Monday, October 31, 2011

SMB United

SMB United: requested for halt at 10.15am this morning.
Profit Sea, a wholly owned indirect subsidiary of Boer Power Holdings, proposes a voluntary conditional cash offer at $0.32/sh. This compares with last traded at $0.30 just prior to the halt, and NAV of $0.293/sh.
As an acceptance condition, the Offeror must end up controlling not less than 52.5% of the shares out.
The Offeror reserves the right to revise the Minimum Acceptance Level during the course of the Offer, provided that the revised offer remains open for another 14 days following the revision and sh/h who had accepted the initial Offer will be permitted to withdraw their acceptance within 8 days of this revision.
The Offeror intends to exercise any rights of compulsory acquisition that it may have in connection with the Offer. It is the intention of the Offeror to privatise SMB and to delist SMB, should the option be available to the Offeror.

Great Eastern

Great Eastern: 3Q11 results.
Net income at $40.4m, -76% yoy, -66% qoq, largely due to sharp drop in life assurance profit from non-participating fund, and losses on sale of invmts and changes in fair value (vs gains yoy and qoq).
Co noted that 3Q10 was an exceptional quarter of high earnings as a results of good invmt performance amidst favorable mkt conditions, while 3Q11 was affected by poorer invmt performance, unrealised mark-to-market losses, and an overall decline in insurance profit due to adverse mkt conditions and net impact of falling interest rates on liability valuations.
Nevertheless there were no significant impairment charges.

Underlying drivers remains positive.
Total weighted new sales increased 8% yoy and qoq to $204.6m.
New business embedded value (NBEV) increased 13% yoy and 3% qoq to $86.7m.
Gross premiums increased 3% yoy and 7% qoq to $1.7b.

On outlook, mgt notes the Group’s performance may be affected by interest rate and credit spread movements and volatility in the equity markets resulting from the ongoing global economic uncertainties.

Deutsche notes that Great Eastern’s lower net profit effectively delivered a $67m sequential earnings headwind to OCBC, and implies potential for near term share price weakness for the bank. But notes, given the key driver was recent financial mkt volatility, the house views any weakness as a buying opportunity. Keeps Buy on OCBC with TP $9.70.


SembMarine (SMM): SMM, in a consortium arrangement with PT Scorpa Pranedya, has secured a US$300m Floating Storage Offloading (FSO) tanker conversion contract from an Exxon Mobil subsidiary for use at its Cepu Block in Indonesia. SMM is responsible for the engineering, procurement, construction, commissioning and hook-up work of a very large crude carrier (VLCC)-sized floating storage and offloading vessel for the Banyu Urip project in East Java, Indonesia. The conversion is expected to be completed in 27 months.

The contract size is large compared to SMM’s previous FSO conversion projects. This brings SMM’s ytd order wins to $3.34b, vs $3b for the full year 2010.
DMG reiterates Buy with TP $5.46.

Ascendas India Trust

Ascendas India Trust: 2Q12 DPU -9% YoY to 1.54cts from 1.7cts. Distributable income -9% to $11.8m from $13.02m, total property income +6% to $31.4m from $29.61m as a result of income contribution from new buildings and higher recovery of utilities costs.

JP Morgan maintain Neutral, and reduce TP to $0.86 from $0.90, Underlying portfolio performance stable despite headwinds. Operational performance faring well, DPU growth from new completions still some time away, Phoenix Infocity acquisition likely to conclude soon. Revise down FY12/13 DPU estimates by 5-8%.

Singapore Land

Singapore Land: 3Q11 net profit came in at $56.6m, beating expectations with a 3% QoQ increase, 13% YoY growth. This was mainly underpinned by strong hotel revenue growth, and a slowdown in negative office rental reversions in 3Q11.

Nevertheless, KE Research maintains Sell with TP $4.91. Sees challenges for the office sector lie ahead in 2012. Notes office rental income still accounts for more than 60% of the Group's gross profits, and expects negative rental reversions to resume with further deterioration in the office sector in 2012.
Adds, SingLand and JV partner UOL are likely to launch their new condominium project at Bedok Reservoir Road in the coming months, but it remains to be seen if upgraders' demand in that location has reached a point of saturation, given the number of new projects sprouting out in the vicinity over the past 2 years.

Sing Post

Sing Post: 2QFYMar12 results below expectations.
Revenue grew 2.4% YoY to $140.9m driven by growth in both the mail (+1.7% YoY) and logistics (+10.8% YoY) segments.
But underlying net profit declined 10.1% YoY to $32.8m, as rising labour costs (higher contract worker cost in a tight local labour market) took a toll on its bottom line.
Including one-off items, net profit dipped 22.5% YoY to $30.6m. The one-offs were largely due to a $4.2m marked-to-market loss on Equity-Linked Notes (ELNs). About half of the mark-to-market losses will be reversed based on the market share price as of 27 Oct. Fair value of the ELNs as at 31 Mar 2011 was $36m, or ~ 9% of all its cash and financial assets.
Operating margin saw a steep decline on a YoY and QoQ basis to 29.3%, as a result of higher contribution from the lower-margin logistics business.
Looking ahead, cost pressure is set to mount but mgt remains committed to accelerating the growth of its non-mail and regional logistics business.
Interim quarterly dividend maintained at 1.25 cts, in line with expectations.

KE Research cuts earnings estimate by 6% and downgrades to Hold with TP $1.13 and regular dividend yield of 5.9%.

Airlines / Qantas / SIA / Tiger Air

Airlines / Qantas / SIA / Tiger Air: Qantas Airways plans to resume flights as early as today (estimated 2pm Sydney time) after Australia's labor regulator barred work stoppages that had prompted the nation’s biggest carrier to ground its fleet, stranding about 80,000 passengers. Qantas plans to add supplementary flights to clear the backlog of customers and expects to return to “business as usual” over the next 24 hours. Keeping the 108 planes out of the skies would have cost A$20 m / day, according to Qantas estimates.

CEO Alan Joyce grounded the carrier’s main unit with no notice on Oct 29 after weeks of sporadic strikes disrupted flights and caused sales to plunge. Joyce halted flights to confront engineers and baggage handlers seeking higher pay and job-security measures. Long-haul pilots have also staged protests in a bid to get the same employment conditions whether they fly for the Qantas-branded unit or budget arm Jetstar. Prior to this, the unions had stepped up action since Joyce announced plans in Aug to eliminate 1,000 jobs, reduce routes and establish new ventures in SE Asia and Japan in a bid to end losses at int’l operations.

CLSA says, the dispute may help SIA win long-haul traffic from Australia and aid the carrier’s budget arm Tiger Airways in winning back passengers after its Australia unit was ordered to halt flights earlier this year because of safety concerns.
Qantas has about 65 percent of Australia’s domestic market and less than 20 percent of international travel.

On Friday, SIA closed up 1.5% at $11.79, Tiger closed up 7.9% at $0.755.


Wilmar: the co’s second attempt to win over Prosperine Co-operative Sugar Milling Association has failed, despite it sweetening its bid by A$5m to A$120m. Sucrogen (Wilmar’s sugar unit) received only 69% of votes, fewer than the required 75%.
Wilmar is keen on Proserpine as it would help increase its market share in Australian sugar cane processing to near 50%. Proserpine would add 1.7mt to the 15mt of cane processing that Wilmar already owns via Sucrogen.
This proposed transaction with Proserpine would have given Wilmar's growth ex-China further momentum. But impact may be limited as sugar is ~5% of its profit base this year.


STX OSV: Could see positive sentimenets as it announced contracts for 4 PSVS valued at above NOK 1b. Orderwin brings YTD orderwins to an approximate NOK 6.3b orders, vs FY10 of Nok12.5b. However we note that Grp still have not record contracts for 8 LPG carriers worth US$1.2b (Nok 2.8b), expected to be made effective by end 3Q11 or 4Q11.

We note that grp also has guidance for Ebitda margins to remain above 15% and for FY11 rev to remain ard Nok11-12b. Orderbook at approximately Nok16b underpins earnings visibility till 2013.

Genting SP/MBS

Genting SP/MBS: MBS appears on track to earn US$1.75b EBITDA, far exceeding the US$1b expected by its CEO and analysts who underestimated MBS earnings potential were promised ‘egg-wiping face towels’.

Strong rev attributed thanks to record VIP rolling revenues, mass market and slot play, which saw VIP rolling chip vol jumped some 63% to US$16.7b, downplaying investor’s concerns that SG’s gaming growth could slow as the global economy cools. Add that qtr would have been even better had the casino had better ‘Luck Factor’. We note that strong bullish sentiments on SG gaming mkt could see some positive spillover for Genting SP, on back of high VIP rolling chips vol.


Ramba: Could see positive sentiments, after Co annouced higher-than-expected production from the first of two new wells at its Jatirarangon block in West Java, Indonesia, and has successfully doubled its gas production from its West Java assets. Co. has positive guidance that they could possibly triple production by year’s end, should the JRR-6 development yield positive results.


SMRT: Annouced 2Q12 results which was below expectations. Rev at $261.1, +6.1% yoy and +3.2% qoq, while net income at 34.1m, -25.6% yoy and -2.1% qoq.

Healthy ridership growth drove rev, +3% qoq to $261m, but this was offset by a +4% qoq rise in operating expenditure, notably on higher electricity and depreciation costs. Mgt reiterated its guidance that FY12 profit may be weaker than FY11 ($161m). Post Circle-line 4&5 opening on Oct 8, weekday CCL ridership jumped to a healthy 300,000/day (Sept: 180,000/day), however, expenses look likely to remain a drag near term.

At current price, valuation appears fair, with grp trading at an estimated 16.4x FY12 P/E vs its historical 10 yr forward P/E average of 15.6x. Ratings are as per follow:

Citi maintains Sell with $1.73 TP,
JP Morgan Maintains O/w with $1.90 TP and
Nomura maintains Neutral with $2.05 TP.


OCBC: CIMB has Technical Sell Call. House note that the rebound from its $7.68 low reached the 38.2% Fibonacci Retracement level. This shows that the stock may be poised for a correction soon. If prices fail to swing above the flag resistance (now at $8.70) over the next few days, expect selling pressure to accelerate.

The correction will likely drag prices back towards $8.16, $8.03 and possibly even $7.68. MACD and RSI are still rising. However, these signal lines could reverse if the bulls fail to push above the flag resistance. Recommend traders Sell into strength as it looks like a good option here, especially near the $8.66-8.70 levels. House will
only review r call if prices swing above the $8.89 level, its 50% FR level.

China Fishery

China Fishery: CIMB has Technical Buy Call. House note that prices is still trapped in a downtrend channel but a short term bottom could have been formed at the S$1.00 low. If house is right, prices should rebound towards its 30-day and 50-day SMAs, at $1.12 and $1.16 respectively, soon.

A stronger rebound towards the downward slopping resistance trend line (now at $1.21) is also possible if these moving averages are taken out. Buying momentum are picking up and this evident from the improving technical landscape. MACD has staged a positive crossover while RSI has also hooked upward. Any pullback is an opportunity to accumulate. However, always put a stop at below $1.035-1.00.

SIA Engineering

SIA Engineering: Announced good set of results which was in-line. Rev at $272.4m, -0.2% yoy and qoq, while net profit at $71.2m, +7% yoy and +4.6% qoq, while operating margins at 12.5% was flat yoy.

Strong bottom-line was due to performance improved in the 2Q as share of profits from associated and JV Co’s grew 7.1% yoy and also due to a write-back of tax provision amounting to $3.1m.Group operating profit slipped 1.2% to $34m, due to the impact of the weaker greenback, offset by exchange gains of $7.1m from hedging and the revaluation of net US dollar-denominated assets.

Going forward, grp expects demand in the short-term to remain stable, although uncertainties in global mkts could hurt the aviation industry. Vigilance on cost and efficiency management will remain key priorities, while on the business side, broad range of services and the grp's network of joint ventures place grp in an advantageous position to continue to capitalise on growth opportunities. Co. has declared an interim div of 6c/share.

We note that grp’s balance sheet remains strong, with grp in a strong net cash position of $386.9m, and at current price, grp trades at an annualized 14.6x FY12 P/E, in-line with its historical average of 14.8x.

SG Market

SG Market: Spore shares are unlikely to push much higher following flat close on Wall Street last Fri and lacklustre openings on regional bourses. The benchmark STI is also approaching a key Fibonacci resistance at around 2920 with stochastics and RSI hovering near overbought levels. Support is tipped at around 2820. Focus will be on slew of corporate results released late Fri – SMRT (below par), SIAE (in-line), SingLand/UIC (above expectations with murky outlook), GEH (net profit -75%) plus contract wins by Sembcorp marine (US$300m) and STX OSV (Nok1b) and profit warning by Otto. Attention this week will be on bank results due 2/3 Nov.

Friday, October 28, 2011

Sembcorp Marine (Flash)

Sembcorp Marine (Flash): SembMarine and Indonesia's Scorpa Pranedya have landed long-awaited FSO contracts with ExxonMobil for the multi-billion dollar Banyu Urip oil projeject in Java. No official anncmt or details from SembMarine yet.

Both companies have been in the running for the contracts. In Aug, ExxonMobil confirmed the award of the 1st EPC contract for the Banyu Urip to a consortium of Triparta Engineers & Samsung Engrg to build onshore facilities.

Wing Tai

Wing Tai: Credit Suisse downgrades to Neutral with TP$1.46 down from $1.53 on slower sales assumption. Notes that while sale of units are still ongoing, luxury project sales will likely be slow on weaker global economic outlook. Positives include low net gearing of 0.22x and deep discount to book of 47% but does not see any near term catalysts.

Interestingly, while RNAV is norm positive to book, we see CS estimate a loss to book. Of course this could be included in NPV of future development profits.
This could imply pricing falling land values in their models.

Genting SP

Genting SP: Citi note that grp may produce a positive surprise when it reports 3Q results, helped by the Formula 1 race and a nine-day holiday in Indonesia, with strong results posted by rival MBS, which reported 3Q EBITDA of US$413.9m with growth in VIP rolling volume and mass-market drop.

The house sees potential upside to its estimate of Genting SP's 3Q EBITDA at $421m, and keeps a Buy call with a $2.30 TP. Citi also revises its 2011 forecast of Singapore''s gaming market size to US$6.1b from US$5.9b, reflecting MBS's results. On estimates, SG is on track to generate as much (gross gaming revenue) as Las Vegas. Meanwhile Macquarie has neutral call with $1.62 TP.


Ezra: FYAug11 results. Topline above consensus, but net profit slightly below.

4Q revenue at US$220m, double yoy, +33% qoq.
4Q net profit at US$12.4m, -42% yoy, but +88% qoq, largely due to higher other operating income.

Full year revenue at US$559m, +58% yoy, with growth across the Offshore Support Services Division, Marine Services Division and Subsea Services Divison.
a) The increase in revenue from Offshore Support Services Division was mainly due to the contribution from 6 new Platform Supply Vessels and 4 AHTS vessels.
b) The increase in revenue from Marine Services Division was mainly due to an increase in procurement and eqpt supply and engrg activities.
c) The increase in Subsea Services Division was due mainly to inclusion of operations of a vessel delivered in FY10 and maiden contribution by the newly acquired AMC Group.
Full year net profit at USS$40.4m, -47% yoy.

Gross margins continued to fall to 13.7% in 4Q11, vs 16.9% in 3Q11, and 29.8% in 4Q10, largely due to the lower margin AMC. The silver lining is that absolute gross profit rose to US$30.1m vs US$27.8m in 3Q11, which may suggest that AMC is starting to see some improvement.

Other operating income remains lumpy, and was up 72% yoy for 4Q11, mainly due to a one-off gain on disposal of fixed assets and gain on dilution of interest in associated companies, which offset the larger FX loss of US$4.3m (vs loss of US$0.8m in 4Q10), and decrease in fair value gain on derivative instruments.

The group is cautiously optimistic on the outlook of the sector over the next 12mths, says demands for medium to large sized offshore support vessels are expected to continue to be good.

No dividends declared for this yr, vs 1.5cts last yr.

Stock trades at 16.5x P/E, 0.8x P/B at the last close of $1.
Pre-results, the Street had already lowered expectations for Ezra. CIMB cut TP to $0.80 from $1.55, DnBNOR cut TP to $1.20 from $1.45.

Indofood Agri

Indofood Agri: 3Q11 results below Bloomberg consensus.
Revenue at Rp 3.28 tr, +43% yoy, +2.4% qoq, compares with consensus of Rp 3.95b.
Net profit at Rp 211.3b, -18.4% yoy, -62.3% qoq, due to decline in gross margins (3Q11: 32%, 2Q11: 33.4%, 3Q10: 37.5%), as well as dilution effect following the spin off of PT SIMP on 9 Jun 2011 and disposal of 4.9% interest in Lonsum to external parties in Dec 2010.

The Plantation Division’s total revenue increased 19% yoy, largely due to higher sales volume of palm pdts (CPO and palm kernel) and higher ASP of CPO, seeds and rubber.
Edible Oils & Fats Division total revenue increased 48% yoy, du eto higher sales volume of cooking oil and by-pdts, as wel as higher ASP of key edible oil pdt groups.
Gross margins declined due to higher cost of pdtn due to timing in fertilizer application and higher purchases of fresh fruit bunches (FFB) from plasma farmers / third parties.
FFB nucleus and CPO pdtn in 9M11 grew 10% and 16% yoy to 2.023m tons and 0.6m tons rptvly. The Group also achieved additional RSPO certification for ~25k MT of CPO from one of Lonsum’s South Sumatra palm oil mills, bringing total certified CPO to ~195k MT.

Mgt notes, despite the current European debt crisis, the fundamentals for palm oil remain supported by consumption growth from India, China and other emerging Asian economies, and coupled with the demand for biodiesel driven by govt mandates in Europe, Brazil, and Argentina. Also expects the demand for palm oil products in Indonesia will continue to be supported by the demand from the food and beverage industry and population growth.

Pollux Properties

Pollux Properties: Has exercised option to purchase remaining unit no 537 of plot in East Coast Road. Co has acquired 531 to 537C East Coast Road, approx 1.4k sqm of freehold land with plot ratio of 1.4, for $16.9m and intends to redev the property. Co intends to finance this acq through internal resources and bank borrowings. This acq is equivalent to 106.1% of co's mkt cap of $15.9m as at 27 Oct.

Loyz Energy

Loyz Energy: Signs binding MOU with STP to purchase a portion of participating interests in rights to explore for oil in the Taranaki Basin, New Zealand for US$1.5m. The combined land area of the permitted area is approx 864.1 sq km.

Starhill Global REIT

Starhill Global REIT: Rev at $44.0m -2.6% yoy flat qoq with net loss compared to $20.9m profit prev quarter. NPI at $34.4m was also -3.7% yoy -3.2% qoq. Loss was due to unrealized loss in cross currency swaps which was entered in relation to acquisition of Japan properties. Co has also announced news for a JPY13b term loan to finance the swaps and provide a natural currency hedge for its Japanese properties. The SGD received from the swaps will be used to reduce loans. Co expects its gearing to increase from 30% to 32%.

DPU remained unchanged at 1.0c same as prev quarter with annualized yield of 6.8%

Co has an ongoing dispute with Toshin Development, its master tenant in Ngee Ann City, which contributes 19.5% of gross portfolio rental. Co has brought the matter to court which was dismissed and is intending to appeal again.

Wing Tai

Wing Tai:1Q Net profit was $25.1m +281% yoy -35% qoq coming in 13% of consensus. Rev at $109.0m was 58.8% yoy -5.3% qoq from sales in Helios and progressive recognition of L’VIV. Profits fell qoq attributed to slower sales. Sales activity has slowed even in more resilient low/mid-end segment with declining take up for Foresque. Other ongoing launches are Helios and co has previewed Le Nouvel Ardmore with commencement of construction on Jean Nouvel Residences. Co highlights that URA’s flash estimate shows property price index increase continues to moderate, increasing by 1.3% in 3Q compared to 2.0% in prev quarter, the 8th consecutive quarter rate of increase has moderated.

DB maintains Hold with TP$1.45 citing undemanding valuations but macro uncertainty dampening high-end sales. Notes co has been disciplined in acquisitions and moderation in land prices could offer more attractive opportunities to restock landbank.


CMA: CIMB has Technical Sell Call. House note that they were stopped out of its short term buy on the stock previously, as the rebound failed to materialize, suggesting that it is still in correction mode.

The bullish divergence saw on both its MACD and RSI likely suggests that a possible triangle is in the making. Furthermore, the MACD and RSI have stalled at their respective resistances, which would suggest that bulls have to be very cautious. As long as prices stay below the critical resistance at $1.375, the triangle view is still intact. A sharp thrust downwards is likely once this triangle pattern ends and this thrust could send prices to below the $1.13 low, probably testing the psychological $1.00-1.05 next.


CMA: CIMB has Technical Sell Call. House note that they were stopped out of its short term buy on the stock previously, as the rebound failed to materialize, suggesting that it is still in correction mode.

The bullish divergence saw on both its MACD and RSI likely suggests that a possible triangle is in the making. Furthermore, the MACD and RSI have stalled at their respective resistances, which would suggest that bulls have to be very cautious. As long as prices stay below the critical resistance at $1.375, the triangle view is still intact. A sharp thrust downwards is likely once this triangle pattern ends and this thrust could send prices to below the $1.13 low, probably testing the psychological $1.00-1.05 next.


NOL: CIMB has Technical Sell Call. House note that prices fell sharply to a low of $0.98 in Aug before trading sideways for the last two mths or so. It has formed a triangle pattern, which is a continuation pattern. It means that there is likely one more downleg ahead.

The long term technical landscape remains bearish with its MACD now starting to turn down again after testing the zero line while its RSI has not breached the 50-60pts mark. Overall believe that prices are likely to make its way lower soon, likely to test $0.90-0.94 levels. Aggressive traders may opt to go short with a tight stop placed above $1.19 or $1.22. Taking out the $1.22 would mean that prices could rebound towards the upper end of its downtrend channel resistance at $1.30.

SG Banks

SG Banks: Goldman Sachs has sector report. House forecast SG banks’ core net profit to be lower by 5% yoy/4% qoq this quarter, mainly weighed by UOB. Of the Singapore banks, see OCBC reporting best on qoq and yoy basis with estimation at: OCBC $573mn, +1% yoy, DBS $712mn, -1% yoy, and UOB $588mn, -15% yoy. Corresponding Bloomberg consensus estimates are $544m, $695m and $600m respectively.

House rating is below consensus and recommend to Buy DBS only on undemanding valuations. Add that SG banks have largely underperformed since last results, with DBS the most, largely reflecting concerns of higher NPLs and slower growth expectations. Consensus has cut FY12-13E earnings by 8-12%; and house lowers FY12-13E earnings by 13-22% to now below consensus by 5-16%, given slower topline growth and higher credit costs.

Despite weak earnings outlook, retain Neutral sector stance, given SG banks’ not demanding valuations; trading near +1 standard deviation below median P/B. Also hink 3Q steady earnings are also likely to be supportive of share prices near-term.

Suntec REIT

Suntec REIT: Annouced the sales of Chijmes for $177m or $1385/psf ppr to an entity whose shareholders include Pua Seck Guan's Perennial Real Estate and OSIM boss Ron Sim. The sale represents a 23.2% premium or $33.3m over the valuation of $143.7m as at 15 Oct11, and a 3.9% annualized yield on Chijmes’ net property income of $5.2m for 9M11.

Perennial believes the acquisition provides good synergistic opportunities between the Chijmes and Capitol sites which it jointly owns 40% with Ron Sim. Site with a gfa of 127,793 sqft, was recently valued by at sgd143.7m by DTZ.

For proforma financial effects, using FY10 financial statements, Suntec REIT is expected to recognize an estimated gain on the divestment of approximately $39.5m, and the divestment would increase grp NAV by $0.018/unit to $1.801/unit. CIMB note that while the divestment of Chijmes could ease concerns associated with AEI funding at Suntec City Mall, balance sheet remains leveraged at near 40% even if all proceeds were channelled towards debt repayment and house remain wary of impact from a slowing office market and maintains U/pm with $1.18 TP.

Sembcorp Marine

Sembcorp Marine: Co. will record a $54.4m refund of tax in its income statement in due to the favourable tax assesment following the settlement of its disputed FX transactions. Grp has been allowed a deduction from its losses from this recorded in FY09 and FY09. As tax had provisionally been paid pending the decision and a refund will be received from IRAS in due course.

Kim Eng note that if refunded by this financial yr, this reversal will provide a 7% boost to house forecast for FY11 to $808m. Stress that this is a one-time adjustment, but believe that it may be applied, if SMM so chooses, towards paying out its dividends. The $54.4m represents around 2.6c/share. Fundamentally, house remain sanguine on SMM's prospects and the potential for its share price recovery and keys Buy Call with $4.95 TP.

Cache Logistics Trust

Cache Logistics Trust: Announced good set of 3Q11 results which was in-line. Net property income at $15.99m, +11.4% yoy and +3.2% qoq, while distributable income at $13.4m, +8.9%yoy and +1.5% qoq. DPU at 2.095 cents represents an annualized yield of 8.6% vs 8% yoy.

Strong results was due to the quality acquisitions completed this yr and the considerable prudence placed in managing costs, with grp’s portfolio 100% occupied with a weighted average lease to expiry of 4.9 yrs, while the average island-wide monthly gross rent for warehouses rose by 2.9% on a quarter-on-quarter basis. Going forward, grp remains positive on outlook and will continue to pursuit the enhancement of its portfolio organically and with value-add acquisitions.

We note that grp’s balance sheet remains strong, with aggregate leverage stood at 30.4%, giving room for grp to gear up for potential acquisitions, while grp trades at 1.1x P/B with an annuzlied 8.6% distribution yield. SCB maintains O/p with $1.10 TP.

Mapletree Commercial Trust

Mapletree Commercial Trust (MCT): good set of 2QFYMar12 results.
DPU at 1.33cts, +21.4% yoy, in line with consensus, and above mgt forecast of 1.22cts, on the back of solid performance from VivoCity and lower financing cost (all-in interest cost of 1.95% vs Deutsche forecast of 2.43%).
Revenue and NPI rose 1.4% and 2.8% YoY largely due to VivoCity partially offset by lower income from PSA Building. Vivo’s operating performance remains robust, with 1H shopper traffic and tenant sales up 13.9% and 9.4% respectively and strong reversion growth of 20%. Vivo saw high retention rate of 98.5%, with rental uplifts of ~20%, and full occupancy at 99.9%.
Construction for ARC remains on track (>90% completed) and is on schedule for completion by Dec 11. Pre-commitments have increased from 1/3 to >50% at rents slightly above mgt’s $8.00psf forecast and mgt
plans to progressively open some F&B and retail tenants upon completion to cater to the office tenants. In Vivo, mgmt is still calibrating AEI plans with space surrendered by Page One (27k sf) to be decanted and re-tenanted. This could drive DPU growth of ~10% in FY12/13E.
Reit trades at 0.94x P/B (vs CMT and FCT at 1.2x P/B) and FY12e yield of 6.1-6.6%.
StanChart reiterates Outperform with TP $0.96.
Deutsche maintains Buy, lifts TP to $1 from $0.98.

Genting SP

Genting SP: positive read through from Las Vegas Sands Corp strong 3Q results last night.
LVS shares were up 4% at US$47.20 after hours on the stronger-than-expected results. LVS posted a profit of US$424.9m, up from US$214.5m yoy. LVS profit surged as strong revenue in Asia drove higher margins, particularly at Marina Bay Sands.
At Sands China (1928.HK), the company's majority-owned Macau subsidiary, 3Q profit rose 42%, driven by growth in higher margin mass table and slot businesses and strong hotel, retail and convention revenue. Its profit reached US$278.3m, up from US$196.6m yoy, as revenue rose 11% to US$1.2b.
MBS in Spore saw net revenue jump 63% on robust VIP, mass gaming and slot volumes, pushing adjusted profit from the property up 71%. Cash flow at MBS was a record US$413.9m, vs US$405m in 2Q.
Technically, the stock has rebounded nicely off the $1.42 low in early Oct. Share price is now above the 50day MA and RSI and MACD indicators are still positive. The stock is a possible breakout play if it can clear the $1.70 level (which is likely). First resistance at $1.80, then $1.90 (200day MA). Support at $1.60 (50day MA).

SG Market

SG Market: Spore shares are likely to move higher, as agreement reached by European leaders to contain the Greek crisis has lifted the cloud of doom hovering over markets although long term execution challenges still exist. The benchmark STI has surged 5.7% in 4 straight session with next target set at 2920

Stocks in the news include Sembcorp Marine, which will recognise a $54.4m tax writeback from its forex losses. Property companies will be in focus after earnings from Mapletree Commercial and Wing Tai. Indofood Agri also posted 3Q results, which seems below expectations. Genting expected to be lifted by good set of results from rival LVS.

Thursday, October 27, 2011


SATS: +2.1% to $2.40 in active trade after the company announces sale of its UK non-aviation food business Daniels Group for £151m, which could rise to £159m upon meeting certain EBITDA targets.

DMG notes the price is $23m over the NAV of the divested units, but after factoring forex translation and expenses, the sale will result in a $4.7m loss. Following this transaction, SATS will once again be dominated by Spore sales contributing more than 90% of group revenue. However, balance sheet will be strengthened with the disposal of the UK business, with net cash of over $400m.

Adds that 2QFY12 operating data continue to exhibit a positive trend, with higher flights handling and passenger volume boosted by rising popularity of low cost carriers. House likes SATS for its cash-generative attributes and leverage to the growth of LCC sector and has a target price of $2.53.

Technicals are however, heavily overbought at these levels and stock may undergo a pullback before resuming its uptrend.

Ziwo / Sky One Holdings (Profit Warning)

Ziwo: Profit warning. Co expects a significant drop in revenue and net profit for 3Q2011.

Sky One Holdings: Issues profit warning. Expects a loss for HY2012 due to weak demand from HK and China

Samko Timber

Samko Timber: Fire incident had occurred at our Jambi plant’s raw material warehouse on 18 Oct. Damages were limited to warehouse building and raw material inventory with total carrying value of $0.4m. Co has insurance in place but are unable to ascertain amt claimable yet.

Cheung Woh

Cheung Woh: Several major customers of co's HDD component segment have suspended operations in Thailand due to severe floods affecting their facilities and supply chain. As a result co expect rev of HDD segment to decline and this segment is expected to report losses in the 3rd and 4th quarter for financial year ending 28 Feb 2012.

HPH Trust

HPH Trust: Deutsche maintains Buy but trims TP to $0.80. House note that despite the start of the peak season, 3Q container throughput growth decelerated from 2% yoy in 2Q to negative 3% yoy in Shenzhen, and from 7% yoy in 2Q to 2% in Hong Kong. Thus, trim throughput growth forecasts for HPH Trust from 4% yoy to 2% yoy in 2011 and from 5% yoy to 2% yoy in 2012.

Add that current share price already reflects an expected slowdown and at the current price, the Trust is offering a prospective DPU yield of 8.2% in FY12.


SATS: Confirming earlier speculation, SATS has announced the sale of Daniels Grp to a Hain Celestial Group for a total consideration of £151m ($305m, or 28c/SATS share), with potential for further upside (capped at £13m) if certain EBITDA targets are met.

Citi note that near term, the confirmation of the deal could provide some excitement over the possibility of yet another special div, however longer-term questions remain as house view earnings growth remain subdued due to margins pressure as well as increased competition at Changi, notwithstanding recent efforts by mgmt to find new growth segments (such as bidding for the new International Cruise Terminal), while Co. is also vulnerable to a further deterioration in global economic conditions. House maintains Sell with $2.35 TP.

Jiutian Chemical

Jiutian Chemical: Profit warning. Expects to report a higher qoq loss for 3Q11. However, yoy losses for Q3 is expected to be significantly lower. The higher loss for Q3 against Q2 is due to longer than expected plant closure for repair and maintenance, lower DMF selling prices, in addition to higher cost of production.


GMG: Announced plans for a renounceable rights issue to raise Gross Proceeds of $349.1m.
Co. has plans to issue 3.8b new shares at an issue price of $0.091, on the basis of 1:1 rights issue. To show its support for the rights Issue, Sinochem (the controlling shareholder of GMG) will subscribe to 60% of the rights issue to show its support for the fund raising.

Abt 80% of the proceeds raised will be used to enhance Grp’s financial capacity and flexibility in pursuing strategic growth and acquisition opportunities, while the remaining 20% will be used for working capital purposes. We note that theoretical ex rights price of the share is at $0.163 and the rights offer represents at 61.3% discount to the closing price of $0.235 as of 25th Oct 2011.

Recall Mon, GMG announced good set of 3Q11 results which was above estimates. Rev at $110.4m, +183% yoy and +8.3% qoq, while Net Profit at $24.4m, +49.3% yoy and +8.3% qoq. Gross Margins improved significantly at 15.3% vs 11.1% qoq, signifying good progress after the acquisition of Teck Bee Heng which increased grp’s processing facilities significantly. Strong rev was attributed to higher ASP and Tonnage Vol. At current price, valuations are compelling, with grp trading at an annualised 11.2x FY11E P/E while balance sheet remains strong with grp in a net cash position.


Wilmar: Sucrogen increases initial offer of A$115m ($152m) to buy Prosepine Co-op Sugar Mill by A$5m. This matches Cofco Grp’s Tully Sugar’s bid A$120m but the Prosepine board was reported to be of the view that Sucrogen’s offer was superior to Tully’s which had a no. of conditions attached. Wilmar trades at fwd P/E of 15.5x vs Mewah at 7.8x


STX OSV: share overhang concerns may re-surface again. Korea’s MoneyToday reported yday, that the STX Group is considering selling its shares in STX OSV by early next year, citing unidentified industry officials. The South Korean group may raise ~KRW 700b if its entire 50.7% is sold, said the newspaper.

Mapletree Industrial Trust

Mapletree Industrial Trust (MINT): 2QFYMar12 results in-line.
DPU at 2.05cts, +3.5%qoq.
Revenue and NPI rose 8.0% and 8.6%qoq rptvly, driven by contributions from the newly acquired JTC portfolio and also positive rental reversions.

For the 4th consecutive quarter since listing, MINT’s portfolio has achieved higher avg occupancy and higher avg passing rents although retention ratio was lower at
79.4% vs. 88.7% last quarter.
At end-Sep ‘11, portfolio occupancy was 94.5% (1QFY12: 94.3%, 4QFY11: 93.2%, 3QFY11: 92.3%) while avg passing rents was $1.54 psf pm (1QFY12: $1.52psf, 4QFY11: $1.49psf,
3QFY11: $1.45psf).

NPI from the flatted factories grew 15%qoq, helped by the maiden contribution from the newly acquired JTC flatted factories portfolio. New leases were signed at $1.82psf compared to the passing rental of $1.26psf prior to renewal. MINT’s portfolio recorded strong positive rental revision across all segments, with business park space average gross rental rising 19% while its flatted factories, stack-up/ramp up and warehouses saw rental growth of 30-36%.

Citi keeps at Buy, raises TP to $1.34 (from $1.30).
StanChart keeps at Outperform with TP $1.30. Notes the Reit has a DPU yield of 7.5% for FY12E, the highest amongst S-Reits with free float >$1b.

Suntec Reit

Suntec Reit: 3Q11 results were inline to above expectations.
Revenue at $68m, +7.4% yoy, +10.8% qoq, driven by consolidation of income from a larger stake in the Suntec convention centre.
Distributable income at $56m, +22% yoy, +0.3% qoq.
DPU was 2.53cts, ~6% ahead of consensus.

Operating data however, showed rents and occupancy weakening. Suntec reported average signing rents of $8.41psf pm (excl leases with rental caps) in 3Q11, -9.4% qoq. This could be attributable partly to the UBS renewal, which could be lower than prevailing market rate due to the large space requirement.
Office occupancy in Suntec Office Tower weakened slightly to 98%, bringing total office portfolio occupancy to 98.6% (from 99.2% in 2Q).
Suntec City mall’s passing rent fell further to $10.10 psf pm in 3Q, from $10.67 psf pm in 2Q. The mall occupancy stayed low at 96.5% as the manager continued to study potential asset enhancement plans for the mall.

StanChart notes Suntec has the highest net gearing of 41% amongst SREITs. Believes
Suntec’s gearing could rise further if capital values decline or if the manager undertakes asset enhancement initiatives (AEI) for Suntec City Mall. Notes, Suntec could sell assets, such as the strata-titled office units in Suntec Office Towers to reduce its gearing, or could raise new equity to reduce gearing.

Street has mixed ratings.
StanChart reiterates Underperform with TP $1.
Nomura maintains Buy with TP $1.64, notes Suntec is currently trading at 0.7x FY12F PB and a 7.9% FY12F DPU yield.
Citi maintains Buy with TP $1.53.

SG Market

SG Market: Spore share are expected to open slightly in the positive following Wall Street’s strong finish but gains are likely to be limited as the EU summit fell markedly short of details and there are still plenty of uncertainties. With technical indicators approaching overbought levels, resistance is tipped at 2800 with support at 2680. On corporate earnings, Suntec, CDLH and MIT all posted 3Q results, which were largely in line.

Tuesday, October 25, 2011


Mewah: JPM cuts TP to $0.45 from $0.60, has Neutral rating.
Says the downward revision in Sep (by as much as 50%) of Indonesia export tax for refined palm products essentially makes Mewah’s products less competitive than its Indonesian counterparts in the export market. Estimates that ~60% of Mewah’s revenue is derived from exports. Notes with all of its existing facilities operated out of Msia, believes Mewah risks a structural de-rating if no countermeasures are proposed by the Msian govt as this could lead to a gradual decline in volume and margins for the company.

Notes CPO price has fallen ~25% YTD, and with Mewah’s profitability having a strong correlation to CPO price, believes 2H11 will remain challenging. Tips the company to report a still weak 3Q11, and the possibility of a quarterly loss cannot be discounted.
Trims FY11E/FY12E/FY13E earnings estimates by 43%/36%/28%, on the back of lower CPO price forecast, as well as lower volume and weaker OM/MT margin assumption on the back of increased competitiveness from Indonesian exports

Cautions that share price may overshoot to the downside should 3Q11 results significantly disappoint consensus, with longer term downside risks being no revision to the Indonesia/Malaysia palm oil tax structure, resulting in a structural de-rating to the Malaysian refining sector.

Genting SP

Genting SP: +0.6% at $1.63 after the group Monday announced the disposals of E-Genting and Ascend International (IT, consultancy services) to sister co Genting Msia, for a total of RM50m and Genting Alderney (online gaming services) to Resorts World Inc. for £3m and 50% of WorldCard International (manages WorldCard loyalty programmes) to Resorts World Inc for US$1.
CIMB says the related-party transactions might be perceived negatively at first glance, "but these assets offer no direct synergies to Resorts World Sentosa. Their disposal should allow the channeling of more resources to the Integrated resort." The house retains its $2.18 target price and Outperform rating.
Says the sale prices seem fair and "since Resorts World Sentosa is Genting SP's core money spinner”, views the rationalising of its non-core assets a sensible move that should allow the company to channel its attention to the continuous development of the integrated resort. Adds, current valuations "offer good buying opportunities into Genting SP's long-term growth prospects."

Separately, Nomura says Genting SP could see the growth of its domestic gaming market capped by the increase in casino exclusion orders barring individuals from entering the city-state's two casinos. Notes govt data show 3Q total casino exclusion orders rose 24% on-quarter to 58,350 (or 2.4% of the Spore population between 21-79 years old), including a 60.7% rise in the total no. of people who applied to exclude themselves. Says, "the continuous rise in exclusion orders could have a negative impact on the domestic business", noting the 2010 surge in the mass-market gaming business was largely led by "hardcore" gamblers. "We believe gaming's growth potential, especially in the domestic mass-market business, could be capped as more people are turning for help (in applying for self-exclusion)."
While Genting SP’s valuations are inexpensive, Nomura believes the casino operator has mediocre growth prospects unless junket licenses are issued, keeping a Reduce rating with TP $1.41.


Olam: CS maintains Outperform with TP$3.85.

At the 2008-09 lows, consumer staples was the best performing sector,
outperforming MSCI Spore by 30% over the nxt 6 mths. It was also best performing sector (together with Industrials) since the 5 Oct lows.Continue to favour Olam, with its business model largely resilient against both economic and commodity cycles.

Near-term catalysts include financial closure and award of turnkey contract for its US$1.3b Gabon fertilizer project, and further, the announcement of more earnings-accretive deals.

Olam still trades at 1 std dev below its historical avg P/E multiple, and at close to 2008-09 P/B lows.


Yongnam: Has secured three contracts worth a total of S$30.4m comprising two contracts for the MRT Downtown Line 3 and a contract for the Victoria Theatre and Victoria Concert Hall.

We note that latest win brings YTD orderwins to $270.6m vs 242.7m total orderwins for FY10, while current orderbook stands at approximately $440m, vs FY10 rev of $330.3m, underpinning earnings visibility till 2014. CIMB has Outperform call on the stock with TP of $0.40.

Leader Env

Leader Env: Substantial orderbook win. Secured 9 industrial wastegas and wastewater contracts btwn 1 May and 30 Sep 2011 of ~ Rmb146.6m. 3 contract were for dust elimination cum desulphurisation worth approx Rmb99.0m to design, fabricate and install a total of 9 units of industrial wastegas treatment sys. These are scheduled to commence works in Sep 2011 and will be completed in FY2012. The remaining are of smaller scale, including one dust elimination contract and five industrial wastewater contracts of approx Rmb47.6m. Co's latest order book is now Rmb176.6m vs 1H11 revenue of Rmb 291m.


Hyflux: JV Hyflux Utility signed a MOU with Yangzhou Chemical Industrial Zone Administrative Authority. This MOU provides for the exclusive right of Hyflux Utility to commence due diligence on the feasibility of implementing Phase 3 of the Yangzhou Qing Shan waste water treatment plant with a designed capacity of 20k tons per day.

Sound Global

Sound Global: Won a bid to build and operate wastewater treatment plants in five rural towns, the regional water supply and wastewater treatment in Jiangyan City, Jiangsu. The scope includes the plants with daily treatment capacity of 13k tons, the pipe networks of both the wastewater and water supply. The concession period is for 25 yrs with a total invmt of ~Rmb480m with a construction period of 14 mths.


Water: Deutsche initiates on the China water and waste sector. Notes China became the world’s largest investor in renewable energy in the 11th Five-Year Plan period, and expects the country to become the largest investor in environmental protection in the 12th Five-Year period, with over Rmb1tr allocated to the sewage and solid waste treatment industry. Believes China’s environmental players should be presented with abundant project opportunities, driven by rising demand from local govts to meet pollution targets, and increasing supply from the privatization of the sector. Also forecasts project returns to improve as treatment tariffs increase to promote water conservation and attract private investment.
Expects the regulatory environment to become more supportive, given the Chinese govt’s positive stance on environmental protection, and expects the upcoming release of the 12th Five-Year Environmental Industry Plan to provide a clearer investment roadmap and to act as a short-term catalyst for the sector.
Deutsche has Buy ratings on the HK water players (BEWH, China Everbright, Guangdong Investment), but also has an unrated feature on Sound Global in its report.

The Deutsche report coincides with positive announcements from Spore’s water-related counters.

Elec & Eltek

Elec & Eltek: Suspension Thai ops in Pathumthani and Ayutthaya due to floods. The production facilities contributed approx 11% of co's rev, however co intends to shift production to other facilities to China and expects minimal interruption. Co also has comprehensive insurance coverage including loss of profits. Co will make a further announcement if material impact from the floods are anticipated. Co trades at fwd P/E of 8.1x.

Aus Group

Aus Group: Awarded a A$22m contract to construct a low grade pilot plant for Rio Tinto in the Pilbara region, Western Australia. Co will cover the design, installation, construction and commissioning of the low grade iron ore pilot plant which is scheduled to commence production in Feb 2012. Co has a current order book of A$330m with this contract. Aus Group has current P/E of 9.2x

Courage Marine

Courage Marine: To acquire vessel for US$26.6m. The vessel is a supermax newbuild with carrying capacity of approx 57k dwt. Vessel will be registered in Panama and operated by co upon its delivery. 70% of the consideration is to be funded by bank borrowings. No third party valuation has been performed and there has been no recent published sales but Directors are of view that transaction is fair and reasonable. The seller Zhejiang Zengzhou Ship Building is to the best of knowledge an independent party.

Co has posted losses in previous two quarters and has guided for financial performance to be adversely affected for the rest of 2011.


SATS: Co. could see some interests on back of strong operating data Changi Airport, with Sept traffic continues to soar, at 3.82m +12.5% mom, taking passenger traffic for first 9 mths to 34.2m, and on course to handle a new high of 45m this yr. Sept aircraft movements 25,500 +16.4% yoy, and 221,900 +13.8% yoy for first 9 mths.

Low Cost Carrier traffic remains buoyant +26% yoy in Sept and now accounting for 25% of total passenger movements at Changi, while full-service carriers +7.1% yoy. Sept cargo movement at 154,400 tons +2.2% yoy, and 1.38m tons +2.5% yoy for first 9 mths.


Olam: Acquired the bulk spices assets and businesses of Vallabhdas Kanji (“VKL”) for a US$18m. The assets acquired include a spice processing facility in Cochin, India, a pepper grinding factory in Vietnam and its sales, distribution operations and capsicum production in North America. VKL is a leading processor & exporter of multiple spices in both bulk and consumer. Besides processing and blending for industrial customers, it also offers retail packs for spices and seasonings to customers across US and Europe.

Olam is trading a fwd P/E of 11x compared to Noble at 10.6x


OKP: Generally within consensus. 3Q rev at $25.5m -30.4% yoy -11.1% qoq with net profit $4.9m +8.3% yoy -29.1% qoq. Gross margins yoy was higher due to certain design-and-build projects which yielded higher gross profit margins, better proj mgmt and tighter cost controls. Decrease in rev due to substantial projects completed and lower % of rev from newly-awarded projects. Construction segment accounted for 84.3% of rev and maintenance 15.7%. Order book based on secured contracts stands at approx $433.4m.

At 9M EPS of 5.8c, co trades at annualized P/E of 7.3x.


CMA: Co-op agreement with Suzhou Industrial Park (SIP) government yday to develop the largest shopping mall in Suzhou. Under the agreement, both parties will jointly develop and own a shopping mall and two office towers on the prime site in Suzhou Centre. The total dev cost is expected to be abt $1.4b and CMA’s share is approx $700m.

The development, with a total GFA of about 460k sqm, is in the heart of the western CBD of SIP, next to the renowned Jinji Lake and near the traditional city centre in Suzhou. With direct connectivity to two metro lines (line 1, which will be operational by next year, and the future line 6), it is to be easily accessible by Suzhou’s 10.5m residents. The retail area of GFA approx 250k sqm will house an Olympic-size ice rink and a Cineplex with 2 Grade A office towers with total GFA of 60k sqm.

CMA trades at current P/B of 0.8x.

Yanlord & Ho Bee

Yanlord & Ho Bee: Yanlord with Ho Bee and Shanghai Youyou Group in a 60%, 20%, 20% JV, acquires 2 adjacent prime residential sites with a combined GFA of 500k sqm in Zhuhai for Rmb3.0b at an avg purchase price of Rmb6k per sqm in a public land auction. The sites have an avg plot ratio of up to 2.19 times and capitalise on government initiatives to inject over Rmb300b to develop Zhuhai into a western hub for the Pearl River Delta.

Key infrastructure projects such as the Hong Kong – Macau - Zhuhai bridge, the Hengqin New District, the Guangzhou-Zhuhai railway and the Aeronautical Industrial Park are some of the key projects brought forth by the government.

Yanlord trades at current P/B of 0.8x and Ho Bee at 0.6x vs developer avg of 0.8x

CDL H-Trust

CDL H-Trust: Announced strong set of 3Q11 results, which was in-line. Rev at $36.4m, +15.2% yoy, while distributable income at $29.6m, +9.9% yoy. Strong performance attributed to improved hospitality performance across the portfolio and contribution from Studio M Hotel (acquired in 2Q11), while RevPAR achieved by at SG hotels in 3Q11 was the second highest recorded in a qtr since the inception of CDLHT.

Going ahead grp remains confident of prospects and tip net hotel room supply in SG to increase by approximately 2,321 rooms in 2012 or 5.6% of the total inventory estimated at the end of 2011. On the demand side, the addition of new leisure attractions in the next 12 mths is expected to contribute positively SG hospitality sector. As part of ongoing efforts to enhance CDLHT’s property portfolio, the recent completion of the refurbishment of the 331-room Claymore Wing of Orchard Hotel, and the improvement works to be done to the remaining 88 rooms at Novotel Clarke Quay would strengthen its competitive positioning.

Result brings YTD rev at $103.3m, +16.1% yoy, while annualized distributable income for 9M11 works out to 10.84c, or an annualized yield of 7%. Balance sheet remains strong with a gearing of 26.5%, giving grp headroom for further debt acquisitions, while valuations remain fairly compelling at 1x P/B vs historical average of 1.22x, given the higher premium investors subscribe to hospitality REITs, which together with retail and healthcare are considered more defensive.


GMG: Announced good set of 3Q11 results which was above estimates. Rev at $110.4m, +183% yoy and +8.3% qoq, while Net Profit at $24.4m, +49.3% yoy and +8.3% qoq. Gross Margins improved significantly at 15.3% vs 11.1% qoq, signifying good progress after the acquisition of Teck Bee Heng which increased grp’s processing facilities significantly.

Strong rev was attributed to higher ASP and Tonnage Vol. ASP at $5,636 per ton, +36.1% yoy but -7.4% qoq, while tonnage vol at 55,413 mt, +107.9% yoy and +16.9% qoq largely due to the contributions from Teck Bee Hang. Operating expenses however registered a 115.2% increase to $19.8 m in 3Q11 largely due to the inclusion of Teck Bee Hang’s expenditure, while grp registed tax gains of $1.4m from tax deffered assets.

Going forward, grp remains positive on outlook and expects demand for natural rubber from Europe and USA to stabilise while demand from China to remain strong and will actively seek both upstream and midstream opportunities.

We note that result brings 9M11 rev to $883.5m, +222.6% yoy, while net profit at $57.9m, +80.1% yoy, although grp had a one off gain of 16.1m. At current price, valuations are compelling, with grp trading at an annualised 11.2x FY11E P/E while balance sheet remains strong with grp in a net cash position.

Frasers Commercial Trust

Frasers Commercial Trust (FCOT): FYSep11 results in line with consensus.
Full yr DPU was 5.75 cts, +5% yoy, as NPI rose 3.2% yoy on the back of higher occupancy rates for Keypoint and 55 Market Street and higher rents from Central Park, Perth.
FCOT also revalued its portfolio by 2% yoy to $1.942b. Spore and Australian asset values rose by 3% yoy, while Japanese assets declined by 6% yoy. Latest NAV was $1.34/unit, translating to 0.6x P/B.

FCOT closed an expression of interest exercise to divest Keypoint on 20 Oct 2011. StanChart expects FCOT to divest Keypoint by Dec 2011, close to the current asset value of $283m, potentially bringing gearing (debt/assets) to 26.3% from its current 36.6%, though the divestment gain itself may not be substantial. The house views the disposal positively, as FCOT would no longer be locked into an asset where it expects rents to fall over the next 4 years.

StanChart notes refinancing alone could provide 15% DPU growth in the next 12 months. Expects the manager to secure new debt at a margin of 190bps (75bps lower than the current 265bps). Also expects the expiry of the master lease at China Square Central to result in positive rental reversion after Mar 2012.

The house maintains Outperform with TP $1.02, with 7% 2012E DPU yield.

Spore market

Spore market: Spore shares are expected to trade with an upward bias, following gains on Wall Street Monday, though upside for the local market is likely to be light following Monday's strong rise and amid frayed nerves over a Europe bailout deal ahead of a meeting of EU leaders Wednesday. The Spore market is closed for the Deepavali holiday tomorrow.

The benchmark STI surged 1.8% to close at 2760.95 Monday in a broad-based rally. "I think it looks like we'll test the 2789 to 2800 region, just above last week's high, but I doubt we'll see a strong break above that area, and we're likely to just hover around below it," says an analyst at a local brokerage. He tips support for the index at the 2700 level.

In Asia, both the Nikkei 225 and KOSPI are marginally higher, as at 8.27am.

On corporate earnings,
FCOT posted inline FY11 results, with full year DPU at 5.75cts.
CDLH Trust reported 3Q11 results. NPI +13% yoy, DPU +9% yoy.
GMG posted a good set of 3Q11 results, above estimates. Revenue was up 183% yoy, and net profit was up 49.3% yoy.
OKP posted 3Q11 revenue that fell 30% yoy, and fell 11% qoq. Net profit was up 8.3% yoy and down 29% qoq. Still largely within expectations.

CMA is likely to be in focus after it announces more investments in China; it will invest Rmb3.37b (US$529m) to develop a shopping mall in Suzhou, with an expected total project cost of ~Rmb6.74b (US$1.1b); CMA will own 50% of the project.

Water names, Hyflux, Sound Global and Leader Environment may see interest following new orders announcements, as well as a water sector report by Deutsche today.

Construction names, Chip Eng Seng, Yongnam, Sim Lian, PEC also announced new order wins overnight.

Monday, October 24, 2011

Sri Trang

Sri Trang: In light of the recent Thai floods, rubber prices have gown up as supply get's disrupted by damaged plantations, which could add cost pressure's on Sri Trang should they not adopt prior appropriate hedging measures (not sufficiently disclosed). Sri Trang's plantations currently make approximately only 5-8% of its internal supply, although its plantations should not be affected as it it located in Trang (See Chart) below, which is not in the flood zone, however given that Sri Trang purchases the majority of its Latex supply, any sudden surge in rubber prices could weigh on their margins.

Furthermore, the flood has caused many automakers and tyre producers to close down/shut down their factories, which could disrupt sales of Processed Rubber to its customers and cause sales to slow down. So, if any of the above scenario materializes, Sri Trang could be hit both on costs and sales.


SIA: Qantas Airways has received approval from EDB to establish a premium subsidiary carrier in S’pore despite intense lobbying campaign from SIA opposing the plan. If Qantas succeeds in staging more flights out of S’pore, it will certainly lead to greater competition for the Spore’s flag carrier in its own backyard while the Australian carrier continues to block SIA’s advances Down Under, seeking for rights to fly beyond Australian points to the US.

Meanwhile, India’s industry ministry has recommended that foreign airlines be allowed to buy as much as 26% stake in the nation’s domestic carriers. This could offer an opportunistic acqn for SIA to penetrate the large Indian market although we must caution that any tie-up may face regulatory and operational hurdles and may not yield results as was the case with its 40% stake in Virgin Atlantic.

Stock is currently trading at the bottom end of an upward trend channel with technical indictors pointing to a possible rebound if it can hold above the 50 DMA at $11.03

Fraser Centrepoint Trust

Fraser Centrepoint Trust: Reported on Fri, 4Q DPU +8.8% YoY to 2.35cts from 2.16cts due to commencement of businesses at refurbished sections of Causeway Point.

CS maintains Outperform at TP$1.90, continue to like FCT’s pure exposure to suburban malls, attractive 6.5% FY13E yield at 1x P/B.

JPM retains Neutral, TP$1.65, a better year ahead, cautious guidance but
strong DPU growth expected for FY12.

Daiwa maintains Hold, TP$1.52 from $1.50 believes FCT’s premium
valuation (FY12 DPU yield of 6.4% vs. the sector 7.2% and a 4% premium to its NAV as at end-Sept vs. the sector 6%) is fair in view of its highly defensive suburban shopping mall portfolio and reasonable FY11-14E DPU CAGR of 6.6%.


Artivision: CIMB has Technical Buy Call. Note that prices have consolidated sideways for the past 5-mths, forming a triangle pattern in the process. Prices pushed out of this consolidation last wk, with prices now holding just above the triangle resistance turned support levels.

Indicators are neutral to mildly bullish, which means that prices could come under some selling pressure in the near term. Expect prices to hold steady above $0.165-0.17 levels, which the 30-day and 50-day SMA currently lie. Recommend aggressive traders should only buy on weakness with a stop placed below $0.135, which is its 200-day SMA as well as its triangle support. This breakout could eventually take prices back up towards $0.215 and possibly even $0.24-0.255 next.


Swiber: CIMB has Technical Sell Call. Note that price rebound recently has not been strong, forming a bearish flag pattern in the process. With prices now facing strong resistance at $0.605, house would not be surprised if prices reversed after a short test.

MACD is beginning to soften while its RSI has reversed after testing the 60-pts levels. A break below $0.52 would confirm that prices are heading to new lows, below the recent low of S$0.44. The stock is a sell, targeting $0.37-0.40 next. A breakout above $0.605 would suggest that bearish view is incorrect.


M1: Morgan Stanley maintains O/w. Note that iPhone 4S Launch by grp is a first step towards pricing increase.

For iPhone 4S 16GB low to mid-end plans (monthly spending of $36 and S$56), customers will now have to pay an additional $25 for the handset ($505 and
$235 vs $480 and $210 before for the 16G model).

New prices imply that customers have to pay an additional $10-25 vs similar plans for the previous iPhone models. House will closely watch out for the iPhone 4S introductory prices from SingTel and StarHub. If both competitors follow M1 in increasing the handset prices, it could set the stage for future change in data allowance and provide operators with the opportunity to monetize rising data usage.


Hi-P: DBSV maintains Fully Valued rating with $0.44 TP. House note that grp has warmed that net profit in 3Q11 would be lower than 2Q11, as despite higher revenue, wage hikes and relocation expenses are hurting profits as well as a product mix change to one with more assembly work, which boosts revenue but not bottomline.

Despite the likelihood of higher volume in 4Q11, the rebound is insufficient to offset YTD earnings decline and house therefore cut FY11/12F estimates by 11.7% and 2.6%. Add that although Hi-P’s stock price has fallen in excess of 50% from its peak in Feb
this year, valuation is not exactly compelling at 0.5x SD FY12 P/E, vs the barometer STI –1SD FY12 P/E.

Asia Environment

Asia Environment: Co shares will be suspended, following the successful acquisition of 97.61% of total issued shares by Ciena Enterprises and related parties.

First REIT

First REIT: Announced strong set of 3Q11 results which was above estimates. Rev at $13.7m, +79.2% yoy and +3% qoq, while distributable income at $12.0m, +125.7% yoy and +21.2% qoq.

Strong results was mainly due to maiden contributions from grp’s three new properties, from Indonesia’s Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang acquired in Dec10, and South Korea’s Sarang Hospital acquired in Aug11, and other gain relating to the distribution of a portion of the total gain on divestment of the Adam Road property in 1Q11.

Going forward, grp remains confident of prospects and will continues to seek consistent growth across all its properties. With a visible pipeline from sponsor Lippo grp we it will be able to strengthen property portfolio in Indonesia, while on the SG front, REIT expects the demand for nursing homes and community hospitals to rise on the back of the govt’s push for improved tertiary care.

Annualized DPU stands at 6.79c, or a distribution yield of 8.7%, while P/B stands at 1x and gearing appears low at 16.4%, suggesting further headroom for REIT to gear up for yield accretive acquisitions.

China XLX

China XLX: 3Q rev at $1.1b +41.0% yoy +13.5% qoq with net profit at $127.1m up more than 2 fold yoy and qoq. The increase this quarter was due to higher sales volume after a 3rd plant was completed in April 2010 and new compound fertilizer plan in Aug 2010. Overall gross profit margins are up from 13.0% in 2Q to 19.8% in 3Q largely attributed to compound fertilizer segment. ASPs for compound fertilizer rose 28.1% compared to costs which were up 21.2% due to co purchasing a portion of raw materials before prices increased.

Co expects strong government support for the agriculture sector and high food prices which will benefit the chemical fertilizer industry as well as coal prices to remain stable. Expansion plans include a cooperation framework with the Xinjiang govt and an expected 4th urea plant. China XLX now trades at current P/E 7.3x


STX PO / STX OSV: shares of STX entities fell 5-11% Friday, with STX PO shares limit down intraday in Korea before closing -10%, and STX OSV shares closing at intraday low of -9.3%, hugely underperforming the KOSPI (+1.8%) and STI (+0.7%).
The heavy sell-down of STX-related shares was triggered by speculation that surfaced in the morning that STX Group may be planning to sell shares and bonds (reportedly up to KRW 1.3tr, or US$1.1n in value) as it may be short of funds. Citi’s check with STX PO suggests the speculation arose due to miscommunication between parties unrelated to STX, where one of the STX entities requested proposals on bond re-financing, but the amount in question was blown out of proportion by third parties. Market concern about the shortage of funds then began to spread to the equity market.

Citi believes the STX Group is not short of fund. Notes the STX Group continues to have access to the corporate bond mkt at reasonable rates, and that its bond re-financing and capex needs can be adequately met. Says the unfounded speculation may subside in the following trading days, which may drive a near-term share price bounce for STX PO.
Fundamentally, Citi has a Neutral rating on STX PO with TP KRW 8300 (~S$7.39).

This morning in Korea,
STX Corp (011810 KS) is up 2.7% at KRW 13,450,
STX Engine (077970 KS) is up 2.5% at KRW 18.850,
STX Metal (071970 KS ) is up 2.7% at KRW 6,530
STX Offshore & Shipbuilding (067250 KS) is up 3.9% at KRW 14.800
STX PO (028670 KS ) is up 6.2% at KRW 7,050 (~S$7.84)

SGD 1 = KRW 899


CapitaLand: 3Q11 results was below consensus.
Earnings were below forecast due to weaker overseas earnings. Net profit of $80.2m was -53% qoq, -83% yoy, and that was including a $32m gain from an Ascott divestment. On a 9mth basis, net profit was $581m, making up just ~55% of Street FY11E estimates.

Residential sales and recognition disappointed both domestically and abroad,
i) slow S’pore residential sales , 67 units sold in 3Q vs. 104 in 2Q, a broader reflection of softness in the prime segment, with ytd sales of 338 units ($0.7b) vs. 520 units ($1.4b) ytd 2010; CAPL’s Bedok Central (583 units), a 4Q launch should see good interest with mass end sales price elastic, yet still falling short of its 2,000- unit sales target for 2011;
ii) China sales fared no better, as CAPL held firm on pricing: 409 units sold in 3Q vs. 493 in 2Q, with ytd sales to 1,339 units ($0.5b) vs. 1,935 units ytd 2010, short of its earlier 4,000 homes sales guidance for 2011; 4Q earnings though should see lift with 3 projects scheduled for completion by end 2011.

StanChart sees little near-term upside for CAPL. Notes CAPL outperformed peers in Spore and China in the past 3 months (ie KPLD, COLI and CR Land), partially due to its share buyback; this is despite a ~30% fall in the share prices of its listed subsidiaries: CMA, CCT, ART and ALZ. The house cuts RNAV estimate by 16% to $3.70/sh to account for the decline in these subsidiaries and lower the capital value for the Market Street office redevelopment. Lowers TP to $2.75 from $3.75, set at 0.75x P/RNAV, from 0.85x previously.

Goldman, Nomura keep at Buy with TP $4.28, 4.05 rptvly.
Deutsche keeps at Buy but lowers TP to $2.80 from $3.03.
JPM maintains Overweight and TP $2.80. Notes expectations of a positive price catalyst are low now, which perversely may limit the downside risks, and a modest share buyback may also provide a signal of mgt’s impression of value in the stock.
Credit Suisse maintains Outperform with TP $3.50.

SG Market

SG Market: Spore shares are likely to open higher, buoyed by the strong showing on Wall Street last Fri as well as firmer regional bourses, which opened 1.5-2% higher. Expect the benchmark STI to test the 50-day SMA at 2745 with the next resistance capped at around 2800 level. However, sentiment remain fragile ahead of the outcome of the EU summit on Oct 26 and any disappointment could quickly turn to another selldown. In corporate news, Capitaland could be hurt by a dismal 3Q earnings hurt by higher expenses. Other stocks to watch today include Swiber Holdings on news of its preferential share offer, SIA and STX OSV.

Friday, October 21, 2011

Tiger Air

Tiger Air: +1.5% at $0.675. CIMB says the airline is an "outright buy" based on charts, with a stop placed below the recent all-time low of $0.625, hit Tuesday.
"Prices have been falling steadily since the $1.97 (rights-adjusted) high set in Sept 2010. We reckon that prices may have hit a significant bottom at $0.625 three days ago, judging from the spike in volume two days ago," the house says. It notes MACD is starting to turn up again and coupled with a hook up on its RSI, "we expect to see a big run from here." The house expects prices "to at least test the moving averages (30-day and 50-day) at $0.74-$0.79 in the near term but it is more likely to continue on towards the S$0.83 resistance levels. In a couple of months, we think that it could even reach as high as $1.00, the downtrend channel resistance."


Lonza: the Swiss-listed group will make its trading debut on SGX mainboard at 9am today as Spore’s first Swiss-listed co to be secondary listed here.
The co. is a supplier to the pharmaceutical, healthcare and life sciences industries headquartered in Basel, Switzerland.
All dealings in the shares on the SGX will be conducted in SGD in board lots of 10 shares or integral multiples thereof.
Based on the company's closing market price of CHF 56.35, or S$79.05, on the SIX on Oct 19, it has a market cap of ~ CHF 2,982 m (US$3,315 m). This corresponds to ~S$4,183 m based on an exchange rate of CHF 1.00 to SGD 1.4028.
For FY10, Lonza reported sales of CHF 2,680m, +3.3% yoy. Net profit rose to CHF 284m, +10.4% yoy.


Synear: has become embroiled in China's latest food safety scare after some of its products were found to be contaminated with staph bacteria.
This pathogen can cause serious infections such as pneumonia, colon infection and the deadly sepsis, which causes the immune system to attack the body's own organs and tissues.
All affected products - 350 packs of savoury dumplings - were recalled and destroyed in Jul. However, news emerged about the incident only this wk after China's list of 18 food products that had failed safety inspections was made public - which included a batch of Synear's savoury dumplings produced in Jun.
Concerns over the food safety scare sent jittery investors dumping shares of the Zhengzhou-based company here yday, sending the stock diving 7.9% to 12.8 cts.

Business Times understands that Synear has since conducted an internal investigation, including its logistics and distribution processes, and reviewed its internal quality control standards. None of its other products were affected by the recall. Historically, savoury dumpling products have accounted for ~ 40% of group revenue.


SIA: the Competition Commission of Spore (CCS) has approved SIA's proposed alliance with Virgin Australia which will see SIA's passengers able to connect seamlessly to many of Virgin Australia's destinations, while Virgin Australia will get access to 70 int’l destinations served by SIA and SilkAir. Both will also engage in joint mktg, pricing, sales and scheduling, while passengers get reciprocal access to lounges and frequent flyer benefits.


STX OSV: Parent STX Corp and sister companies STX Pan Ocean, STX Offshore & Shipbuilding tumbled by as much as 15% in Seoul but no reason were cited. There are unconfirmed rumours that STX group could be facing solvency issues and is being investigated for irregular trading activities, all of which cannot be verified. At the same time, there is renewed market talk that STX could be seeking buyers for its 50.8% stake in STX OSV.

Mapletree Log Trust

Mapletree Log Trust: DPU of 1.69c for 3Q. 3Q Rev at $68.3m +25.4% yoy +3.8% qoq with net profit at $23.7m -29.9% yoy -5.3% qoq partly due to changes in fair value of financial derivatives of $13.0m which were hedges not recognised as rev. Distributable amt at $40.8m was+29.7% yoy +5.3% qoq. Positive rental reversions of 22% High occupancy of 99%. Partial distribution of the net gain from divestment of 9 Tampines St 92 and 39 Tampines St 92 which will be distributed across 3 quarters including this one.

Gearing unchanged at 41% and co has successfully refinanced $281m of debt extending its maturity from 2012 to 2018 with no significant impact on overall borrowing cost.

YTD DPU of 4.84c translates to approx annualized yield of 7.5%.

Deutsche maintains Buy with TP$1.01 citing defensive and well-diversified portfolio with 7.6% yield in FY11 and 7.7% FY12.

CS maintains Outperform with TP$1.10, likes MLT for defensiveness (WALE of 6 yrs) and strong acquisition pipeline.

Keppel Corp

Keppel Corp: strong 3Q11 results ahead of expectations.
Revenue at $2.7b was up 18% yoy and qoq, and
record high net profit at $406m was up 33% yoy (3Q10 restated) and 6% qoq.
The key highlight was the strong O&M margins achieved, with EBIT margin surging to 26% (+175 bps qoq, +700 bps yoy), returning to record levels once again.
O&M contributed 84% of group profit (vs 70% in 1H11). Property was in line while Infrastructure was below expectations.
3Q11 annualized ROE remains above 20%.

Current orderbook now stands at ~$9b, almost double from Dec ’10 total of $4.6b. this has been a solid yr for KEP O&M, with ytd new order wins at a record $8.7b, surpassing the previous peak set in 2007. KEP expects a robust E&P outlook over the next two years, underpinned by higher crude oil prices; says enquiry levels have remained stable over the past quarter despite macro headwinds. Geographically, KEP expects rig demand to be underpinned by North Sea (harsh weather jackups) and GoM (semisubs) where activity is gradually picking up after a long lull. Global demand for semisubs has also started to improve. KEP is in contention for six rigs from Petrobras tenders via Sete Brasil, which is expected to conclude soon. Nevertheless, we note that over the last one month, 3 of KEP’s options (from Discovery and Dynamic Offshore) have lapsed and now 3 are outstanding (all from operators) and all will expire by year-end.

The majority of the Street retains their Buy / Outperform calls, though mostly premised on oil price staying >US$80 bbl and on sustained order wins.
DMG maintains Buy, raises TP to $11.40 from $11.03.
CS reiterates Outperform, raises TP to $12.40 from $11.60.
JPM retains Overweight, lowers TP to $12.80 from $13.70.
RBS maintains Hold with TP $11.60.
The others have Buy/ Outperform ratings with TP ranging btwn $10.66 – 13.45.

SG Market

SG Market: Spore shares are likely to see cautious trade ahead of this weekend's meeting of European leaders to discuss a debt crisis bailout package, though bias could be to the upside after Wall Street's positive close and after the benchmark STI''s 3.1% fall over the last 3 sessions. STI should find immediate support at 2680 with resistance at 2720. Keppel Corp will be in focus after its 3Q net profit surged 33.3% on year and the rigbuilder hopes to secure "a fair share" of Petrobras orders.

Thursday, October 20, 2011

CapitaMall Asia

CapitaMall Asia: Reported yday, 3Q11 net profit of S$36.5m (+62% qoq, excluding reval gains in 2Q) with rev of S$66.9m (+6% qoq).
The higher rev was largely due to higher contribution from fund mgmt and higher property and project mgmt fees.

Nomura maintains Buy, TP 1.69, 3Q below expectations, but largely pricedin. Currently trades at 26.6% discount to NAV estimate of S$1.69/share and FY12F P/B multiple of 0.8x.

Citi maintains Buy, TP 1.88, encouraging Improvement in China Operations, attractive from a valuation perspective at its current price of S$1.26. Trading at almost 20% disc to its book value of S$1.50 and a hefty 40% disc to RNAV estimate of S$2.07. Spore malls account for about 60% of its RNAV of S$2.07, worth approx $1.25 per share, implying at current levels the market is attributing almost zero value for its China exposure.

Macq maintains Outperform, TP 2.32, 3Q11 results a tad light, but operational momentum on track. Believe CMA offers good value, trading at a 17% discount to its latest book value of S$1.50, expect the book value to rise on higher asset revaluation come its FY11 final results in Feb 2012. The market is not ascribing any value to CMA’s S$19.2bn fund mgmt business.

RBS maintains Buy, TP 1.90, expect stable earnings for the group as the current global uncertainty is unlikely to impact retail sales in China. Added catalysts from good take-ups at its upcoming Bedok residential project.

DB maintains Buy, TP 1.70, 3Q inline, firmer operating trends, valuation remains attractive.

Genting SP

Genting SP: Nomura maintain Reduce with TP $1.41. Note that monthly visitor arrivals to Spore have averaged above 1m, a big contrast to 2010’s tourism monthly statistics where it only breached the 1m mark twice

House believe tourist arrivals to SG could at least hit 13.4m (+14% in 2011F) and see upside surprises to 2011 arrival figures due to seasonality factors. Big jump in Chinese tourists in 2H, avg 183,834 from July to August, 46% higher than 1H’s monthly average of 126,275.

Note that Genting could be a beneficiary of this trend, however, its valuations remain expensive with FY12 EV/EBITDA of 12.6x, at a 43% premium to regional peers. Think its growth prospects are likely to lag those of its Macau peers. Unlike in Macau, the SG govt has no plans to make SG a gambling hub.

ST Engineering

ST Engineering: Co. announced that its aerospace arm has secured new maintenance contracts totaling $453m in the whole of 3Q11. This is somewhat higher than the $260m secured in 2Q11 and the $320m secured in 1Q11, and may indicate that momentum in commercial aerospace is picking up.

Kim Eng note that the stock price has been relatively stable in the past mth, and at this level it still provides a healthy div yield of 5.7%. However, house maintain HOLD recommendation as its forward P/E remains at 15.7x. TP of $3.15, offers a 11% upside. CIMB meanwhile maintains O/p with $3.61 TP.

Pacific Shipping Trust

Pacific Shipping Trust: Co. announced 3Q11 Rev at 16.4m, +5% yoy, while Net Profit at 6.2, -13% yoy, while DPU yield at 7.3% was slightly lower vs 7.5% yoy. Result brings 9M11 rev to 46.9m, +2% yoy while DPU yield at 7.2% vs 7.5% yoy.

Co. has also proposed to seek a voluntary delisting of Trust from SGX, at an exit price of US$0.43 / unit. Co. will be issuing a to Unitholders, to provide unitholders with the advice of the independent financial advisor to the independent directors and the recommendations of the independent directors with regard to the Exit Offer.

TTJ Hldgs

TTJ Hldgs: Secured new contracts worth $34m for structural steelworks and civil defence shelter doors. Co will supply and install shelter doors for MRT downtown line 3 and a major construction service provider, in addition to 4.3k tons of steelwork for an 800MW power plant on Jurong Island and the National Art Gallery.

Co now has orderbook of $181m up from $147m in Sep 2011 with current P/E of 3.3x

Li Heng

Li Heng: China imposes anti-dumping tariff of 2.2% to 25.5% on Caprolactam (CPL) imported from US and EU member states for period of 5 yrs from 22 Oct 2011. This is a major raw material for co used in production of Polyamide chips used in nylon yarn products. Co has over 90% of CPL purchases not subject to the tariffs and has arranged with suppliers to source from countries unaffected by the tariffs. Impact of tariffs expected to be immaterial.

This might still affect other chem-fibre co such as China Sky, China Fibre Tech, China Taisan, Foreland Fabritech.

Koh Bros

Koh Bros: Puts in top bid of $163m or $361 psf ppr for a 99 yr leasehold residential site in the east, which it plans to build a 400-410 unit residential project. Bid was 10% above the 2nd highest offer. Lowest bid came in at sgd130m or sgd288/psf ppr. Property experts highlights units in nearby 99-yr leasehold Hedges Park condo have been marketed at $800-950 psf since Apr 11, and approx 65% of the 501-unit project has been sold to date.

Koh Bros has a current P/E of 6.4x

Sabana REIT

Sabana REIT: DPU of 2.14c declared, on track to deliver annualized DPU of 8.63c for FY2011. 3Q Rev at $17.4m flat qoq with net income at $10.8m (excld revaluation gain of $51.3m) +1.9% qoq. Co currently has a WALE (weighted avg lease to expiry) of approx 3.0 yrs with 14 properties at 100% occupancy and 1 property at 96.7% occupancy rate.

At current prices, annualized DPU translates to approx 9.3% yield and co has also achieved a BBB- invt grade credit rating from S&P in July. Co has a P/B of approx 0.84x
Daiwa maintains Outperform with TP$1.00 with no negative surprises, expected high yield and accretive acquisitions.

Book closure date for distribution is on 28 Oct 2011.

Keppel Land

Keppel Land: 3Q11 results 30% below consensus, and in line with lower range of estimates.
Net profit came in at $58m, +15% qoq, boosted by investment income (+48% yoy) as KPLD received higher dividends from its invmts in Alpha Invmt Partners, and greater contribution from booking of revenue from Spore trading projects (mainly Reflections @ Keppel Bay, Madison Residences, as well as The Lakefront Residences).

Home sales in Spore and China townships were stronger in 3Q compared with 1H. for instance, in 3Q KPLD sold 260 homes in the Luxurie in Spore, vs 160 units achieved in 1H. Also take up of township homes in China came in at 780 units in 3Q, vs 400 units in 1H, with most units being sold in The Botanica in Chengdu, The Seasons in Shenyang, and The Springdale in Shanghai.

With the divestment of Ocean Financial Centre (OFC), StanChart expects net debt/ equity to reach 10% by end 2011, leaving KPLD with sufficient headroom ($2b before reaching 50% gearing) to invest in sites for more residential, township devt projects.
The Street cuts FY12 EPS estimates for KPLD, adjusting forecasts to incorporate slower completion of projects in china and Vietnam, new land acquisitions in Shanghai, Wuxi and the loss of rental income from OFC in 2012.

StanChart keeps Inline rating and TP $2.86, set at 0.65x P/RNAV. But notes in 2002-04, when Spore residential prices were on a gradual downtrend, KPLD traded at 0.5x P/NAV, implying KPLD could trade to $1.80/sh if such an environment were to be revisited.
Citi maintains Neutral with TP $2.88.

SG Market

SG Market: Spore shares could open lower after Wall Street's weak session and as regional markets open in the red; negative factors remain Europe, where reports suggest leaders are still at loggerheads over the EFSF and the US, where the Fed's beige book has sparked increased worries over the US economy.

The benchmark STI closed down for its 2nd straight session of losses on Wed. Support is tipped at 2680 and 2600 with any upside likely to be capped at 2750. Property stocks may be in focus after the govt said it continues to monitor the real estate market closely, and will take more measures to temper high housing costs if needed, as current low global interest rates are likely to keep property demand high. Within the sector, Keppel Land may draw interest after its 3Q net profit rose 6.6% on year to $58m, helped by higher contributions from its property investment and trading businesses, and changes in accounting policy.

Wednesday, October 19, 2011


Artivision: Trading halt lifted. Subsi ArtiSecurity has entered into a $42m agreement with Chinese tech giant Beijing Daheng Innovative Tech to exclusively adopt AVision software for its surveillance hardware applications. During the 3.5 yrs Beijing Daheng will have the exclusive licence to mkt and distribute AVision to customers in China.
AVision is a software which detects and tracks video objects.

Artivision: Trading halt to be lifted 1245.

IPO: Parkson Retail

IPO: Parkson Retail: Msian's Parkson Hldgs is looking to list its retail arm in a $200m IPO on SGX and a preliminary prospectus has been lodged as of yday. An indicative price range of $0.935-1.07 has been touted with HSBC as the issue mgr with CIMB as the joint bookrunner and underwriter, CLSA as co-lead mgr. Net proceeds from the IPO will be used for expansion of retail stores in the region


Hafary: To issue 32m new shares to 3 individuals at $0.20 each of which Mr Ching Chiat Kwong (Oxley) is taking up 30m and will have 23.6% of enlarged share cap. This is a 9.1% discount to VWAP on 17 Oct 2011. Total proceeds of $6.4m expected with $6.0m to be used for investing in tile-related manufacturing facilities and remainder for working capital. Placement is subject to approval by SGX and shareholders.

Wee Hur

Wee Hur: Awarded a $57.0m design and build project at Fusionopolis from A-REIT. Project covers the design and build of a business park and office mixed use dev comprising 2 blks of 6-storey buildings with 2 lvls of basement carpark. The project will commence in end-Oct 2011 and is expected to complete in 3Q2013. It is designed to be a R&D complex with retail outlets and serviced apts. Rev is expected to accrue mainly in 2012. Wee Hur trades at approx 6.9x P/E.

CapitaMall Trust

CapitaMall Trust: Recall that 3Q11 DPU +2.5% to 2.42c vs 2.36c yoy due to additional contributions from new acquisition, Iluma which it acquired on April 1. Ratings are as per follow:

Citi maintain N, TP $2.00, fine-tuned rental revenue for the individual malls and have reduced DPU estimates largely to reflect the higher-than expected finance cost which was attributed to the acceleration of the option value and transaction costs from the redemption as well as cancellation of S$87.75m of CB due 2013.

Deutsche maintains Hold, TP $1.98, expect earnings to be fairly resilient with growth supported by multiple AEIs. Valuations fair at 1.2x P/B and 5.1% FY11e yield implying a relatively tight 345 bps over the 10-year bond.

Nomura maintain Neutral, TP $1.96, currently trading at 1.2x FY12F book value and 5% FY12F dividend yield. At 1.2 PBV, the stock is not cheap vs avg 0.97x FY12F PBV that other REITS are trading at.

CS maintain O/p, TP $2.22, balance sheet is healthy with the next refinancing only due in Oct-12. Gearing at 38.4% (40% of management target), CT is top S-REIT pick for its resilience.

BNP maintain Buy, TP $2.09, continue to favour S-REITs to S-developers; Prefer retail within SREITs. Potential concerns include tighter credit and capital markets.

Daiwa maintain Hold, TP $1.90, premium valuations look fair, 3Q11 results in line; resilient DPU growth, boosted by asset enhancements, are in the price. More visibility on Iluma's asset enhancement plans.

Goldman maintain Neutral, TP $2.18, premium valuation of 1.2X fwd P/B is balanced by its above-sector DPU growth and exposure to nondiscretionary retail income. CMT offers visible growth with its disciplined AEI rollouts in 2012/13 – Iluma, to commence in Nov and to be completed by Jun 2012, should see yield on cost improve to 5.8% from 3.8% and ROI of 22.4%. Prefer

RBS maintain Buy, TP $2.19, top pick for the sector as it has a good retail portfolio and strong balance sheet.

UBS maintain Buy, TP $2.06, cautious tone on market outlook, think CT may rollover the S$7.7m tax-exempt retained income (0.24¢) to FY12 to buffer potential DPU volatility from an economic slowdown.

UOL & Sing Land

UOL & Sing Land: Won with sole bid of $529m for commercial site at Sims Ave/Tanjong Katong Rd launched by URA. The site was launced on 26 July and has a max GFA of 86.9k sqm. At this price, the land is apparently 35% lower compared to another commercial site at Paya Lebar Central awarded in Apr. UOL has stated that it intends to develop a retail mall with an office tower and hotel for the project and states it will be in line with govt plans to decentralize business activities from the CBD.

UOL has a current P/B of 0.64x and Sing Land at 0.56 P/B. Other property developers City Dev trades at 1.37x P/B and Capitaland at 0.75x


SembMarine: Announced that its processing module division has been awarded a contract valued at approximately US$100m, which could potentially increase to more than US$150m, for the module assembly of LNG's liquefied natural gas facility in Curtis Island, Australia, for Australia Pacific. The contract also adds to grp’s diversification into more LNG projects, especially in Aus and the region

Recall that Ezion Holdings has also been awarded a contract to provide full logistic and support service activities for the haulage of equipment and modules for the development of LNG facilities on Curtis Island, and the whole Curtis Island project is estimated to have a budget of around US$40b.

Kim Eng estimate that the margin for project stands at around 10%, but earnings contribution to SMM will be relatively small vs its larger earnings base. However, with this initial contract, believe that there is more potential for grp to secure more such work, as is with Ezion as well. For SMM, maintain Buy recommendation to TP of $4.95 and Ezion is also a Buy with TP of $0.99.

Similarly DMG maintain Buy, with TP $5.46, noting that contract win is positive and lifts YTD order wins to $3b and outstanding order book to $6b, while Nomura also maintain Buy, TP $4.50. Believe that new order wins at SMM are still likely as operators continue to experience strong chartering demand.

China Animal Healthcare

China Animal Healthcare: may be in focus on news it's contemplating a potential delisting from SGX (while maintaining its primary Hong Kong listing). The company, which manufactures animal vaccines, is looking into delisting as part of a "constant evaluation of corporate options" and makes the announcement to clarify recent media reports that cited the company as a potential candidate for privatisation.

China Animal says SGX has no objection to any potential delisting, subject to conditions. The news is unlikely to cause too much surprise, but may focus investors' attention on potential delisting candidates, especially among beaten-down S-chips. In a recent note on the issue, CIMB said "although trading above book, China Animal may (at some point in time) have to rationalize if a dual listing is worth the associated costs?"

In 2Q11 China Animal posted net profit of Rmb60.2 m, and said it expects to remain profitable with strong growth this year. China Animal closed Friday, before requesting a trade halt, +6.1% at $0.26 in heavy volume in Spore, and HK$1.57 in HK (1SGD = HKD6.12).


CMA: Rev in-line with consensus estimates but lack of revaluation gains this quarter.3Q rev at $66.9m +57.3% yoy +6.4% qoq but net profit fell 30.3% yoy to $36.5m, also down from prev quarter’s $164.9m. Net profit was depressed due to an absence of revaluation gains ($7.0m in 3Q2010, $67.6m in prev quarter), higher fees of $4.7m from listing in HK and a $4.0m exchange loss from a strengthening S$ to Rmb. Of note, higher rev came from China at $29.0 +23.6% qoq +160.9% yoy. Singapore (41% of rev share) and China (43%) continue to be the top 2 contributors to rev.

Co cautions growth could be weighed down from global economic conditions although Sg retail sales index continues to show positive growth of 7.4% yoy in Aug 2011 and remains positive on China’s prospects with retail sales growth of 17.0% yoy in Aug 2011.

CMA has NAV of $1.50, a current P/B of 0.8x

Keppel T&T

Keppel T&T: 3Q11 results.
Revenue was flat yoy at $28.1m, as higher revenue from the Data Centre Division was offset by lower revenue from the Investments and Logistics divisions due to the disposal of non-core businesses and redevelopment of an existing warehouse.
Operating profit rose 36% to $4.2m, due mainly to higher contribution from the Data Centre division.
Net profit was up 127% to $35.6m, thanks mainly to a $22.3m after-tax gain on exceptional items (disposal of an associated co, Wuhu Annto Logistics).
The Group will work towards maintaining high warehouse occupancy in China and SE Asia. It will continue its efforts in expanding its logistics business with the completion of a new warehouse in China and the redevelopment of an existing warehouse in Spore. It is expanding its capacity for data centre services and continues to search for data centre assets for invmt.
NAV/sh rose 11% to $0.69, translating to a P/B of 1.8x based on last close at $1.21.
Excluding exceptional items, 9M11 EPS was 8.1cts, which translates to an annualized 11.2x P/E.

SG Market

SG Market: Spore shares may see a positive opening after Wall Street's firmer close on Tue but gains are not expected to be strong amid conflicting headlines coming out of Europe and lingering uncertainty over what EU leaders will pull out of the hat to tackle the debt crisis. With US stock index futures again in the red, the STI is unlikelt to test Mon's high of 2789 with 50 DMA at 2752 being the 1st line of resistance. Support lies at 2720, followed by 2600.

Stocks making the news include CapitaMalls Asia which reported a 30.3% drop in 3Q net profit; Sembcorp Marine after its SMOE unit secures a US$100m LNG module assembly contract in Australia; and China Animal Healthcare, which is considering a potential delisting from SGX (while keeping its primary HK listing).

Tuesday, October 18, 2011

Sri Trang

Sri Trang: says there was a fire accident at a ribbed smoked sheet (RSS) factory at Tambon Ta Chang, Muang district, chantaburi province, which the co had rented from a private co, on the evening of 16 Oct, which has been brought under control.
The rented RSS factory has an effective pdtn capacity of 8400 tpa, or 0.9% of current total annual capacity of 987.6k tpa. The fire occurred in the smoking rooms, and some goods under pdtn process were damaged, though all personnel are safe with injury. The goods and the buildings (which are leased) were fully insured.
Mgt believes there has been no significant impact to overall operations.

Golden Agri

Golden Agri: main subsidiary PT SMART announces that Unilever has resumed palm oil purchases with the co. Unilever contributed 3% of sales in 2008. While positive, the news is not entirely unexpected, as SMART has been in talks with Unilever on this since late Sep. This move follows SMART's Roundtable on Sustainable Palm Oil certification and Nestle's decision to resume palm oil purchases in early Sep.

Keppel Land / K-Reit

Keppel Land / K-Reit:
K-REIT will acquire KPLD’s 87.5% stake in Ocean Financial Centre at a value of $2b, or $2,600 psf. The property is originally on a 999-year land tenure, but K-REIT is acquiring on a fresh 99-year basis, where KPLD has the option of acquiring back the interest at the end of the lease for a nominal consideration of $1.

OFC currently has a committed occupancy rate of ~80%, with passing rent of ~$9 psf/mth (negotiated during previous crisis). KPLD will provide K-REIT an income support of up to $170m over 5 yrs until 2016 to offset the current vacancy and any shortfall if the annual Net Property Income falls < $122m.

K-REIT's net consideration works out to $1.57b, to be funded by debt of $602.6m, and a 17-for-20 rights issue of 85 cts per rights share (17.5% discount to last close), to raise $976.3m of equity.
KPLD and Keppel Corp, which together own 76.3% of K-REIT have committed to take up their pro-rata entitlement. K-REIT expects the acquisition to be DPU accretive, with post-acquisition gearing at 41.6%.

Circular will be sent to K-REIT holders on 19 Oct, EGM will be held on 10 Nov.
K-REIT goes "ex-rights" on 14 Nov.
Nil-paid rights expected to trade from 21-29 Nov.
New rights shares to start trading on 13 Dec.

The deal is viewed as a positive catalyst for KPLD, as transaction capital value of $2,600 psf is higher than expectations of $2,400 psf. It is also a timely divestment ahead of potential office downturn. Market had expected the sale to take place in 1H12.
KPLD is expected to book in a net divestment gain of $492.7m (or 34 cts/share) in FY11. StanChart tips the possibility of KPLD to pay a special div of 18 cts/sh, just like it did in 2010 when it divested its one-third stake in MBDC Phase 1.
Post-divestment, KPLD will have negligible net gearing of 3% (lowest among peers), giving it ample financial strength to weather any uncertainties in the market in future, as well as to acquire assets if opportunities arise.
With a much reduced direct interest in office properties, some share price overhang may be removed. Its main direct investment now lies in its one-third stake in Marina Bay Financial Centre Phase 2, expected to be completed by end 2012.
KPLD will announce its 3Q11 results on 19 Oct.
Deutsche retains Buy with TP $3.82.
HSBC retains Overweight with TP $4.75
StanChart keeps at Inline with TP $2.86.

For K-REIT, StanChart notes the organic yield of 4.2% is attractive vs current market cap rates of 3.4%. With the income support, the yield will be boosted to 5.9%. With a cost of debt of ~2.3%, it believes the acquisition will be 12% DPU accretive in FY12. Post the acquisition, the house expects gearing to rise to 42%. However, StanChart cautions that when income support falls away at end 2016, and if office rents fall 30% and debt costs rise to the long term average of 4%, the acquisition could be dilutive to long term earnings. Maintains Underperform with TP $0.85.

K-REIT: also reports 3Q results. Distributable income came in at $26.7m, +17.7% yoy, DPU at 1.96cts, +16% yoy, for an annualised DPU of 7.78 cts or a distribution yield of 7.7%. End 3Q aggregate leverage at 39.8% vs 39.2% qoq. KREIT has no debt expiring next yr while $100m of debt will be due for refinancing in 2013. The Reit trades at 0.67x P/B.