SG Market (23 Jan 14)

Market Roundup: US stocks finished on a mixed note as disappointing results from IBM, AMD and Coach weighed on the Dow. After a 30% rally in 2013, buoyed by the Fed’s massive stimulus, investors are now looking to corporate profits to justify current valuations. But corporate results so far has been mixed with yellow falgs raised as most earnings are still being driven by cost cutting instead of revenue growth. With little to go by, the STI remains trapped within its tight 3,120-2,160 trading range. Stocks to watch: *Keppel Land: Turned in FY13 and 4Q13 net profits of $885.9m (+6%) and $567.3m (+8% y/y) on record revenues of $1.5b (+6%) and $505.7m (+7%). Excluding fair value gains of $331.1m (-11%), FY13 and 4Q13 earnings of $583.7m (+22%) and $265.1m thrashed street estimates. This was driven by mainly by its China projects (8 Park Avenue, The Botanica The Springdale), property investments (MBFC Tower 3, Keppel REIT) and sale of stakes in Jakarta Garden City and Hotel Sedona Manado, which yielded divestment gains of $151.8m. Overseas profits rose 64% to $141.1m and contributed 33% to the core bottomline. End ’13 NAV climbed 13% to $4.52. Final DPS of 13¢ (+1¢) declared. *SGX: As expected, 2QFY14 net profit of $75m came in 1.8% weaker on revenue of $164.6m (+1.7%). Faced by challenging market conditions, securities revenue declined -13% with daily average traded value of $1b (-19%). This was offset by sustained growth in derivatives business (+16%) hitting 26.3m contracts (+18%) and other auxillary services. Total equity funds raised was $2.6b ($1.4b from 9 IPOs) vs $2.1b previously, while $33.7b (-15%) was raised from 144 new bond listings. Cost-to-income ratio rose to 46.4% due to higher depreciation charges, processing and royalty fees and marketing expenses. Interim DPS of 4¢ was maintained. *Mapletree Commercial Trust: 3QFY14 distributable income jumped 24.2% y/y to $38.7m, while DPU rose 11.9% to 1.865¢. NPI swelled 24.9% to $49.4m, in tandem with gross revenue growth of 22.4% to $68.4m. VivoCity maintained its robust operating performance, while PSA Building delivered strong earnings growth. Mapletree Anson, acquired in Feb '13, also contributed an additional income stream. Overall portfolio occupancy improved to 98.7% with weighted average lease to expiry of 2.2 years. Aggregate leverage remained stable at 40.8% with average term maturity of 2.7 years at an average cost of 2.18%. End Dec NAV stood at $1.07. *CapitaCommercial Trust: Delivered gross revenue of $386.9m (+3%) in FY13, driven by improved performance from most properties, notably Six Battery Road, Raffles City Singapore, HSBC and full year contribution from Twenty Anson. Accordingly, distributable income rose to $234.2m (+2.5%), and DPU edged up to 8.14¢ (+1.2%), implying a yield of 5.5%. Portfolio occupancy climbed to 98.7% (+1.5ppt) from a year ago. CCT ended Dec ’13 with aggregate leverage of 29.3% and NAV per unit of $1.71. *Frasers Commercial Trust: 1QFY14 distributable income surged 33% y/y to $13.7m driving DPU up 30% to 2.05¢, aided by lower interest costs arising from capital management initiatives and conversion of Series A CPPUs. Gross revenue dipped 3% to $28.8m and NPI declined 4% to $22.1m on the back of a weaker AUD and slightly lower occupancy for Central Park, which offset by the improved performances of S'pore properties. Average portfolio occupancy rate slid marginally to 97.1% with weighted average lease to expiry of 4.4 years. Aggregate leverage stayed at 37.9% with effective interest cost of 2.7%. End Dec NAV was $1.54. *Soilbuild REIT: Posted DPU of 1.51¢ for 4Q13, exceeding its IPO forecast by 3.4%. From listing date (16 Aug ’13) to end ’13, actual DPU amounts to 2.27¢, implying an annualized yield of 7.8%. For the quarter, the REIT delivered net property income of $13.7m, supported by new take up and lease renewals. As at end ’13, portfolio occupancy stood at ~100%, aggregate leverage was 29.3%, and NAV per unit was $0.80. *Global Logistic Properties: Signed nine new leases totalling 180,000 sqm across multiple locations in Japan, of which six are first-time customers. These are to third-party logistics providers or wholesale distributors catering to domestic consumption. Four of the facilities are under its 50% owned GLP Japan Development Venture, and have reached 82% occupancy. *Boardroom: Major shareholder Salacca has bought over Third Avenue Management’s 10.35% stake, lifting its shareholding to 44%. Salacca will make a mandatory conditional cash offer of $0.575 per share for the rest of the shares it does not own. *Aspial: Acquired 28,255 sf freehold site in downtown Melbourne for A$42.3m ($47.6m) and plans to redevelop into the city's tallest building at 312m with >1m GFA of residential and commercial space. *Cordlife/Asia Medic: Cordlife has launched a lawsuit against AsiaMedic’s JV, Cryoviva Singapore for breaches including use of Cordlife’s proprietary information and intellectual property without its knowledge and consent. The application has been fixed for hearing on 24 Jan ’14. *China Essence: Expects to record a loss for 3QFY14 (to be released 27 Jan), citing lower sales volumes due to low production level for the quarter, as well as high finance charges and operating expenses. *Gems TV: SGX has granted a further extension of time up to 31 Aug ’14 for Gems TV to meet the requirements to exit from the Watch-List, subject to certain conditions being met.