Tuesday, January 31, 2012


Wilmar: Shares in Ghanaian oil palm producer Benso Oil Palm Plantation (BOPP.GH) jumped nearly 13% after reporting net profits more than tripled in FY11. Meantime, the local unit of Wilmar that net profits rose 266% to 9.8m cedis (US$5.9m), helped by a higher world market price for crude palm oil.

Wilmar is scheduled to report its 4Q results on 22 Feb with consensus estimates tipping net earnings of US$446m vs US$321m in 3Q11. The street has 15 buy, 9 hold and 4 sell calls on this stock with an average price target of $5.35. Technically, the stocks need to sustain above to negate its downward trend.

Tiger Air

Tiger Air: Technical Sell Call by UOB kay Hian with TP of $0.630. Note that an immediate resistance level appears at $0.74 for now as denoted by the top tweezer candlestick pattern. This is lower than the previous intraday high of $0.79 on Oct 11. The Stochastics indicator has
crossed below its signal line in the overbought region.

For those that have followed house BUY recommendation on 18 January (with 7% gains on closing prices), recommend take some profits off the table. Alternatively, investors may exit their shorts if prices move above S$0.76. House institutional research has a fundamental SELL with a TP of $0.59.


CWT: IIFL maintains Buy, but reduce TP tp $1.25 from $1.33. Note of strong growth prospects.
Stock price underperformed its peers n STI, possibly due to lower-than-expected coal trading volumes and margins in 2011.

The disappointment is trivial as the coal trading business will account for only 2-6% of 2011-13 profit. MRI Trading, accounting for 27-41% of 2011-13 profit, is progressing well on its growth path. Profit contribution from 79% owned MRI would likely more than double over 2011-13.

Strong growth in the metals trading business and a steady 16% annual profit growth in core logistics and freight forwarding businesses will support 29% EPS CAGR over 2011-13. Overall, house lower 2012-13 EPS by 6-10% for revised base metal price estimates and cut contribution from coal business.

Suntec REIT

Suntec REIT: Citi has key take away with mgt meeting. House maintains Buy with $1.53 TP.

Note that barring any major events, mgt expects 2012 to be a better year than 2011 for its office space at Suntec City as expiring leases were signed back in 2009 at the trough of the mkt. Mgt also disagrees with view that portfolio, especially the office component, will suffer a major write-down similar to during the sub-prime crisis. Barring unforeseen circumstances, gearing is
unlikely to rise past 45% either.

Post completion of AEI in Suntec city, mgt expects average rents to increase 25% to $12.59psf/mth from $10.10psf, with a projected ROI of 10.1%. Proceeds from Chijmes Sale will also mitigate impact from AEI, depending on the progress and the reception of the AEI during its initial stages.
House believe the stock is undervalued, and at current price offers over an 8% yield for office/retail exposure and trading at more than a 40% discount to book value.

Sabana REIT

Sabana REIT: Results on 20 Jan generally met expectations with 4Q DPU of 2.2c declared, an annualized DPU of 8.61c. Forecasted div yield is approx 10%

Sabana has a leverage of 34.1% with further debt headroom of $87.7m for further expansion. Mgmt aims to grow its portfolio by 10%-15% pa.

HSBC maintains Neutral with TP$0.85 and is of view easy DPU accretion via debt-funded acquisitions is coming to an end. Post IPO acquisitions have been neutral given NAV dilutive nature despite DPU-accretion.


CDLH: 4Q DPU 3.27c. FY2011 DPU was 12.28c +9.8% yoy, approx distribution yield of 7.2%. FY2011 Gross rev at $141.1m +15.4% yoy with NPI at $135.2m +17.5% yoy. At the btm line, net profit at $180.8m was up 30.7% yoy part due to a revaluation gain of $73.2m.

For 4Q, rev of $37.8m was up 13.4% yoy +3.8% qoq, attributed to general improved performance across the portfolio and contribution from Studio M. RevPAR for the Sg hotels increased by 6.0% to $205 in 4Q2011 representing the best 4Q performance since inception of CDLH, fuelled by a growth in visitor arrivals.

CDLH’s gearing is currently at 25.3% with avg occupancy in FY11 approx at 88.0%

Co expects new inventory of 1540 rms to be added to the Sg hotel sector at the end of 2011 which might contribute to a more competitive environment in the Sg hospitality mkt. However, new attractions such as the Maritime Experential Museum, Aquarium and Marine Life Park at RWS are expected to facilitate visitor arrivals to Singapore.


Olam: Announced a partnership with the Russian Dairy Company, LCC (“RUSMOLCO”) for the large scale development of dairy and grains farming in the Penza region of Russia. The first step under this partnership is the investment of up to US$75m by Olam for 75% of RUSMOLCO. This translates into RUSMOLCO enterprise value of up to US$130m, owners of RUSMOLCO will hold the remaining 25%.

In the first phase of expansion spread over the next 4-5 yrs, RUSMOLCO will invest to expand the area under grains cultivation from the current 52k ha to 106k ha. In addition, four new modern dairy farms will be constructed, taking the total milking cow population from the current 3.6k heads to 20k heads.

Olam is anticipating this invt could yield EBITDA margin of 35-40%, net margin of 15-20%, equity IRR of 28%. However RUSMOLCO is currently loss making since it is at an early stage of development but Olam mgmt believes that the invt may be cash-positive from FY2013E and profitable from FY2014E.

Both JP Morgan and Goldman are of view that acquisition is still in early days and will see limited impact on current earnings.


Centurion: Announced that it has been awarded a bid to acquire 85% equity interest in Dormitory Investments, an investment holding Co. that owns an 8600-bed workers’ dormitory at Tuas, and also has full ownership of three subsidiaries that provide ancillary services associated with the operations of the Tuas Dormitory.

Terms and conditions of the acquisition will be set out in a sale and purchase agreement to be entered into between the 2 grps (Details not out yet). The purchase consideration will be partly funded internally and by debt.

Centurion expects the Grp to see immediate yield accretion to its existing portfolio given Tuas Dormitory’s sound operating fundamentals, strong cash flow and substantial bed capacity and will enable grp to gain a strong foothold in the growing workers accommodation industry in SG and the region.


Singpost: Announced 3Q12 results which were in-line. 3Q12 rev at $149.4m flat yoy and +6.1% qoq, while core net profit at $38.9m, -4.8% yoy and +18.5% qoq. Ebitda Margins however dropped at 35.5% vs 43.2% yoy.

Weaker margins due to lower margins from grp’s transshipment business and rising labour costs and according to grp, margins are not likely to improve significantly despite cost cutting measures.

Regional investments so far has also yielded unattarcative yields, with associate Co’s profits increasing from losses in 3Q11 to a $1m profit in 3Q12. Based on SingPost’s investments of around $65m to date, the estimated yield of 6.2% on an annualized basis suggests the risk-reward dynamics of these investments are rather unattractive, especially since its own div yield is higher at 6.4%.

Free cash flow for the fiscal year to date has reached around $75m (annualised FCF yield: 5.4%), just sufficient to cover Grp’s min dividend commitment of 5c per share (or $94m in total). SingPost has maintained a div payout of 6.25 c/share since FY08, translating into a regular dividend yield of 6.4%.

Ratings as follow:
Kim Eng maintains Buy on valuations with $1.09 TP.
JP Morgan maintains neutral with $0.90 TP.
DBSV maintains Hold with $0. 1.04 TP
UBS Maintains Neutral with $1.00 TP.

Starhill Global

Starhill Global: Announced good set of 4Q11 results which was in-line. NPI at $36.5 was flat yoy and +6.1% qoq, while DPU at 1.01c, -2.9% yoy and flat qoq. Result brings FY11 NPI to $143.6m, +10.1% yoy and DPU to 4.12c, +5.6% yoy.

Strong performance due to full yr contributions from Starhill Gallery and Lot 10 in KL which were acquired in Jun10. SG contributed to 59% of grp’s FY11 NPI and was down 2% YoY
due to negative office rental reversions & disruptions from Wisma’s redevelopment. Full-year contribution from Msia & Aus malls resulted in a 92% & 14% YoY increase in NPI, respectively.

Among other smaller contributors, China saw a healthy increase in NPI (+11% YoY) while Japan (a/c for 4% of NPI) posted a decline in earnings due to lower rental rates. Overall, Grp remains confident of prospect, on back of healthy consumer confidence and increased tourist arrivals in SG and Msia and will continue to create value via through yield accretive acquisitions of prime assets to enhance growth in grp’s core markets.

Fundamentals remain strong, with overall occupancy rate at 98.7%, while gearing remains strong at 0.8%, with no major debt refinancing until 2013. At current price, grp trades at 7.3% yield and at 0.85x P/B.

Ratings as follow:
CIMB Maintains Buy with $0.68 TP.
Merrill Lynch maintains Buy with $0.70 TP.
Macquarie maintains O/p with $0.67 TP

Fortune Reit

Fortune Reit: FY11 results in line.
NPI reached HK$632m, +8% yoy.
DPU was +8% yoy to HK 26.3cts.
The growth was mainly attributable to positive rental reversion and strong increase in income contribution from Fortune City One (FCO) and Ma On Shan Plaza (MOSP) after AEI phase completion. The remaining phases of FCO AEI are expected to be completed by end 2012, with target ROI of 15% for a total capex of HK$100m.
Overall the portfolio showed stable growth where avg portfolio passing rent went up 12.2% yoy to HK$32.2 psf with occupancy improving to 97% at end 4Q11, from 93.5% at end 3Q11.
Balance sheet remains healthy with gearing lowered to 18.8% due to increase in invmt properties value.

The Reit’s previous proposal to acquire the Belvedere Garden Property in Tsuen Wan and Provident Centre Proeprty in North Point for HK$1.9b was approved unitholders. Mgt expects to complete th acquisition before end-Mar and see immediate yield accretion.

BOA-ML maintains Neutral, lifts TP to HK$4.40.
Goldman keeps at Neutral, raises TP to HK$4.20 from HK$4.
JPM keeps at Overweight, raises TP from HK$4.45 to HK$4.88.

Tiger Air

Tiger Air: 3QFYMar12 results in line with Citi’s expectations but below consensus.
Tiger posted a net loss of $17m, due to decline in load factors, higher fuel costs, further weighed by provision for doubtful receivables of $7m and exceptional items of $1.35m.

Losses at its Spore unit persisted in its seasonally strongest quarter, although its loss of $4.8m was an improvement over 2QFY12’s loss of $12m. This was bcs new aircraft meant for Tiger Australia’s expansion were diverted to Tiger Spore after Tiger’s domestic Australia services came under regulatory restrictions, resulting in sharp capacity increase.

However, Tiger Australia’s losses were narrower than expected at $8.6m, an improvement over the $27.2m loss qoq, as the summer peak season enabled the airline to recover some fixed cost. Mgt also disclosed for the first time that Tiger Australia was previously profitable in 3QFY11, dispelling the misconception that the unit had never been profitable, and lends credibility to Tiger’s decision to remain operating in Australia.

Citi notes that the operating and financial results suggest Tiger is past its worst moment, but cautions that Tiger’s liquidity position looks precarious, with the current ratio at 0.6x even after the recent rights issue which raised $155m net proceeds. Says Tiger urgently needs to improve its operating cash flow generation (only $2m in 3QFY12), maintain balance sheet flexibility despite aggressive fleet plans, and hope that no major external shocks occur in 2012 that may further strain its cash position. Keeps Sell with TP $0.55.

UOBK however raises TP to $0.64 from $0.59.

SG Market

SG Market: Spore shares may consolidate recent gains following Wall Street's stumble last night. With the market already is a grossly overbought situation, the profit-taking we saw yday is likely to continue today. Attention is reverting back to Europe where Greece’s problems are not resolved, Portugal is becoming an issue and Italy could be next.

Expect a a near-term pullback in the STI to around 2850, with 2900 as initial cap. Olam may rise on a Russian deal but Tiger Airways may face pressure after reporting a 3rd quarterly loss.

Monday, January 30, 2012


Sakari: UOB Kay Hian has technical SELL Call with a 8% potential return. Recommends SELL with TP of $2.10. Stock has turned down from the resistance level and the upper band of the Bollinger as well. The Stochastics indicator has also crossed below its signal line in the overbought region and these indications suggest that prices are likely to fall towards the resistance-turned-support level at $2.10. Alternatively, investors may exit their shorts if prices move above $2.43.

Mandarin Oriental

Mandarin Oriental: Daiwa downgrades to Hold from Outperform, citing limited share-price catalysts in the near-to-medium term despite its attractive high discount to NAV.

But house notes the company's asset-light business growth path, via management contracts, should enable it to reach its target of 10,000 rooms and strengthen its global franchise. Adds that the 35% Ebitda margin for its the hotel management contracts should improve given a pick-up in scale, but the positive earnings impact is likely incremental, especially as it cuts its 2012-112 RevPar growth forecast for the HK luxury hotel sector to 5% from 7%, in line with the city's visitor-growth outlook.

House cuts its price target to US$1.52 from US$2.44, based on 10.5x 2012 EV/Ebitda from 15.5x previously given decelerating RevPAR growth and flat 2012-13 Ebitda forecast.


JLJ: Technical Buy Call from CIMB. House see a lot of positives at current levels. Prices appear to have found a bottom after flattening out since September last year.

The technical landscape is beginning to look appealing with both its weekly MACD and RSI sporting bullish divergences. Aggressive buyers should get in to buy now with a stop below $0.075. Expect prices to rally towards its moving averages around the $0.109 levels followed by retesting the next resistance at $0.14.


Miyoshi: Technial Buy Call from CIMB. Prices are still in a downtrend but prices have tested the downtrend channel support for the past couple of mths. Bulls appear to be able to repel the selling pressure, suggesting that there is a good chance that a rebound could take place here.

Weekly MACD is improving while its weekly RSI sports a bullish divergence. Believe that a rebound is likely on the cards as its intra-day indicators also sport bullish divergence signals. Only aggressive traders should attempt to buy this stock. The rebound is likely to take prices back up towards S$0.10 and possibly to try to test the upper channel resistance at $0.12


SPH: Co. has been awarded the tender for a Sengkang site.
- DMG maintains Neutral, TP $3.91. Think SPH paid a fair price, estimate SPH’s share of site and construction costs at $291m, in-line with valuation of SPH’s stake in the prospective retail mall.

Estimate the mall to cost $1,950/sqft, avg passing rent of S$12.80/sqft which is in line with other suburban malls such as JCube (S$12/sqft) and Causeway Point (S$12/sqft). Value the prospective mall based on a cap rate of 5.5%, leave earnings estimates and valuation for SPH unchanged.


Hyflux: IIFL reiterate Sell, TP #1.07. Note that growth outlook remains murky. Stock price performance could be largely driven by expectations of HYF winning the US$350m-400m desalination water contract in Oman.

Also, the recent divestment of 2 water projects in China could have eased concerns about the company’s ability to recycle capital through divestments of BOT projects. The on-balance sheet funding of Tuas II increases HYF’s net debt/equity to 1.02x in 2012 from 0.75x in 2010, leaving limited financial headroom to fund the Oman project if HYF fails to secure project financing.


DBS: Deutsche has earnings preview. Note that 4Q11 results on 10 Feb, before market opens and expect a solid qtr.

House forecast Net Profit of $713m, -6% QoQ and +5% YoY and expect decent underlying results with NIMs stabilising, strong (albeit slowing) loan growth and no spike in credit costs. Suspect growing macro optimism combined with solid earnings will continue to support the share price near term. Despite the recent rally DBS still trades at just 1.1x F12E P/B.

Gaming / Genting HK

Gaming / Genting HK: Nomura interviews Mr. Takashi Kiso, President of International Casino Institute Inc in Japan, on the country’s casino legislation. He says there is political agreement (btwn DPJ and LDP) for a casino bill given the need to stimulate Japan’s economy/ tourism post the ’11 earthquake and tsunami. Believes a “detail lite” bill legalizing gaming could be submitted in Feb.
Nevertheless, the whole process is expected to be long drawn; even if the bill were approved, licensees could be selected in 2014/15, and the first casino expected to open in 2017/18.
Kiso also believes, i) there could be 2-3 casinos to start (at least one urban and one rural location), eventually increasing to 10 casinos, ii) gaming tax rate to be 20-30%, iii) min invmt >US$4b per location, iv) licensed junkets allowed, v) locals likely need to pay a levy to enter like in Spore.

Expect the Japan gaming theme to be a recurring one, as new updates come in. Officials want to use the Spore IRs as the development model, leaving the Genting group well positioned. Nevertheless competition is stiff with LVS, WYNN, MGM and MPEL all tipped to be interested, and there is no clear leader yet. Genting HK has previously mentioned its interest to enter the Japan market if the gaming bill is passed.

Tiger Air

Tiger Air: announces the completion of its 33% invmt in PT Mandala Airlines of Indonesia. Says the next stage is to reactivate Mandala’s Air Operator’s Cerificate (AOC) which has been frozen since suspension of operations in Jan ’11. The AOC is expected to be reactivated in Feb ’12, after which flight sales will commence ahead of the resumption of flights in Apr ’12.

News is positive as it provides greater clarity on Tiger’s expansion plans in Indonesia, and build upon its existing hubs in Spore, Australia and the Philippines (via SE Air). A more extensive network and greater scale allows Tiger to compete more effectively against other budget carriers, ie. AirAsia, Cebu Air, which have also been growing aggressively in this region.

Technically, the stock appears to have bottomed out at $0.60, and has broken out of the downward trend channel. With the past negative news now behind (ie. suspension of Australian operations and pilot shortage issue), this forms a positive backdrop for the stock to recover. Although RSI and Stochastics are overbought, investors may consider positioning for the longer term. First resistance is at $0.80. Initial support at $0.70, followed by $0.65 (50day MA).

Tiger reports 3QFY11 results today after market.


CRCT: FY11 DPU of 8.7c approx 7.3% yield. 4Q DPU of 2.28c declared. Increase in DPU by 11% was attributed to Minzhongleyuan acquisition and strong rental reversions. Net income for FY11 was 7.5% higher yoy at $119.7m

Gearing declined to 28% with overall interest cost at 2.6%. Rental reversions came in at 11.5% for the yr, substantially improving from 5.1% in FY10. Phase II of CapitaMall Xizhimen was finally opened in 4Q11 which saw a 10% increase in shopper traffic. Other potential upsides include AEI for Mingzhongleyuan and conversion of some of the master leased malls.

JP Morgan retains Neutral but raises TP to $1.25.


P Life REIT: Annouced strong set of 4Q11 results which was broadly in-line. NPI at $20.8m, +5.9% yoy and +3.5% qoq, while DPU at 5.52c, +3.2% yoy and +5.1% qoq. Result brings FY11 NPI to $80.3m, +9.1% yoy and DPU at 5.36c, +9.2% yoy.

Strong results primarily due to rev contribution from grp’s Jap nursing home acquired in Jan11 and appreciation of Jap Yen. Rev growth was further driven by higher rent from the SG hospitalproperties due to rental growth rate of 5.3% (under the CPI + 1% rent revision formula)

Going forward, grp remains positive on outlook and intends to focus on consolidating its Japan business for FY12 and remains steadfast in strengthening PLife REIT’s financial position and generating organic growth across the portfolio to sustain earnings stability.

We note that grp’s fundamentals remain strong, with a 100% occupancy for its portfolio, while Leverage ratio stood at 34.8%, well below the 60% threshold, suggesting ample room for to gear its balance sheet to fund acquisitions, backed by a strong interest coverage of 7.9x.
At current price, grp trades at 1.2x P/B with a 5.3% yield.

Ratings as follow:
Phillips maintains Neutral with $1.88 TP.
UOB Kay Hian maintains Buy with $2.00 TP.

SG Market

SG Market: Spore shares are likely to open lower, tracking losses in most regional bourses and as the market digests the index's climb above the key 2910 resistance level last Fri. But the reopening of China's stock markets after last week's closure for the Lunar New Year holiday will likely be closely watched but until a deal is finally struck, Greece's debt issues will remain a source of uncertainty and might dampen the risk mood ahead of the EU summit today.

With the STI breaching above 2900 resistance, the next upside target is now tipped at the psychological 3000 level. However, a temporary pullback may not be unwarranted given the extreme overbought nature of the market with stochastics indicators above 90 and RSI at the 72 mark. CapitaRetail China Trust and Parkway Life Reit may be in focus after releasing results.

Friday, January 27, 2012

Mapletree Industrial Trust

Mapletree Industrial Trust: Credit Suisse keeps at Neutral with a $1.22 target price despite 9M12 DPU rising 17% yoy to 6.19¢, beating its forecasts. Notes that MIT’s DPU growth was driven by stronger occupancy and rents due to better economic conditions and the expiry of JTC rental caps, contribution from the JTC tranche 2 acquisition and lower-than-expected interest costs. The house raises its FY12-13 DPU forecasts by 1-1.5% on lower interest costs.

However, it opines MIT’s strong growth is reflected in the price. Highlights that while its valuation looks attractive at FY12 yield of 7.7% and P/B of 1.1x, this offsets its portfolio risk, which could come under pressure if global economic conditions worsen, given that its Singapore focused portfolio is highly exposed to US and European economies.

SP Ausnet

SP Ausnet owns and operates electricity transmission and electricity and gas distribution assets in Victoria Australia. As a utilities business, it operates in very highly regulated mkts, and in most cases, business appears unexciting but stable and dividends are often sought after by investors in such businesses.

Counter has been very thinly traded over the last yr and is off any houses coverage, with avg vol for the last few mths at approximately 20-50 lots done/day. Based on Co’s latest 1H12 results, grp saw an increase in yoy total rev of 5.7% to A$831m, a 6.5% increase in EBITDA and a 3.7% increase in EBIT. Driving these results has been a combination of price adjustments, continued growth in o regulated asset base and higher rev contributions from Select Solutions.

An interim distribution of 4 Aus cents was also declared, and grp appears on track to deliver a full-yr distribution of 8 Aus cents. Grp has recently just refinanced its debt, via the raising of A$272m of bonds. Next major refinancing is due in Mar13.

Tiger Airways

Tiger Airways: UBS: maintains Sell, TP $0.58. Note that Tiger still a fragile business. Expect Tiger Aus to remain loss-making.

Other areas face overcapacity risk and estimate that proceeds from a rights issue ($155m) and the sale and leaseback of 2 aircraft ($90m) in 3Q12 will help Tiger Airways overcome the short term funding gap. However, the FY13 outlook will depend on its ability to return to positive operating cash flow in the next six mths.


Ezion: Technical Alert, share price is beginning to test its 1 yr high again of $0.76. A close above that level could see higher highs.

Recall, share price jumped 3.5% yesterday, after Co. announced it has secured a US$93.5m charter contract to deploy a service rig in North America.

DMG note that based on preliminary estimates, assuming US$8m net profit per annum, the service rig contract could lift FY2012-2013 forecast earnings per share (EPS) estimates by 3% and 9% respectively, citing Ezion as house top pick (TP $1.00) in the small/mid-cap O&G sector given its strong EPS growth.

Meanwhile, CIMB reiterated its 'O/p' call on Ezion, adding that investors have come to appreciate Ezion's solid track record, together with a strong cash-generating business, backed by assets under long-term contracts.

Berlian Laju

Berlian Laju: Possible negative sentiments, after Co. announced it will stop servicing its debt in a move that will affect US$418m in repayments. The debt moratorium will enable the Berlian Laju group to review its financial position and arrangements, cited Co.

Decision to freeze payment on its debt follows a covenant breach on a loan granted to a Berlian Laju subsidiary. Fees charged by shipping firms to transport oil and other commodities have fallen sharply in recent months, hurt by a slump in Chinese buying and a surplus of vessels, while the Baltic Exchange's main sea freight index, fell to its lowest in over three yrs on Wed

United Fiber Tech

United Fiber Tech: Announced that it has entered into a $1.5b RTO agreement which would see the Co. refocusing on coal mining.

Firm announced it has agreed to acquire 66.9998% of PT Golden Energy Mines from PT Dian Swastatika Sentosa by way of exchange for new ordinary shares. United Fiber will issue around 44b new shares at $0.035 each, representing approximately 92.7663% of the enlarged issued share capital of the company. Proposed acquisition will result in a change in control of the Co.

First REIT

First REIT: Announced strong 4Q11 set of results which were ahead of estimates. NPI at $13.7m, +82.2% yoy and flat qoq, while DPU at 1.93c, +121.8% yoy and flat qoq. Result brings FY11 NPI to $53.4m, +78.9% yoy and DPU at 7.01c, +105% yoy.

Strong performance was mainly due to the maiden contributions from two new properties in Indonesia – namely, Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals acquired in Dec10, as well as the South Korean Sarang Hospital acquired in Aug11 and divestment gains from grp’s Adam road property.

Going forward, grp appears confident of prospect, citing that its resilient structure has held out well, providing consistent growth across all its properties. Believe that the healthcare mkt in Asia is largely underserved and continues to hold potential growth prospects and aims to continue exploring yield-accretive acquisitions in Asia.

We note that grp’s fundamentals remain strong with a low Leverage ratio of 16%, with a very comfortable 12.3x interest coverage ratio. At current price, grp trades at 0.95x P/B with a robust yield of 9.2%.

Mapletree Industrial Trust

Mapletree Industrial Trust: Announced strong 3Q12 results which was ahead of grp’s initial forecast. NPI at $45.6m, +23.5% ahead of grp’s forecast and +10% qoq, while DPU at 2.05c, +14.9% ahead of grp’s forecast and flat qoq.

Strong results due to average portfolio occupancy rose to 95.1% from 94.5 qoq, while REIT had significant upward rental revisions of 26.8%, 27.5% and 31.5% for its Flatted Factories, Stack-Up/Ramp-Up Buildings and Warehouse respectively. Retention rate for qtr was also higher at 81.8% vs 79.4% qoq.

Going forward, grp remains positive on outlook and believes tt REIT is on track to exceed the Forecast estimates for FY11 as stated in its IPO prospectus. Barring any additional shocks to the global economy, expect mkt rents to stay flat in the near term.

We note that grp’s fundamentals remain strong with an acceptable leverage ratio of 39.1%, well below the 60% maximum threshold, with strong interest coverage at 6.3x. At current price, grp trades at 1.1x P/B with an annualized yield of 8.2%.

Ratings as follow:
Deutsche maintains Buy with $1.26 TP

Keppel Corp

Keppel Corp: Announced strong 4Q11 results which were broadly in-line, albeit at the higher end of estimates. Rev at $2.8b, +31% yoy and +3.7% qoq, while net profit at $389m, +11% yoy and -4.2% qoq and vs consensus estimates of $380m. Result brings FY11 Rev to $10.1b, +10.3% yoy and Core net profit to $1.5b, +14.1% yoy, operating margins improved slightly at 18.8% vs 17% yoy.

Strong performance driven by grp’s O&M Division with rev at $5.7b, capturing a good share of global high spec jackup orders, with record level of $10b order wins for FY11. Most of the new orders were for house proprietary designs, in particular its KFELS B Class jackup. For FY11, Grp delivered 40 major O&M projects.

Rev from Infrastructure Div +14% to $2.9b, with higher rev generated from the cogen power plant in SG, while rev from K-Land at $1.5b, +41% yoy, on back of completion of several projects/phases in India, China and Vietnam. Going forward, grp remains confident of prospects, and tip global demand for oil to continue rising with major oil Co’s announcing budget increases, while Day rates have been strengthening for Jack ups and Semi-Subs. Net order book of $9.35b would keep shipyards busy till 2015.

We note that grp’s fundamentals remain strong with a low net gearing of 0.17x, while Co. has declared a final div of 26c, bring FY11 total Div payout to 43c or 3.9% yield. At current price, valuation appears fair, with grp trading at 12.8x FY11P/E vs historical average of 13.8x.

Technically, orderbook quotes suggest $10.90 may cap any gains for the session, while Julpeaks around $11.30 may offer a near-term cap.

Ratings as per follow:
Citi maintains Buy with $12.00 TP
Daiwa O/w with $11.80 TP
Deutsche maintains Buy with $13.40 TP
DMG maintains Buy with $11.80 TP
JP Morgan O/w with $12.70 TP
Kim Eng maintains Buy with $12.60 TP
Macquarie maintains O/p with $11.19 TP.
Nomura maintains Buy with $11.10 TP
UOB Kay Hian maintains Buy with $11.50 TP
CIMB maintans Neutral with $10.20 TP

SG Market

SG Market: Spore shares are likely to consolidate recent gains amid conflicting cues from the US and Europe while regional markets opened mixed. The local market could be headed for a subdued day after US markets retreated overnight as the fizz from the Fed's monetary accommodation announcement went flat but Asian markets could take some comfort from strong performances put in across Europe last night.

The STI is tipped to trade within a 2790-2960 range, with the index poised to head towards 2960 if it breaks immediate resistance at 2910. Keppel Corp will get a little boost from its record 4Q and 2011 earnings but much of the good news may have been priced in after the stock's 15.7% rise year-to-date. Shipping stocks may be in focus after Indonesia-based tanker company Berlian Laju Tanker disclosed it will cease debt payments after breaching a loan facility's covenants. Meantime, MIT and First Reit results were ahead of forecasts while UFS announced a $1.5b reverse takeover deal to acquire a coal mining company.

Thursday, January 26, 2012

Upcoming IPO

Upcoming IPO: Newswires say Spore-based M&L REIT is planning to launch an up to $500m IPO in Spore early in 2Q12. The IPO, if successful, will be one of the biggest offerings this year in Spore and comes after a nearly 8-month period in which there were no IPOs larger than $500m. The listing was initially planned for late last year, but delayed due to weak mkt conditions. Recall, PCRT raised US$608m in May, and mkt sentiment soured thereafter.

M&L REIT is said to be awaiting approval from the MAS for a capital market license, which will allow the trust manager to market the IPO and tap potential cornerstone investors. It apparently already has SGX listing approval.

The REIT will comprise hotels in Australia, Japan and Singapore--including Sydney's Sheraton Four Points and the Ibis Singapore.
DBS, JPM and UBS are handling the IPO.

Mkt watchers think the IPO could open a window of opportunity for companies like Manchester United and semiconductor company UTAC to revisit Spore listings.

SMM and Kep Corp

SMM and Kep Corp: Religare issues a relative value strategy note. Sembcorp Marine (Buy, TP: $5.85) has recently outperformed Keppel Corp (Buy, TP$12.20) by an extreme amount and history argues for mean reversion according to house’s Peer Divergence Model. Street feedback suggests that investors may either be short-covering, expecting order wins from SMM to catch up or could be buying SMM SP on special dividend expectations. A special dividend announcement from SMM is expected, but believes SMM shares have already run on the expectations and KEP is now likely to Outperform in the near term.

Advocates switching out of SMMand into KepCorp, or buying KepCorp outright for long exposure to the Singapore offshore yards industry with the best near-term risk/reward and at a cheaper valuation.


NOL: Trading Central has Technical Buy Call. Note the upside prevails as long as $1.22 is support. Alternative scenario: below $1.22, expect $1.15 and $1.1.
he RSI is trading above 70, which could mean that either the stock is in a lasting uptrend or just overbought and that therefore a correction could shape (look for bearish divergence in this case). The MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (respectively at $1.21 and $1.13).


PEC: Grp recently announced that it will hold an EGM on 10 Feb12 for a proposed share purchase mandate where the grp will be authorized to purchase up to 10% of the total
issued shares (excluding treasury shares). The proposed mandate will also improve the group’s return by reducing its excess cash.

OCBC believe shareholders would generally vote in favour of the resolution as it would provide direct support to PEC’s share price, which appears to be steeply undervalued. Last traded price is $0.765 versus NAV of $0.80 and net cash of $0.61 per share. House maintains BUY with unchanged fair value estimate of $0.92.


Olam: OCBC raises its fair value estimate to $2.63 from $2.05 but maintains Hold Call, after bumping up its valuation peg to 18X FY12 EPS from 14X previously. Not ethat in view of the still uncertain economic outlook, house not entirely convinced that the worst is behind us.

Nevertheless, recognize that demand for soft commodities, especially the essential food items, will continue to be well supported by population growth in China and the other developing countries. But views the stock's 24% year-to-date rally was driven by liquidity and talk of impending monetary easing in China amid the specter of weaker-than-expected growth prospects.


Venture: UOB Kay Hian maintains Buy with $7.95 TP. House note that the Worst is likely over. Customers are still cautious but the outlook appears to have stabilised. This is a huge contrast to 4Q11 which saw overwhelmingly negative sentiment. Mgt expects 1H12 to be flat with a slight pick-up in 2H12.

Add that Venture has a pipeline of new projects in the printing & imaging (MEMS-based inkjet printers), retail store solutions (secured financial transaction cards), communications (bidirectional optical devices) and industrial (power electronics) segments, most of which will contribute more significantly in 2H12.


SIA: UOB Kay Hian has earnings preview. House expect a 72% yoy decline in 3Q12. SIA will report 3Q12 results on 3Feb. At the group level, house expect net profit -31% qoq and -53% yoy to $135m, excluding exceptional items. Group operating profit is expected to decline 80% yoy and 16% qoq, primarily due to expectations of lower operating profit for the parent airline on the back of lower load factors
(-2.5ppt) and higher jet fuel prices (+27%).

Pax yields are expected to show qoq growth due to seasonality and a weaker SGD. However, think growth will be moderate at 0.9% as data from IATA indicate that premium traffic grew just 0.1% in Oct, the slowest growth since Mar 10. This could impact yields from the front-end for SIA. Overall, house maintains Hold with $10.90 TP.


Noble: HSBC says cotton has returned to normalized volatility in 4Q11, which reduces the risk of farmer defaults which occurred in 3Q. Likes that mgt has inidacted a Group-wide restructuring to enhance communications, decision support, efficiencies and pdt/ country centric profitability.
The house also expects a new CEO to be announced before 4Q11 results on Feb 28 – one which focuses more on strategy and vision for the Group while internal senior mgrs will be elevated to take on overall operational work. Says this opens the door for a qualified non-industry candidate to be appointed, while giving more clarity on the direction of the Group.
Believes the current P/E of 10.7x FY12E adequately reflects the current risks. The house upgrades Noble to Neutral from Underweight, raises TP to $1.51 from $1.41.

Genting SP

Genting SP: They refused to divulge casino traffic, but both integrated resorts (IRs) were upbeat about the number of visitors that came calling as the Year of the Dragon kicked in.
The Shoppes at MBS saw visitation figures over the last four days of this festive period (Jan 21-24), increase 21% on avg over the same period in the last CNY, likely boosted by the opening of the Bayfront MRT station on Jan 14.
Last year, MBS said it received 885k visitors, including hotel guests, shoppers, diners and tourists, over the four-day CNY holiday weekend from Feb 3-6.

Separately, a RWS said it received > 125k visitors in the first two days of the CNY holiday. There was also 'a surge in guest numbers to Universal Studios Singapore, as families took advantage of the long weekend break'.
Last year, RWS received 150k visitors in the first two days of the CNY holiday. But over the four-day holiday period (Feb 3-6), that figure jumped to > 400k visitors, including those to the resort's public areas.

A foreign brokerage house said GENS could see flat to lower VIP gaming revenues in 4Q11 due to the delayed opening of the 200-luxury room Equarius hotel and 20-plus beach villas to the first quarter. Equarius and the beach villas were supposed to have opened by Dec. The house added that, with the shorter window between Christmas, New Year and CNY this year, GENS could also see lower VIP volumes than last year.
Meanwhile, MBS may see sharply lower VIP gaming revenues for 4Q11 as it apparently turned hawkish about giving credit to gamblers in the wake of global economic uncertainties.

Jaya Holdings

Jaya Holdings: In response to SGX’s query regarding reports on its possible acquisition by Dutch shipbuilder IHC Merwede, Jaya Holdings confirmed that Co. did receive an expression of interest by the Dutch Shipbuilder to acquire certain of the company’s assets but no agreements have been entered into and Co. will update shareholders if and when such agreements are entered into.

Otto Marine

Otto Marine: DnB NOR reiterate Sell, TP $0.12. Note that FY11 profit warning is not unexpected; modelling 4Q11/FY11 losses of $2m and $53m respectively.

House argue that market has yet to fully priced this in, as consensus is expecting a marginal profit of $2m in 4Q. Expect to revise down 4Q estimates to take into account the profit
reversal, believed to be associated with the fourth and last Mosvold newbuild. Reiterate SELL on the back of potential negative triggers.

Kruez Holdings

Kruez Holdings: RB Milestone initiates coverage with $0.458 TP.
Note that increased Offshore Capex and Focus on Emerging Asia will fuel growth. With global economic revival, demand for oil has increased. Frost & Sullivan estimates cumulative offshore drilling and completion capex in Apac for 2010-2012 to be around US$3.3b, of which around 70% would be contributed by countries like Malaysia, Philippines, India, China and Indo.

Close Association with Swiber Group also bodes well, allowing grp to gain greater and easy access to the offshore construction industry while opening potential opportunities to establish business relations with Swiber Group’s customers.

Since listing, Kreuz has increased the strength and size of its order book which stood at US$185m as on Nov11. Additionally, mgt is focused with constant lookout for any strategic acquisition opportunity in order to expand the subsea service portfolio. Such strong and focused management with diverse knowledge and experience works as a competitive advantage for Co.

Westminster Travel

Westminster Travel: Trading Halt. Mandatory unconditional offer by substantial sh/h e2-Capital. Offer will be at $0.089 per share, a disc of 22.6% to last traded price on 28 Dec. Offeror intends to keep listing status of co and offer was due to acquisition of effective stake of 58.75% after a vendor (controlling sh/h SBI Travel) was unable to settle a loan becoming payable.


AIMS REIT: Stanchart maintains Outperform but increases TP from $1.25 to $1.42. 3QFY12 DPU beat forecasts by 16% on better-than-expected achieved rents and occupancies. Earnings upgraded by 13%. Counter has a high yield of 11% in FY12/13E and its potential for growth via redev of other portfolio assets remains.

Spore market

Spore market: likely to open up after the higher US close overnight, boosted by the Fed’s extension of its previous pledge to keep borrowing costs low through at least late 2014, as well as Ben Bernanke saying he is considering additional asset purchases, which sets the table for additional monetary easing.
A the Hong Kong market resumes trading today, and more participants return, expect to see greater trading interest as well.
In the region, KOSPI and Japan are both flat, at 8.14 am.

Amidst today’s positive backdrop, the STI may breach the 2900 level. Next resistance is 2930 (50day MA), followed by 3000. Momentum is positive with the key indicators above neutral and rising positively. Support is some distance away at 2800.

Wednesday, January 25, 2012


SIA: Engineers inspecting Airbus A380 aircraft for cracks on a part inside the wings have found similar flaws on at least one aircraft, industry sources said yday. European safety authorities ordered urgent inspections on just under a third of the superjumbo fleet last week after two types of cracks were discovered on a bracket inside the wings of the aircraft.
Airbus and safety authorities are stressing the 525-seat airplane is safe to fly as engineers check wings for more tiny cracks in a type of wing bracket known as rib feet.

The checks affect some 20 aircraft operated by SIA, Emirates and Air France, making up just under a third of the current A380 fleet. Airbus has sold 253 of the aircraft and 68 are in service.
Airlines have until Friday to complete a first phase of tests after which Airbus or European safety authorities are expected to give an update on any new findings.

China MinZhong

China MinZhong: CIMB has Technical Buy Call. House see a lot of positive at current levels. Prices appear to have completed a 5-wave move down from the high of $1.90 and the rebound from the $0.665 low has taken prices above its moving averages.

The technical landscape also looks fairly positive with both its MACD and RSI moving above their respective resistances. Buyers should wait for a pullback towards its moving averages before jumping in long. Stop losee at recent low $0.815. Longer term, expect prices to continue on higher to $1.10-1.14, where the latter is the 38% Fibonacci Retracement level.

SembCorp Industries

SembCorp Industries: OCBC note that counter may recover further after overcoming its key downtrend channel, $4.46 key resistance and 200-day MA as both the RSI and MACD are still trending steadily higher. Tips the stock to test the $4.80 immediate resistance, with the next obstacle at $5.30. The $4.46 level is now the key resistance-turned-support, with the next support at $3.90, a key trough in Oct and Dec.


Boustead: Announced it has entered into an agreement to purchase 50m new shares in OM Holdings, an ASX-listed Co. engaged in manganese mining operations in Aus, China and SG. Boustead aims to support OMH in the construction of its infrastructure needs (eg. energy intensive ferro alloy manufacturing facilities) as the latter expands its bases Asean.

OMH guided for lost in FY11 due to non-recurring items, although it would be profitable at the EBITDA level, due to various non-recurring items, deferred mining costs and stock value adjustments. Transaction would see Boustead paying for stake in OMH at only 0.56x book.

The purchase price of A$0.35 per share, an 8.8% discount to the 15-day and 5.2% discount to the 30-day weighted average price of OMH and Boustead would eventually end up with a 8.6% stake in OMH if the transaction goes through.

As at 1HFYMar12, Boustead was in a net cash position of $168.4m. Even after this investment, it would still have large amount of cash waiting to be deployed. Nevertheless, this is a positive first step in making more efficient use of its capital. Kim Eng maintains BUY recommendation and $1.32 TP.


F&N: robust demand for the launch of Watertown, a JV btwn FNN, Far East and Sekisui House. As of yday afternoon, ~500 units were sold out of the 992 unit project. Turnout at the showflat was good. ASP was ~$1100, inclusive of a 10% developer discount, 5% early bird discount and 3% stamp duty absorption.
This compares with Sim Lian’s A Treasure Trove launched at ~$866 psf in Sep, and located opposite to Watertown.
The Watertown is located in Punggol Central, next to Punggol MRT. It is a mixed devt comprising of suites, SOHO apts, sky patios and condos. A key feature is the integration of Water Point, a retail mall of ~370k sf which will incl an IMAX cinema.
Deutsche notes pricing is broadly in line with its forecasts and estimates ~26% margins based on estimated break even of $809 psf. The house has a Buy rating with TP $7.06.


Guocoland: 2QFYJun12 results.
Revenue at $145.8m, -43% yoy, +34% qoq.
Net profit at $12.9m, -67% yoy, but up from a loss of $12.8m qoq.
Yoy performance was lower due to the previous quarter recognizing the sale of completed projects in China, such as Ascot Park in Nanjing and SOHO units in Shanghai GuoSon Centre, in addition to progressive recognition of Spore residential projects.
The better qoq performance was mainly due to faster construction progress for the group’s Spore residential projects, such as Goodwood Residence.

Mgt notes that the latest round of cooling measures in Spore (ie. the Additional Buyer’s Stamp Duty) is expected to moderate further invmt demand for private residential properties; and in China, believes it is unlikely that in the short term, the govt’s property cooling measures will ease. Says business conditions will continue to be challenging, but is optimistic on prospects for the year.

The stock trades at 0.8x P/B
Pre-results, UOBK had a Hold rating with TP $1.80.


CCT: 4Q11 results above consensus.
DPU came in at 1.92cts, +4.9% qoq, mainly due to higher non tax-deductible add backs. Yoy, DPU was -1% yoy, due to loss of income from divested properties and negative rental reversion from Six Battery Road and Capital Tower, but was offset by strong earnings from Raffles City Singapore.
Portfolio occupancy slipped 1.4 ppt, though mainly due to ongoing asset enhancement works at Six battery Road.
Gearing inched up 2.8ppt to 30.2% and continues to be healthy with a 4.1x interest cover. CCT obtained $650m of committed funding to meet the 2012 refinancing needs, of which $200m will be through its MTN programme at a rate of 3.25%. CCT remains on the lookout for acquisitions and has a $1b debt headroom if it gears up to 40%. Nevertheless, mgt noted that the lack of attractively priced assets severely limits targets at present.

Stanchart maintains Outperform with TP $1.30. Says CCT is already pricing in trough prime office capital values of $1500 psf at current levels. Notes the stock trades at 0.7x P/B, provides FY12E DPU yield of 6.5% and has a very healthy balance sheet.
UBS keeps at Buy, but trims TP to $1.28 from $1.40.

SG Market

SG Market: Spore shares are likely to usher in the Year of the Water Dragon with a small splash, tracking gains in Wall Street and regional markets despite concerns over stalled Greek debt talks and the IMF's lowered global growth forecasts. But market activity may be quiet as we come out of the long weekend holidays and with Hong Kong market remaining closed. The STI is expected to close the breakdown gap at 2853 before aiming for the next resistance at 2900, with support at 2795.

Apple-suppliers Hi-P and Broadway may advance despite a profit warning after Apple posted record earnings.

Friday, January 20, 2012

Genting SP

Genting SP: UOBK met with mgt. Expects poorer-than-expected gross gaming revenue (GGR) at Resorts World Sentosa (RWS) in 4Q11 - the first significant qoq contraction since the RWS begun operations. Believes VIP visitorship took a dip in the traditionally strong 4Q attributable to the close time gap between the Western and Chinese New Year festive season in Dec-11 and Jan-12.
But anticipates a better 1Q12 as RWS is set to open its Equarius Hotel in conjunction with the CNY Year festive season which should draw more VIP players to RWS. Also, RWS has recently ramped up its slot count to 2,400 units (vs max allowable 2,500 units) from the earlier 1,859 which should strengthen the mass market business.
Opines that legalisation of junket operators could be round the corner (ie. within next few mths) premised on two factors – a) mgt appears more confident with the junket licensing issue, and b) CRA’s audit period on the junket operators has ended.
Reiterates Buy with TP$ 2.04.
The stock is +5.5% at $1.62.


Sakari: DMG Sales gives their thoughts on the Co. Note that new Mgt really seem to be changing Co. around. Sakari is due to report results on the 20th February, and all going well, the results should (at a min) be in line with mkt expectations. The reason why stock is exciting is because the new Mgt are proving themselves to be consistently able to deliver into expectations, not only on vol but also on the cost side of the equation as well. Assuming that Sakari can continue this throughout the entire year, then Sakari should grow earnings by 94% in FY12, and given the current 7x P/E this does not seem expensive. More importantly, the target is not achieved by changing any assumptions to house coal price forecasts which remains at a very reasonable blended average price of $102 ton. Historically they have managed to sell the coal at a 5% (Sebuku Island Mine) to 20% (Jembayan Mine) discount to the Newcastle bench mark ($114 at today’s spot price) which equates to $108/t so there is scope for prices to still fall and meet house targets. New mgt from PTT are very successfully ramping up the new Sebuku Island mine which is becoming a company transforming operation. New mine is already producing 2.5mtpa (+60% yoy) and is scheduled to continue growing to 5mtpa by 2014. Effect on costs has been just as dramatic, as the benefits of economies of scale kick in. Technically speaking Sakari broke out of short term resistance today and looks set to test the $2.50 level on strong vol. Given the 7x PE and forecast 94% EPS growth, the counter is not expensive and could rally back up to the $3 level where it was 6 mths ago. Stop loss at $1.80.


GLP: Goldman initiates at Buy with TP $2.34, based on an NAV disc of 10%, reflecting GLP’s earnings quality and growth potential.

Says GLP offers the leading China/Japan footprint of modern warehouses, a sector where size and depth of network are key competitive advantages. Notes GLP is geared towards several beneficial trends: 1) domestic consumption in China (76% of China leases) driving logistics demand with China’s staples spending to leapfrog US by 2020E; 2) logistics outsourcing in China/Japan; and 3) operating in markets with a shortage of modern warehouses.

Expects GLP’s leadership in China/Japan and its China expansion to span years, funded by Japan’s annuity income.
Sees GLP outperforming its sector with a +16% EPS 3-year CAGR through 2014E, driven by volume build-out (less price/rents), potentially rising to +20% if its development starts target are met.
Believes GLP is several years ahead of its peers in terms of scale and footprint, and that the mkt is not attributing any value to its development business, despite its track record and visible development pipeline.
Adds, in China, GLP operates in a preferred segment within real estate where there are less govt controls, and access to onshore and offshore capital are favorable vs. constrictive for other segments.
On the Japan segment, the house notes stable margins/ cash flow may lead to dividend surprise.

First Ship Lease Trust

First Ship Lease Trust: 4Q11 results – negative surprise in DPU cut.
Revenue at US$29.6m, +23% yoy, contributed by the full quarter lease revenue from the two newly acquired vessels leased to TORM A/S in Jun ’11, as well as higher freight income generated by the two pdt tankers trading in the spot mkt.
Net profit at US$7.4m, vs $0.9m loss in 4Q10, mainly due to a US$2.5m write back of a provision for call on a banker’s guarantee made in 2Q11, and US$5m receipt of settlement from Daxin Petroleum pursuant to the amicable out-of-court settlement in Nov ’11.
Income available for distribution jumped 4-fold to US$19.7m, but net distributable amount collapsed to US$0.7m, -89% yoy, as mgt decided to conserve cash and reduce the distribution. FSLT intends to conserve cash, strengthen its balance sheet to stay more firmly within its loan covenants, citing deteriorating freight rates and asset values as well as heightened counter party risk.
DPU cut to US 0.1 cts from US 0.95cts yoy. This translates to an annualized yield of just ~1.7% based on last close at $0.30.
NAV drops to US 53cts/ sh, -7% yoy, which translates to a valuation of 0.44x P/B on last close at $0.30.
The stock gapped down at open today, and is -22% at $0.235 on above avg volume.


AusGrp: Technical Buy Call by CIMB. House note that the corrective rebound from the August 2011 low does not look complete, suggesting that there is still room on the upside from here. Prices have been trading in a sideways manner since the rebound to its 50% Fibonacci levels.

Think that the next leg higher is likely to take place soon given that its MACD has now moved back into positive territory. However, its RSI is still building base above the 50-pts mark. Only aggressive traders should attempt to buy this stock and place the stop below the recent swing low of $0.305. The next leg of the rebound could send prices higher towards its 62% Fibonacci Retracement level at S$0.41 or at least S$0.39.


DMX: Technical Buy Call by CIMB. House note that stock broke out of its downtrend resistance trend line recently and has stayed above its key resistance turned support at $0.235. As long as prices continue to do so, we reckon that the bulls could continue to push prices higher to try to fill up the $0.305-0.32 gap.
Technical indicators continue to show bullishness with its MACD now back above the zero line and its RSI above the 60-pts mark. The stock is still a buy now with a stop placed below $0.235. A drop below $0.235 would mean that the downtrend has resumed.


Azeus: Awarded a 3 year IT service and BPO contract worth approx US$7.9m by by HK govt, with effect from 1 Dec 2011. This is the 3rd time Azeus has been awarded the contract and marks 10 years of a strong working relationship with the intellectual property department (IPD). Scope of work includes IT support and maintenance services for the In-House hardware and software as well as Front and Back Office ops services. Azeus will also provide support and maintenance to mission critical e-filing and online search systems, project mgmt and admin services. In addition, system enhancement services may also be provided when the need arises.


Olam: MS remains O/w after mgt meeting. Note of steady business momentum, no negative suprises.
Continue to rate Olam amongst top picks in the ASEAN consumer space. Business momentum is steady, valuations (despite the recent rebound) have room to expand and think there is upside risk to FY13-15 earnings as Olam effectively deploys growth capital. Olam will report 2QF12 results on Feb 14 after market close and house have modeled in net profit of $134 m (+19% yoy).


Kepcorp: Citi note of more Surprises in store in 2012.
Midway through the Newbuild Cycle, sector fundamentals remain resilient and a resumption of the newbuild cycle is on the horizon. Expect the under-investment in semisubs (since 07) to reverse and play catch-up to drillships.

Raise orderbook assumptions by 20-25% over 2012-13E and expect order wins to reach $5b for next two yrs. Maintain Buy, TP $12.00 from $10.35 and see further upside given a potentially stronger orderbook scenario. Raise fair value multiple for the O&M to slightly above mid-cycle valuations.

Golden Agri

Golden Agri: Citi maintains Buy, TP $1.09.
Note that GGR's subsidiary PT Ivo Mas Tunggal has received Roundtable on Sustainable Palm Oil (RSPO) certification for 2 of its subsidiaries PT Ramajaya Pramukti (RJP) and PT Buana Wiralestari Mas (BWL).

Key positives:
a) Biggest and most liquid: With a market cap of US$6.9b and ADT of US$32m/day.
b) High likelihood of beating consensus estimates again in 4Q11 (GAR’s 9M11’s Net Profit already accounts for 83% of consensus’ latest FY11E earnings estimates, FY11 earnings on Feb 27).
c) RSPO certification helps reaffirm GAR’s commitment towards achieving environmental sustainability.

Overall, maintain GGR as top pick in the ASEAN CPO space.

Marco Polo

Marco Polo: Has secured a ship outfitting contract for a construction vessel with a third-party customer worth $22.5m. Co will be responsible for the engineering, procurement and installation of equipment for an existing hull. The Contract, which will involve the most sophisticated and complex vessel to be handled and will expand the repertoire of the Group’s ship repair and conversion business. The contract is expected to be recognized progressively over 12 mth period.

Including this contract, co will have a YTD orders worth $57.5m. Contract is sizeable given co’s full yr rev of $83.0m in FY2011. Co currently trades at 6.9x current P/E, peer ASL Marine trades at approx 6.5x P/E


AIMS REIT: Stable results. 3Q DPU at 2.6c compared to 2.5c in 3Q2010 and prev quarter. NPI at $15.2m +4.3% yoy -1.8% qoq.

Increase in rev was due to contribution from 29 Woodlands Ind Park in Feb 2011 offset by sale of property in Changi South, Japan warehouse property and redev of 20 Gul Way.

Property at 31 Admiralty Rd classified as held for sale and the sale is expected to be completed in 1H2012 which may result in a one-off gain and DPU.

AIMS has current NAV of $1.37 and is trading at approx 0.7x P/B as of closing yday.

Mapletree Log

Mapletree Log: Stable results in-line with consensus. 4Q DPU at 1.7 compared to 1.55 prev year same period and 1.69 last quarter. Distributable income for 4Q is at $41.3m +12.2% yoy, flat qoq. 4Q Rev at $71.9m +17.8% yoy with net profit at $47.2m -9.8% yoy

Rev growth mainly due to contributions from the 4 properties acquired in FY 2011, higher revenue from existing assets (overall positive rental reversions, lower vacancies and conversion of some single-tenanted properties into multi-tenanted properties. The conversion also resulted partly in higher property expenses. Mgmt sees return of more attractive acquisitions.

Gearing currently unchanged at 41.4% and will focus on yield+ growth strategy with AEI initiatives and acquisitions. There is approx $300m worth of properties in their sponsor’s pipeline with Mapletree Log having the first right of refusal which might result in equity raising for acquisitions. Occupancy still high at 98.8% though slightly lower than the 99.0% in Sep end.

Expected yield for FY11 is approx 7.6%, note that yr end was changed to Mar 2012.

Houses that maintain Buy include DB (TP$1.01), BNP (TP$1.00) and Stanchart (TP$0.94).

First Resources

First Resources: Maybank Kim Eng initiates coverage with Buy Call and $1.79 TP. House note that with a young palm age profile of 8 years, grp offers a 12% CAGR in FFB output over FY10-14F (or +57% in four yrs) to bring total FFB output to 2.5m tones and is reaping the rewards from disciplined planting, averaging 10,400 ha p.a. over the last five yrs

Despite having a young age profile, FR achieved a low all-in cost of production of USD292/t on the back of FFB yields of 20.2t/ha/yr (FY10) and ranks the second-lowest in terms of production cost among house coverage of palm oil planters, just above IOI Corp.

FR’s low cost structure will help provide greater resilience through price cycles and this is supported by its unplanted landbank of c.155,000 ha in Kalimantan, which is sufficient to sustain its planting target of 12,000-15,000 ha p.a over the next 8-12 yrs. Fundamentals remain sound with a healthy balance sheet to spur expansion and net
gearing at 21% and a policy of paying out up to 30% of yearly profits as dividends.

CapitaCommercial Trust

CapitaCommercial Trust: Announced 4Q11 results this morning which was in-line, albeit at the lower end. 4Q NPI at $68.3m, -3.6% yoy and -1.3% qoq while DPU at 1.92c, -1% yoy and 5% qoq. Results brings FY11 NPI to $277.3m, -7.2% yoy and DPU to 7.52c, -4% yoy.

Drop in NPI and DPU mainly due to lack of income contribution after sales of Robinson Point and StarHub Centre in 2010 and redevelopment of Market Street Car Park. Other reasons are lower occupancy rate and signing office rents being lower than expired rents in 2011. Nonetheless, the increase in rental income from Raffles City, together with the lower property tax payment for the portfolio and interest savings moderated the decline in income.

Going forward, grp remains confident of outlook, while we note that grp’s fundamentals remain sound with a low gearing ratio of 30.2%, with interest coverage at 4.1x, while grp’s total portfolio occupancy levels stood at 97.2%, with Wale for its top 10 tenants standing at a comfortable 4.5 yrs. At current price, valuation appears compelling, with grp trading at 0.71x P/B and FY11 yield of 6.7%.

Ascott Residential Trust

Ascott Residential Trust: Announced FY11 results which was in-line with street, despite a drop in 4Q11 DPU attributed to one-off events. Rev at $75.3m, +3% yoy and +3.2% qoq and DPU at 1.83c, -15% yoy and -18% qoq. Results brings FY11 rev to $288.7m, +39% yoy and DPU at 8.53c, +13% yoy and 10% higher than Co’s initial forecast.

Better yoy operating performance was mainly due to strong performance from Grp’s service residences in SG and UK, as well as accretive contributions from the acquisition of 28 serviced residences in Oct10.

4Q11 however saw DPU dipped 15% yoy, incurred by one-off events, namely, establishment of a US$2b Euro-MTN programme at a cost ofS$0.5m and higher loan related expenses and cash holding costs of $0.8m incurred on early refinancing of secured borrowings due in 2012 and provision of $2.1m for licensing related matters for a serviced residence in China.

Going forward, grp remains confident of prospects, noting that exposure across different economic cycles will continue to enhance stability of income and asset value and expects to weather through the uncertainties and continue to deliver a profitable operating performance in 2012.

We note that grp’s fundamentals remain sound, with Wale of 7 yrars, while gearing of 40.8% stands well within the 60% gearing limit allowable, with an interest coverage of 3.8x. At current price, grp trades at 8.5% FY11 yield and at 0.8x P/B.

CIMB maintains neutral with $1.09 TP.
Macquarie maintains O/p with $1.31 TP
Morgan Stanley maintains E/w with $0.95 TP
Daiwa maintains Buy with $1.33 TP.
UOB Kay Hian maintains Buy with $.25 TP.

Suntec Reit

Suntec Reit: FY11 results better than expected.
4Q DPU came in at 2.48 cts, +7% yoy, -2.1% qoq. FY11 DPU was 9.93 cts, +0.7% yoy.
Contribution from Suntec SG drove the 30% and 10% increase in 4Q revenue and NPI rptvly, excluding which both would have declined 2% yoy on negative rent reversions.
However interest cost savings (avg cost of 2.81%) and better performance from MBFC led to a 3% increase in distributable income.

On operating metrics, Suntec Office occupancy rose from 98% to 99.2% as space surrendered by IDA was filled. Leases were secured at an avg of $8.72psf in 4Q vs $8.41 psf qoq.
Suntec City Mall appears to have stabilized with flattish rents and occupancy. The portfolio was revalued +9.3% on avg with the largest percentage increase from Suntec City Mall (+13% to $2095 psf), bringing aggregate leverage down to 39%.

Deutsche keeps at Hold, with TP $1.23 (from $1.21). Notes downside risk from the 28.5% of retail NLA expiring this year, mainly from Suntec City Mall and disruption from AEI works.
HSBC maintains Underweight with TP $1.05.
Citi maintains Buy with TP $1.52, says the Reit is highly attractive with its current yield of >8%.

Keppel Land

Keppel Land: record FY11 results.
Reported net profit was $1.37b, boosted by revaluation gains of $591m from investment properties, and $508m divestment gain from the sale of its 87.5% stake in Ocean Financial Centre.
Adjusted net profit was inline by StanChart’s estimates, but below BNP, HSBC and Citi expectations.
On the back of this, KPLD proposed a bumper dividend of 20cts, ahead of last yr’s div and Street expectations of 18cts. This works out to a yield of 7.8%. Mgt is committed to paying out 1/3 of realized earnings.
KPLD also reported a big jump in NAV to $3.64/sh, +28.8% yoy, which translates to a valuation of 0.71x P/B.
Net debt to equity drops to a comfortable 0.1x.

On operating metrics, in FY11, KPLD sold ~ 480 homes in Spore, lower than the 650 sold in 2010. In China, KPLD sold 1,400 units, mostly in townships, lower than the 4,100 units sold in 2010.
KPLD also announced an acquisition of a 51% stake in a prime commercial site (100k sm GFA) in Chaoyang district, Beijing, for $195m, as it continues to signal its willingness to invest in China.

StanChart maintains Underperform with TP $2.50, continues to expect residential prices and volumes to decline in Spore and China, provide few upside catalysts. Notes when Spore residential prices started to decline in 2001, KPLD traded at 1.3x P/B on avg, and 0.3x P/B during the trough.
JPM maintains Neutral with TP $2.85, expects stock to carry some near term positive momentum with the mkt looking favorably at div payout, the 30% discount to NTA, and reversion of its 2011 laggard status.
Citi maintains Neutral with TP $2.88
HSBC maintains Overweight but cuts TP to $3.10 from $3.20.
Macquarie maintains Outperform with TP $3.41, believes shares are attractive at 47% discount to RNAV.
Deutsche maintains Buy with TP $2.90, pegged to 35% discount to RNAV of $4.48.
BNP reiterates Buy with TP $3.60

SG Market

SG Market: Spore shares appear set for an auspicious final trading day before the Lunar New Year, likely tracking Wall Street and European gains and advances in regional markets as confidence gets a big boost from encouraging US jobs data and successful European debt auctions. But analysts are cautious about getting swept up by the optimism, noting Greek debt talks remain a sticky wicket. With such upbeat news coming from all sides, some market watchers warn that perhaps this is the time to start worrying as investors seem to have forgotten the fundamentals have not changed in the global economy and there is still a long way to go on the road to recovery.

For the STI, resistance is seen at the 2850 breakdown gap with support at 2793 level. Positive US earnings reports from financial and tech sector players may boost these sectors. Keppel Land may be in focus after reporting over $1b profit for the 2nd time in a row with a bumper 20¢ DPS declared. Other S-Reits like Ascott Residence Trust, Suntec, Mapletree Logistics, CCT all posted unsurprising 4Q results

Tuesday, January 17, 2012


STX OSV: DMG gives its thoughts on the potential sale of STX OSV by its parent.
House note that based on share price of $1.355/share , potential buyers have to fork out roughly $811m for the 50.75% stake from STX Grp, and $320m for Och-Ziff's stake if they decide to cash out of this. Recall that Och-Ziff took the 20% stake at $1.33/share in Jul 2011.

Analysis shows that not many buyers have that kind of firepower to make a takeover offer for STX OSV. By buying out the 51% stake in STX OSV, the potential buyer will be required to make a mandatory general offer for all the remaining shares, which could come up to more than $1.6b.

At this juncture, house have no idea what the price nor the structure of the deal is, but clearly in this mkt conditions, not many buyers can afford the big price tag to takeover STX OSV. Which leads to the question of price. At what price will STX Group be willing sell STX OSV? As a reference, STX Group has sold down some of its own shares at $0.79/share during the IPO and 20% stake to Och-Ziff at $1.33/share.

House best guess is that the price could range between $1.30/share to $1.50/share (STX Group clearly can sell at lower prices, but Och-Ziff's stake may have set a floor price to this).
Add that Keppel and SMM have the right balance sheet to make a takeover of that size, and potential fit e.g product range, culture on R&D, governance, Brazil expansion etc. However, not very sure if they are keen to do it unless price is really low.

Still believe STX OSV is worth more in the long run when order flow turns bullish again (maybe 2H12 or 2013), but for now, the stock faces parent shareholder uncertainties and challenging six months to fill their 2012 capacity.

HK Land

HK Land: Appears to be trading in a positive channel in the mid-term. Counter looks to be coming off overbought conditions, MACD falling. See resistance at $5.05 and support at $4.60 lvl. Divergence spotted which indicates stock may possibly test support lvl but will continue within channel unless broken.

HPH Trust

HPH Trust: The stock successfully breached the $0.70 resistance-turned-support yday, and is a potential break out candidate, after being range bound for the past 6 mths. Nevertheless, the key indicators are displaying overbought signals, hence aggressive traders who enter at current levels may consider a tight stop at $0.695.
Longer term, the counter appears to have bottomed out at $0.55, and the downtrend negated. Investors with a longer term view can look to buy on pullbacks towards the 20day MA. Downside risk appears limited with $0.60 as a floor, and supported by the stock's 8.1% FY12E yield.

Keppel Land

Keppel Land: reports FY11 results on 19 Jan.
JPM expects KepLand to deliver FY11E revenues at $911m (+15% Y/Y) with core net profit at $381m, +50% from FY10 core net profit at $253m. Also expects the group to reflect revaluation gains from K-REIT Asia stake in 4Q11 along with divestment gains of $492.7m on OFC sale. Forecasts end FY11E book value to rise to $3.44/sha whilst end FY11E gearing would fall to 23%, benefitting from the OFC transaction. Tips special dividend announcement likely, following OFC divestment proceedings; pencils a FY11E total dividend yield of 7.3%.

The house maintains Neutral rating, rolls over TP of $2.85, set at 48% discount (1std dev below historical avg discount) to FY12E RNAV.


NOL: Technical Buy Call from Trading Central. Upside prevails as long as $1.18 is support.
Alternative scenario: below $1.18, expect $1.1 and $1.05.
The RSI is above 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at $1.17 and $1.12).


Venture: Trading Central has technical Buy Call, with preference for upside to prevail as long as $6.34 is support. Note that the RSI is above 70. It could mean that the stock is in a lasting uptrend or just overbought and therefore bound to correct (look for bearish divergence in this case). The MACD is above its signal line and positive. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (respectively at $6.29 and $6.45).

China Aviation Oil

China Aviation Oil: entered into agreements with its parent co, China National Aviation fuel Group Corp (CNAF) to acquire CNAF’s wholly owned subsidiaries, China Aviation Oil (HK) and North American Fuel Corp (NAFCO) for a total consideration of ~US$16m. Mgt says, the acquisitions expand its geographical reach, and are inline with its strategy to establish a global trading network by 2014.

CAOHK, to be acquired for ~US$12m, is involved in the business of jet fuel trading and supply of jet fuel to airline companies at various airports including HK, London, Taiwan and domestic airports in the PRC.
NACFO, to be acquired for ~US$4m, is an agent and wholesaler of jet fuel in the US. It commenced its agency business for local fuel suppliers and major Chinese airlines since Jan ’11.

Technically the stock looks like it could be starting on a new uptrend, after breaking out of the long term downtrend line convincingly at the beginning of this year. Volume, though light, has been increasing with signs of accumulation evidenced by the rising OBV.
Near term, see resistance at $1.10 (just above the 50day MA), though we highlight the stock could be a potential breakout play above that level. RSI and MACD are looking positive, even though Stochastics are in overbought territory. Pullbacks toward $1.05 may offer entry opportunities.

Spice I2I

Spice I2I: Responds to Business Times article stating that there is no formal proposal for any merger/buyout or consolidation.


GLP: Announces pricing of new perpetual securities at 100.5% with the same terms and conditions as the Dec 2011 securities. The total amt issued was $250m at 5.5%. Co is rated Baa2 by Moody’s and BBB+ by Fitch. The new perpetuals are expected to rated BBB- by Fitch. The pricing is supposedly on the high side possibly on anticipated strong demand after the Dec issue.

Co had previously issued $500m in perpetuals during early Dec 2011 at 5.5% as well. These came with a rate reset on 7 April 2017 and step up on 7 Apr 2022.

GLP is currently trading at fwd P/B of 0.9x.


LionGold: Chairman and Group CEO fails to complete purchase of 40m shares (prev 5.49% stake) in co from Asiasons Capital. Sales agreement was first signed on 1 June 2011 and was delayed several times. This may cast some doubts on either the financing capability of the chairman or the investment value of the shares, neither of which is beneficial to LionGold.

The consideration was initially for $30m at $0.75 per share for 40m shares. It was raised to $0.76 and the chairman was charged an extension fee of $50k on 1 Dec after delays. LionGold is currently trading at $0.88


SATS: Operating data for 3Q FY2011-12, no of flights handled grew 13.3% yoy to 29.6k while unit services handled rose 10.5% to 23.5k, underpinned by the seasonally high travel season from Oct to Dec 2011.

Gross meals and unit meals increased by 4.1% and 3% respectively, in line with the higher passenger traffic recorded during the quarter while Cargo increased 1.6%. For 9M FY2011-12, all business segments recorded higher levels of activity.


SIA: Operating figures for Dec out. Passenger carriage and cargo traffic generally increased although load factors fell due to capacity increases. Of note America saw a rise both in both passenger and cargo load factors.

Co recorded 1.8% yoy growth in passenger carriage while capacity grew by 3.2%. As a result, passenger load factor declined 1.1% points to 79.6%. The number of passengers carried increased by 1.3% over the same period the previous year.

All regions except Americas registered lower passenger load factors (PLFs) over the same month the year earlier. East Asia PLF due to capacity increases and the flood situation in Thailand also continued to affect demand. The improvement in Americas region's PLF was a result of strong year-end travel demand.

For SilkAir, carriage +7.6% yoy against 9.3% growth in capacity. As a result, PLF declined 1.4% points to 83.1%. PLF on West Asia routes rose as market conditions remained buoyant in SilkAir's India points. The PLF for East Asia routes due to capacity.

Overall cargo traffic +1.5%, cargo capacity +1.3%.Load factor in Dec 2011 rose by 0.1% point. Cargo load factor for Europe and the Americas increased, while other route regions registered lower load factors.

JPM is of view Dec performance was better than normal seasonality and maintains Overweight with TP$15.50. House highlights net cash of 40% mkt cap with div yield of 5-11% over nxt 3 yrs and at 0.9x P/B (trough 0.7x during prev crisis) as supporting pts.

Citi maintains Sell with TP $10.40. DMG maintain Buy with TP$12.37

KS Energy

KS Energy: Announced that a fire incident has occurred on the KS Endeavor jack up rig, which is owned by a jointly controlled entity of KS Drilling. All crew were evacuated from the Rig, except for two members of our crew who are unaccounted for currently. At the time of this announcement, it is reported that the Rig is still on fire.

Efforts to suppress and extinguish the fire are still ongoing. Co. together with CNL are working with priority on the search and rescue of the missing personnel.


SGX: Announced weak 2Q12 results which were in-line with bearish estimates.
2Q12 rev of $148m, -14% yoy and -17% qoq, while net profit at $65m, -19% YoY and -25.2% qoq.

Poor performance due largely to fall in securities rev at $53m, -34.4% yoy and -26% qoq, as ADT fell to $1.12b vs (1Q: $1.57b), although this was partially offset by a pickup in average clearing fee to 5.75bps (1Q: 5.57bps). Stated equity turnover velocity fell to 47% vs 1Q12 61%). All other segments also saw weaker contributions; with depository services, -13% qoq, Member services, -9% qoq and issuers-related fees -9% qoq.

Bottom-line was partially offset by a 4% yoy and 8% qoq fall in expenses (staff -11%,
tech -3%). Overall, 1H12 profit of $153m remains on track for consensus estimates for FY12E profit $315m, although there is downside risk if ADT falls below S$1.55bn (YTD Jan12: $0.9bn).

CEO maintains cautious outlook on Co. citing volatility and uncertainty in global mkts and did not completely rule out a bid for LME, and reaffirmed SGX’s commitment to pursue opportunities in Asia, where he sees more potential for SGX. Grp currently trades at 22x historical P/E which appears excessive vs historical average of 23x, in light of the poor sentiment outlook.

Ratings as follows:
Citi maintains Sell with $5.40 TP
CIMB maintains Sell with $5.43 TP.
Daiwa maintains Hold with $6.05 TP.
HSBC maintains O/w with $7.20 TP.
Deutsche maintains Buy with $6.80 TP
Macquarie maintains O/p with $7.21 TP.
Kim Eng maintains Buy with $6.90 TP.


M1: weak 4Q11 results, below consensus expectations.
Total revenue increased to $317m, +21% yoy, +29% qoq, due to strong eqpt sales associated with the iPhone 4S launch. Mobile service revenues however were flat yoy and qoq at $147m.
EBITDA disappointed at $73m, -4% yoy, -9% qoq, with margins at 38.5% (-220bps yoy, -360 bps qoq), reflecting higher subscriber acquisition cost (“SAC”, +48% qoq), both due to seasonal promos in the festive season, but also impacted by the launch of iPhone 4S.
This resulted in net profit of $38m, flat yoy, -9% qoq.

Operating metrics overall were weak. Monthly net adds were seasonally weak at +2k. Total ARPU declined by 6% yoy, and were 3% below JPM estimates, mainly due to data.

M1 declared a final div of 7.9cts, translating to a payout ratio of 80%. Full yr div amounts to 14.5cts, lower than last yr’s 17.5cts which included a 3.5 cts special div. Div yield is 5.7% based on last close at $2.56.

Mgt guided for stable overall performance for 2012, and highlighted that growth in wireless data and fixed broadband could be offset by declining roaming revenues amidst a weak backdrop. Div payout guidance remains unchanged at 80%. Capex guidance for 2012 at $110-130m due to planned upgrades to billing systems.

Citi keeps at Buy, lowers TP to $2.88 from $2.90.
MS keeps at Overweight with TP $3.
UBS keeps Neutral rating and TP $2.48.
JPM/ CIMB keep at Neutral, both with TP $2.50.
Deutsche maintains Sell, lowers TP to $2 from $2.06 to reflect weaker operating trends.

SG Market

SG Market: Spore shares are likely to recover some ground from Mon’s losses in tune with the firmer close on European markets, as investors seem to be taking a “half-full glass” view of Europe, and hopes of policy easing in China as well as improving non-oil domestic exports, which rose 9% in Dec vs forecast of a 1.2% contraction. The STI may take another crack at the 2793 mark but is unlikely to surpass it given the heavily overbought nature of the market. Support sits at the 2725 level (50-day MA).

SGX and M1 may underperform as their 4Q earnings disappointed, prompting several houses to slash their target prices. S-Reits are set to be in focus with the majority releasing results this week, starting with A-Reit and K-Reit today, Cache, CMT, FCT due tomorrow, MLT, ART, Suntec due on Thu and CCT, Sabana and AIMS APS on Fri.

Thursday, January 12, 2012


WBL: Chairman Ng Ser Miang was ousted from the Board at Tuesday’s AGM, led by key investor Straits Trading which holds a 20% interest.
Veteran director Cham Tao Soon, has also stepped down, while independent and non-executive Director, Dr Ser Wee was also not re-elected.
Straits Trading has appointed its own lieutenants, Norman Ip as the new Chairman, and Mark Greaves as non-independent and non-executive director.

WBL has experienced few corporate changes over the past years, with group revenue having stagnated as well. Could the mgt changes signal an intention for the group to embark on a more aggressive growth profile?

Separately, WBL’s US-listed subsidiary, Multi-Fineline Electronix announced prelim financial results for 1QFY12 that exceed the high end of mgt’s previous guidance range, as the supply chain shortages from the flooding in Thailand improved throughout the quarter. The co also saw an increase in shipments to its largest key customer. This may pave the way for WBL to report a more sanguine set of results (estimated out on 14 Feb).

WBL trades at 8.5x P/E, 0.8x P/B, 3.4% yield.
The stock is up 1% at $2.93. We highlight the pick up in volume over the past 2 days, on this otherwise illiquid counter.

TEE Int’l

TEE Int’l: Sias notes 2QFYMay12 results were in line with its expectations.
2Q revenue declined 42.4% yoy to $38.7m, as last yr’s revenue was boosted by several large scale projects that were close to completion.
Net profit fell by a lower 8.1% to $3.6m, helped by better lower cost of sales, higher operating income and association contribution.

Sias notes the integrated real estate segment has yet to contribute to the P&L for this fiscal YTD, and expects the bulk of the existing projects’ milestones to be met by 4QFY12. Adds, despite headwinds from the property sector, TEE’s project s have been selling well, which provides much comfort to its forecasts and earnings visibility.
TEE declared interim div of 0.6cts, 20% more than the same quarter last year. Sias estimates FY12E div of 2.5cts, which translates to a yield of 10.4% based on last traded at $0.245.
Meanwhile, over the past 3 mths, CEO Mr Phua Chian Kin has made open mkt purchases of ~1.7% interest, raising his direct and deemed stake to 56.2%.
Sias maintains its Overweight rating, with TP $0.45.


SGX: Deutsche maintains Buy, but slashes TP to $6.80 from $7.60. Note that mkt uncertainty suggests turnover to remain subdued. While SGX's balance sheet strength remains a key attraction and recent results suggest management initiatives are beginning to bear fruit, persistent uncertainty in the macro outlook has seen securities market turnover fall well short of expectations which will weigh on share price near term.

Qian Hu

Qian Hu: 4Q11 net profit jumps 39.7% on sale of factory to $886,000. The Guangzhou factory, which manufactures aquarium and pet accessories, was sold for a cash consideration of $13,000. But as the subsidiary was in a negative net assets position when it was sold, the gain on disposal is $952,172.

For FY11, Co’s net profit declined 17.7% to $3.5m on the back of a 3.1% drop in revenue to $88.3m. Co. is proposing a first and final div of 0.6c / share.

Genting HK

Genting HK: UOB Kay Hian maintains Buy with $0.33 TP. House expect a strong 2H11 and expect GENHK to deliver a 58% growth in 2H11 net profit to meet house full-yr forecast of US$148m on the back a strong 77.2% yoy growth in 9M11 at RWM.

RWM on track to double EBITDA to US$189.8m in 2011 as gross gaming rev doubled to US$2m/day. VIP gamers reacted positively to organised tournaments and events (60% of GGR), although mass-mkt segment continues to grow impressively with estimated daily traffic rising to the high 20,000s by 3Q11 (1Q11: <15,000). Meanwhile, Star Cruises is on course to deliver US$125.1m EBITDA in 2011, driven by a 32% growth in gaming revenues and a successful ship swap program.

Overall, house note that grp continues to be the most conservative in the broking community. And strong earnings momentum could allow GENHK to overshoot house TP before easing again on concerns of looming competition.

Raffles Medical

Raffles Medical: IIFL maintains Add, TP $2.55. Note that counter is the only quality healthcare stock listed on SGX. Expect grp’s non-cyclical and steady growth business to deliver 18% earnings CAGR over 2010-13 driven by:
1) 13% revenue CAGR; and
2) 140bps expansion in operating margin on the back of higher reve per bed and specialist service fees.

The completion of $200m hospital expansion and a new specialist medical centre by end-2014 will more than double its 2015 NP vs 2010. Favourable industry fundamentals and a highly cash generative business model make grp a great stock to own in the current uncertain environment.


KepCorp: Daiwa: retain O/p, and increases TP to $11.40 from $10.24. Note that order wins in the past four wks may indicate reasonably positive mood in the industry. O/p rating given its current attractive valuations as well as its strong order wins in 2011 which lowers earnings risk in 2012-13 relative to its peers.

Continue to prefer KepCorp over SembMarine (Hold) due to the former’s better positioning regarding any potential Petrobras contracts, and its better earnings transparency in 2012-13.


DBS: UOB Kay Hian has earnings preview. Maintains Buy with $16.14 TP. Expect DBS Gto record a healthy loan growth of 3% qoq in 4Q11 due to drawdown of loans previously approved. Loan growth should start slowing down in 1H12, in tandem with the moderation of GDP growth across the region.

Net interest margin expected to be largely unchanged at 1.74% due to a mild pick-up in 3-month SIBOR to 0.39% by end-4Q11.
Expect market sensitive sources of fee income to decline on a sequential basis. Based on statistics for Oct and Nov 11, stock market turnover has dropped 36.6% yoy. Tip a lacklustre qtr for investment banking as DBS did not participate in IPOs completed in 4Q11, which were mostly for small to mid-cap Co’s.

Expect net trading income to be seasonally softer in 4Q11, similar to the trend in 4Q10, especially as liquidity contracted in December. Cost/income ratio should trend slightly higher to 43.9% due to sequentially lower total income. Expect general provision to normalise to a lower quantum given the adequate coverage of 124.4%.

Overall, expect DBS to report a net profit of $758m for 4Q11, flat qoq (3Q11: S$762m, including a gain of $47m to combine DBS Asset Management with Nikko Asset Management and a hefty general provision of $187m). Like DBS for its consistency in execution and financial performance since the new CEO took over the helm, including the recent impeccable growth in fee income.

SMRT / Comfort Delgro

SMRT / Comfort Delgro: Deutsche says the land transport sector will likely remain under regulatory scrutiny. Points out, specific policy recommendations in the areas of crisis mgt and maintenance could potentially result in higher repairs & maintenance, and staff costs for operators – these expenses account for ~45% of Comfort’s total opex and ~55% of SMRT’s total costs. But notes, Comfort may be less exposed due to its geographically diversified exposure, whereas near term risks are skewed towards SMRT. Adds, mgt succession remains an uncertainty for SMRT following the departure of its CEO.

Separately, HSBC raises annual repair & maintenance cost estimates for SMRT by $10-13m (1% of overall costs), and cuts FY12-14E profits by 2-5%. Expects SMRT’s margins to take the pressure for having to provide free bus rides during breakdowns, as well as the co maintaining a bigger emergency bus fleet.

Deutsche maintains positive view on the sector, on the back of ridership growth. Keeps SMRT at Buy, but lowers TP to $2. Prefers Comfort (Buy, TP $1.44) for its relative valuation discount and larger total returns offered.
HSBC downgrades to Underweight from neutral, cuts TP to $1.70 from $1.95.


STX OSV: Recent rise spurs stake sale expectation with analyst noting a likely sale transfer of 50.75% parents' stake.

Recall that STX OSV has put on over 10% since Jan 3, while STI has inched up just 1.3% and STX Corp's chairman said last Oct that it had hoped to raise as much as 700b won ($779.8m) by selling foreign assets in the early part of this yr

Recent bull run on STX OSV also mirrors what happened over two wks in late Jun till early July. Then, it soared 18.3% in the two wks before STX Europe sold 18.3% of Co. to German investment fund OZ Management at $1.33 a share. The $1.33 placement price may act as a 'floor price' in the subsequent divestment, said DMG.


CMA: Bonds in the retail tranche also oversubscribed, full $220m taken. The public offer tranche of initial $100m was oversubscribed by 4.65x. The earlier placement tranche of $100m was oversubscribed by more than 2x and saw $180m placed out, with the debt offering upsized from $200m to $400m. The bonds are expected to be listed and traded on SGX from 13 Jan 2012 under the counter, CapMallA3.8%b220112.

CMA is trading at 0.8x fwd P/B.

SG Market

SG Market: Spore stocks may see some profit taking after its recent 55-point rally and the mixed close on Wall Street. Support for the STI is tipped at 2725 with technical landscape in the overbought territory. No corporate news to drive the market as investors wait for direction from the 1st batch of results due next week.

Silverlake Axis

Silverlake Axis: Stock price does not look to be going anywhere. Trading within a band of approx $0.27-0.32. Share buybacks was abt 1/3 of the volume yday, price might be supported if the buybacks continue like Osim. Growth in revenue has been coming in from licensing fees from banking solutions particularly in SEA region. Counter now trades at 12.9x current P/E.


Hi-P: Hon Hai reported recorded sales of NT$317b in Dec, +3% mom, +30% yoy, much better than the mkt expectation of ~10% mom decline in Dec. Citi believes the strong sales were entirely driven by iPhone, with ~16.5m units shipped by Hon Hai in Dec, and >40m units (75-80% iPhone 4S) in 4Q12.

Hi-P may be a proxy to the strength of iPhone shipments, with Apple said to be Hi-P’s second largest customer, contributing 10-15% of sales.
Following Hi-P’s weak 3Q11 results, Street expectations have been lowered, leaving less room for disappointment now. Recall, for 4Q11, mgt expects revenue to rise both qoq and yoy, and full yr revenue to rise yoy but earnings to decline yoy.
Last wk, DMG lifted Hi-P to a Buy from neutral, and raised TP to $0.79 from $0.62.

Technically, the stock made a new base at $0.49 in Oct last yr. Having broken out of the long term downward trend channel, we may now be looking at the beginning of a new upward trend. Indicators are above neutral and rising positively which bodes well for the near term trend. See initial support at $0.60, resistance at $0.70.


Amtek: +4.9%. UOB Kay Hian has a technical Buy Call on stock this morning with $0.69 TP followed by $0.75. House note that aggressive long investors may view $0.75 (+20% potential return) as their TP. House think the stock is likely to rebound further as the stock has broken out of the bullish flag formation.

Both the MACD and the Stochastics indicators are trending up, suggesting prices are
likely to follow through. Alternatively, investors may exit their longs if prices move below $0.565.

China MinZhong

China MinZhong: Continues to rise strongly, probably after China 2 days ago announced the lifting of the value-added tax (VAT) on the distribution of vegetables in its bid to shield consumers from higher food prices.

Recall yesterday Kim Eng note that the removal will be backdated to 1 Jan12. Previously, a VAT of 13% applies to enterprises engaged in import-export, production, distribution or retailing activities. Lifting the VAT on vegetables will lower the cost of sales for wholesale retailers, who are expected to pass on the savings to end-consumers.

The removal of the VAT also underscores the fact that food inflation remains a key concern. Even though the lifting of VAT will not have a direct impact on upstream players like Minzhong, it does signal a policy shift away from taming prices towards fostering supply growth.


CMA: UOB Kay Hian has Technical Buy Call with 9% potential return and $1.30 TP. House note that stock has broken out of the first downtrend resistance line in the last trading session
with comparatively high trading vol. A reversal is likely to be denoted by the morning star candlestick pattern and prices are likely to trade higher for now.

The MACD indicator is still trending up and the Stochastics indicator has hooked up, both of which are positive signals. Alternatively, investors may exit their longs if prices move below $1.13.

Bio Sensors

Bio Sensors: Caution. UOB Kay Hian has Technical Sell Call after its recent Run. House recommends Technical Sell TP of $1.40. Note that stock is currently trading near the upper channel band and believe it is likely to face resistance near S$1.58.

The Stochastics and the CCI indicators are turning down from the overbought region, suggesting prices are likely to pull back. Alternatively, investors may exit their shorts if prices move above $1.61.


Midas: CIMB has Technical Buy Call. House note that prices broke out of its medium term downtrend channel yesterday. Prices also pushed above its 50-day SMA along the way. Looking at the chart, it appears that there is a good chance that prices may re-rate towards $0.375 and $0.40. The 200-day SMA at $0.51 is also a magnet for prices.

Bullish divergence on its MACD indicator shows that buying momentum is picking up fast. RSI is also above the 50pts mark. Traders may start to take some position now ahead of the breakout. Only a fall below its recent swing low of $0.335 would cancel out house bullish stance.


Ezion: CIMB has Technical Buy Call. Note that prices broke out of its bullish flag pattern on strong volume yesterday. This indicates that buying interest has emerged. If right, the next upswing is going to lift prices towards $0.76 and $0.81 next.

Technical landscape remains positive. MACD histogram bars have returned to the black while RSI is also rising. With the candles also trading above all its key moving averages, think the stock could still push on higher from here. Risk takers may start to nibble now but be quick to cut loss if the $0.685 support is breached. A break below the S$0.63 low would suggest that the uptrend from its Oct11 low is likely over.


SGX: JP Morgan downgrades to U/w from Neutral, cut TP to $5.30 from $7.00. Note that 2Q earnings on Jan 16 and 4Q11 volumes were exceptionally low at $1,088mn/day, the lowest in the last 24 qtrs. Believe lack of any rebound in the mkt may lead to further downside risk in SGX.

Raffles Medical

Raffles Medical: DMG maintains Buy, TP $2.55. Note that outlook remains positive, given its 2 expansion projects (hospital extension and acquisition of Thong Sia Building) that it expects to complete in 2 - 3 yrs, and the stable demand for healthcare in Singapore.

Currently, Raffles Medical is the only listed healthcare provider with primary (a network of GP clinics island-wide), secondary (a range of specialist services) and tertiary healthcare services. Raffles Medical expects to release 4Q11 results around 20 Feb12.

HPH Trust

HPH TrustL Deutsche has key take away from its China Conference in Beijing.
Note that in 2012, HPHT expects throughput vol to grow 6-7% mainly driven by transhipment and intra-Asian cargo. Co. states that 4Q11 throughput vol has been better than its 3Q11 vol, which typically is the peak season for port operators. Thus, see very little risk for HPHT to miss its 2011 dividend payout guidance.

Add that absolute tariffs are unlikely to increase in 2012 given the current challenging environment in the West. However, Co. still expects a slight increase in effective ASP – though noting any increase is not a given.
Overall, house maintain Buy Call on HPHT as believe risk/reward remains attractive, with more than 8% yield in forecast years.

City Dev

City Dev: its JV with Hong Leong and TID has submitted the top bid of $388m ($495 psf GFA) for the first residential site to be tendered out following the 5th round of measures. Interest was muted with only 5 bidders.
The site is located next to Bartley Secondary School, and a slightly further distance to the Bartley MRT compared to the earlier site which City Dev bought at $620 psf GFA in Mar last yr.
The current site has a max GFA of 784k sf, and can be developed into a 785-unit condo. Estimated breakeven cost of $920 psf implies ASP of $1,100psf based on a 15% gross margin.
Nearby Oasis Garden (Freehold, completed 2009) is transacting at ~$1,000psf in the secondary market while new projects around Potong Pasir (eg. Nin Residence, 85% sold) are averaging ~$1,200 psf.

The top bid came in significantly below market expectations of $610-630psf, which means City Dev may have gotten a decent deal. Deutsche estimates a modest 3ct/sh accretion to NAV for City Dev’s 1/3 stake in the project.
Nevertheless, the low transaction price also indicates cautiousness amongst developers, and given City Dev’s premium valuations, Deutsche keeps at Sell with TP $8.83.