interim div of 7c/share (1.8%) which will be paid on May 24, 2011. Deutsche and Kim Eng maintains Buy with $4.33 and $4.68 TP, while CIMB remains neutral on grp with $3.98 TP.


SGD: Spore tightened its monetary policy Thursday for a 3rd time in a row, intensifying its fight against inflationary pressures that have continued to build on high global commodities prices.
The move came as the government reported better-than-expected economic growth for 1Q...

The MAS raised its SGD trading band, but left the width and slope of the band unchanged. It said it recentered the trading band below the level of the Spore dollar's nominal effective exchange rate that prevailed prior to Thursday's announcement...

The USD/SGD has climbed back from its post MAS record low of 1.2453 and is now at 1.2509. DBS notes the MAS tightening was a bit less than expected, hence the bounce back due to some SGD profit taking. Still, believes the trend is for long-term appreciation. Tips an end-2Q target of 1.2300 but sees support for the USD/SGD around 1.2430.

Spore Economy

Spore Economy: 1Q GDP +8.5% yoy, vs +5.7% forecast by analysts and +12% in 4Q.
Growth was led by the manufacturing sector which grew 13.9% yoy. This strong growth was driven by the electronics and precision engineering clusters, which benefitted from a pick-up in business investment in the region…

Meanwhile, the construction sector grew 2.6% yoy, reversing the contraction of 2% in the previous quarter.
And the services producing industries also expanded 7.2%, following the growth of 8.8 per cent in the preceding quarter.
Growth was also driven by the financial services sector, which saw an increase in commercial bank lending activities…

OCBC says better-than-expected 1Q GDP expansion suggests resilience in the economy, expects upside to growth and inflation in the coming months, as Singapore has so far weathered the shocks from Japan and Middle East well. Adds, inflation may peak in 1H11, with the MAS tightening to temper inflation by 2H11.
Notes biggest risk is in oil prices, and rosy data not yet reflecting full impact from external shocks.

SG Market

SG Market: Spore shares may rise despite mixed close on Wall Street as 8.5% 1Q11 GDP growth proves surprisingly strong & funds flow return to the region. MAS tightening of monetary policy for the 3rd traight meeting should also underpin the market although it was largely expected. Stocks in focus will be those perceived as proxies to Spore's growth, such as banks & SPH. This week's high at 3187 may cap STI near term with support remaining at 3120.

Stocks in focus:
*SPH 2Q results slightly below par at $75.4m, -33.5% yoy due to absence of gains from Sky@Eleven condo
*CapitaMalls Asia signs MOU with mall operator Parco to collaborate in China & Japan
*Hyflux selling $200m 6% preference shares, with option to double the size
* UMS Hldgs’ main customer Applied Materials signs research collaboration deal with A*Star
*Beng Kuang secures its 1st long term 5-yr shipping contract worth US$18.9m to provide a livestock carrier to ship live cattle from Aust to Indon.

Techcomp has submitted an application to SEHK for dual listing of shares in HK.

Wednesday, April 13, 2011


ThinkEnv: 70% owned Mornington has completed first pass assessment which shows potential and will be ready for rapid production in 3-6 mths at Keikoro, South Mali. Currently there are 3 producing artisanal mines ready to be mined and at least 4 other sites which may have enriched potential…

Co reiterates strategy of accelerating production as well as amassing licenses to enlarge potential gold-rich resource areas. Artisanal mines are essentially small-scale subsistence operations undertaken by independent miners. No production capacity was projected in the news release.


Olam: Morgan Stanley reiterates O/W rating on Olam and favorably view Tata’s investment in grp’s Gabon Project. Key positives of development include, de-risking Olam's investment in space that was new by bringing in experienced strategic partner, significantly reducing execution risk, as Tata will be responsible for Project Management for first 3 yrs, and stake sale at an implied equity valuation premium of 154% reduces immediate pressure on Olam to raise equity for funding project.


UnitedFiberSys: Auditors emphasize that co has incurred net loss of US$47.2m and are in net current liability positions of US$62.1m. This may cast doubt on co’s ability to continue as a going concern.


BBR: 80% owned subsi has been awarded RM52.7m ($21.9m) contract from Msia co Trans Resources Corp to construct and complete facilities work for Kelana Jaya LRT line extension to KL. Project is scheduled for completion by Dec 2012. Current order book for BBR is at $620m. FY2010 rev was $205.8m.


TTJ Intl: Co has secured $29m worth of contracts and boosted its order book from $140m in Mar to $169m. The contracts comprise of a $25m contract to construct a new ITE HQ in Ang Mo Kio, steelworks in Samsung-Tiong Seng's JV Connexion project and replacement of a shiplift system…

As of 1H end Jan 2011, co had approx $44.8m worth of rev. Listed in April 2010, co trades at current P/E of 7.6x.


UnitedEngineers: Co has been awarded tender for land at Bendemeer Rd/Whampoa East for $543m by HDB. The site is approx 18.6k sqm with lease of 99 yrs and is within walking distance from Boon Keng MRT. Co intends to develop the site into a waterfront condo of 700 units. The acq is to be financed by internal funds and borrowings. Co has current P/E of 3.6x

Lian Beng

Lian Beng: Has granted option to purchase to TAS Services for 18 New Industrial Rd in Sg. The sale price is $32.5m and a deposit of 1% has been paid by TAS. Est net gain from transaction is $6.0m. Reports strong 9M end Feb 2011 results of rev $379.9m +58.0%yoy and net profit of $36.6m +110.7%yoy…

Strong rev growth was due to higher rev recognition with construction segment contributing 85%. Other operating income included a $5.0m gain on sale of investment property in Suntec City Tower 1. As of 28 Feb co's order book was at $661m with activities till FY2013. Despite run-up after DMG report last wk, at EPS of 6.91c, annualized P/E is 3.9x.

Tuan Sing

Tuan Sing: Kim Eng Initiates Coverage with Buy rating and $0.63 TP. Tip grp as a diversified ppty grp offering immediate catalyst its underlying businesses. Add that redevelopment could unlock value of prime commercial buildings it owns in SG’s financial district and two 5 star hotels in Aus. A corporate restructuring will give GulTech, its associate, a much higher valuation than just 5.3x PER currently. Trading at only 0.7x book value, TSH is poised for a major re rating.


COSCO: Could see positive interests, after announcing that Seadrill has exercised an option to construct a new tender drilling rig T-17 valued at US$66m. Seadrill has now exercised one of the options awarded by Cosco. Rig is scheduled for delivery in 1Q13 and contract is not expected to have a material impact on grp’s EPS and NTA for 1Q11…..

Contract wins brings YTD orders secured to US$2.76b, and grp’s orderbook to approximately US$7.3b vs FY10 Rev of US$3.07b, under pinning earnings till 2013/14. Citi has Buy Call on grp with $3.00 TP. Note that fundamental recovery is not yet fully priced in and raise estimates by 10-11% over 2011/12E pegged to 21x mid FY12E P/E. Add that consensus underestimates the pace Cosco is transitioning into a credible O&M play. CIMB however remains neutral on grp with $2.38 TP.


Offshore: The back drop for the offshore sector continues to be positive for the long term, with bidders offering Petrobras daily rates of US$638k-740k/ day for deep water drilling rigs. Petrobras had expected to rent the rigs for US$500k/day, leading it to cancel its tender for 4 drilling units, and consider changing contract regulations to hire foreign built rigs to reduce costs…

However, the 4.8% pullback in Brent futures to US$120.69/barrel since the start of this wk may put a lid on stock prices of rig builders in the near term. The IEA said that oil prices above US$100/barrel are starting to hurt the global economy and Goldman Sachs forecast a “substantial” correction in Brent to US$105, as the oil market has adequate inventory and OPEC spare production capacity.

Keppel Corp

Keppel Corp: lands new contracts worth $240m.
Under one contract, Keppel will build a prototype multi-purpose dive support construction vessel (DSCV) for SBM Offshore, to be delivered in 2Q13. SBM is a long time customer of Keppel, with completed contracts involving 13 FPSO completions, and 4 FPSO conversion projects in progress…

In another contract, Keppel has received a fast-track project for the upgrading of an FPSO vessel from Petrofac Int’l (UAE) for which work commenced in 1Q. Designated for an oil and gas field offshore Peninsular Msia, this FPSO facility will be able to handle both oil and gas pdtn.
Keppel’s ytd order book wins now stand at $4.9b, making it on track to meeting Street expectations of up to $7b worth of orders for this yr...

The Street has mainly Buy ratings on the stock, with recent TP ranging btwn $13.92 – 15.10.

SG Market

SG Market: Spore shares are likely to track overnight weakness on Wall Street, to extend their consolidation into a 3rd straight session. With the STI market still very much in overbought territory & weighed by fresh concerns from Japan over its stricken nuclear reactors, the market is expected to head towards support at the 3120 region.

A break of that key support may take the index down to 3080, where both the 20 & 50-day MAs are converging. On the upside, resistance will be met at 3187 followed by 3220. Watch for Keppel Corp. (BN4.SG), which may gain after saying late Tuesday its unit got offshore and marine contracts worth S$240 million in total.

Stocks in focus:
*KepCorp secures $240m worth of contracts from SBM Offshore & Petrofac, taking total orders clinhed so far this yr to $4.9b & putting it on target to exceed record $7.4b orders achieved in 2007.
*Cosco wins another tender barge contract from Seadrill, valued at est US$65m. The new unit, T17, is scheduled for delivery in 1Q13.
*Lian Beng more than doubles 9MFY11 net profit to $36.6m on 58% growth in revenue to $380m.
*UE awarded tender for 18.6k sqm land at Bendemeer Rd/Whampoa East for $543m by HDB. The 99-yr site is within walking distance from Boon Keng MRT & can be developed into a waterfront condo of 700 units.
*TTJ Intl has secured $29m worth of contracts, boosting its order book to $169m. The contracts comprise of a $25m contract to construct a new ITE HQ in Ang Mo Kio, steelworks in Samsung-Tiong Seng's JV Connexion project & replacement of a shiplift system.
*HPH Trust - Stabilising activities has ceased as over-alloted 540m units have been fully utilised as of 12 Apr 2011
*UFS auditors flags net loss of US$47.2m & co is in net current liability position of US$62.1m.

Tuesday, April 12, 2011


Informatics: According to Reuters, M’sian tycoon Vincent Tan is mulling a 49% stake sale in the unlisted gaming unit of Berjaya Sports Toto for approximately US$1b including debt. Tan has hired Citigroup as adviser to the deal. Carlyle Group & Providence Equity Partners were 2 of those recently approached to buy the stake but it is unclear whether the buyout funds are proceeding with the process.

Would Tan consider injecting its gaming biz into Informatics, which is 30.3% controlled by the Berjaya Group & 20.9% by Peter Lim? Or do a RTO at Rowsley where Peter Lim owns a 29.9% stake? The guessing game is on.


Midas: Announced that it will invest Rmb600-650m in a new plant in Henan Province. Plant will include 2 aluminium alloy extrusion production lines, one downstream fabrication line, auxiliary machinery, land, buildings and other infrastructure. Construction is expected to be completed in 2H 2012….

With new capacity, Grp’s total annual extrusion production is set to increase by 40% to 70,000 tonnes. Its downstream fabrication capacity will also increase by 30% from to 1,300 train cars. New production plant will be funded by proceeds raised from grp’s HK secondary listing and internal resources. Developments are not expected to have a material financial impact on grp for FY11.