Wednesday, July 31, 2013

Q&M Dental

Q&M Dental: Group recently announced a MOU to acquire 60% stake in Aoxin Stomatology Group (Aoxin, based in Shenyang), for RMB108m. A management company will be incorporated to manage all the six hospitals and clinics in the entity and the seller agrees to provide a profit guarantee of RMB133m over the next 12 years. The seller will also pledge his remaining 40% stake in the management company for the performance of the profit guarantee. Q&M had been cautious in its venture into China. It currently has 10 clinics in China (4 in Beijing, 4 in Nanjing and 2 in Shanghai). SIAS reckon there is a fair chance that the acquisition will be completed by the end of this FY. This acquisition is priced at about 9.7X P/E and will contribute about 25% to group's FY14 bottom line. The acquisition will be funded via internal cash and loan facility from IFC and/or issuance of Q&M shares. The company had $29.8m cash equivalents as of end Mar 2013. Overall, SIAS believe this acquisition will help to lift Q&M’s profitability to a higher level. SIAS recommend INCREASE EXPOSURE with a TP of $0.435.


Note that the theoretical value is subjected to a share consolidation. Hence calculations as per follows: Current Market Cap @ $45.8m Consideration shares value @ 320m x 0.50 = $160m Arrangement shares value @ 26.2m x 0.50 = 13.1m Total share base after completion of proposed transactions is 456.8m shares So theoretical value assuming transaction is approved = (45.8m + 160m +13.1m) / 456.8m shares = $0.479


Asiasons - Results est to be out on 14th Aug. Note however that results has typically been a non eventful factor for Asiasons, which can also be said of its share price, which appears relatively unaffected by any corporate/external developments, having surged from ~$0.15 in 2012 all the way to a high of $0.99-$1.00 in recent times. Given its stellar run, in which some market watchers finds it hard to be explained fundamentally, would not be surprised if we see some pullbacks/profit taking along the way

Genting SP (technical)

Genting SP - Technicals appears indicative of further downside, with RSI and RSI moving firmly done. The counter has also breached pass its 20 day, which could reconfirm the downward trend. The recent low of $1.30-$1.31 could act as the near-term support.

Fortune REIT

Fortune REIT: Fortune entered into a non-binding MoU with its parent to acquire Kingswood Ginza Mall, Tin Shui Wai, for an indicative consideration of HK$5,849m. The acquisition will be financed by HK$5,084m debt (87%) and HK$764m equity (13%). The share purchase agreement is expected to be completed by 30 Sep 2013. The indicative acquisition price is HK$8,792psf, based on 655k sqf GRA. With 6M13 NPI of HK$110.4m, the price implies an annualised NPI yield of 3.8%. Fortune believes the NPI yield can rise to c.4% if occupancy of the property improves to 98-99% from 95.5%. Fortune also noted there is room for future AEI on the asset. Fortune sees the acquisition as yield accretive at the DPU level. The debt portion of the funding source will bear a blended interest margin of 1.48% p.a. over HIBOR for the next 3.5-5 years. With the current 3M HIBOR at c.0.4%, the floating interest rate is at c.1.88% before the debt upfront fee, which will be amortised, according to management. Separately, Fortune did a placement of 143m new units at an issue price of HK$6.82 to more than six institutional/ professional investors. The issue price is at a 4.5% discount to the last closing price of HK$7.14. Net proceeds of HK$947m will be used to partially fund the proposed acquisition of the Kingswood Ginza peroperty. SC has an OUTPERFORM rating, with a TP of HK$8.20.


Cogent: Group's wholly-owned subsidiary SH Cogent Logistics received $100k for an option to purchase its property at No. 1 Chia Ping Road from Crane World Asia. The property comprise a land area of 14,900 sqm and is currently used for warehousing & related logistics services, engineering and handling of automotives. The option to purchase the property at $10m will expire on 13 Aug. The book value of the property was marked at a historical value of $3.6m and the excess of $6.4m gain (1.34cents/share) will be used for general working capital. Subsequently, group's gearing will be reduced from 0.09x to 0.05x. The disposal of property is to consolidate the group's logistics operations as Cogent intends to reallocate its warehousing capabilities and resources to enhance coordination among its existing operations and broaden its customer bases at its other facilities.


GLP: GLP has leased 23,000 sqm of space at GLP Park Zengcheng and GLP Park Yunpu to a e-commerce player, which intends to use both facilities to provide express services in Guangzhou and throughout China to meet increasing demand. The new lease of 18,000 sqm at GLP Park Zengcheng and 5,000 sqm at GLP Park Yunpu raises occupancy to 97% and 99% respectively.


Rotary: Awarded $200m worth of EPC contracts in Singapore and Saudi Arabia. First contract awarded by a joint venture between three multinational oil companies to build a shared lubricant storage facility in Tuas South, covering the construction of 80 tanks, common pipelines, import/export jetty topsides and supporting infrastructure. The facility will be located adjacent to the oil companies' lube oil blending and grease manufacturing plants. Construction works will commence from Jul, with expected completion in 2015. In Saudi Arabia, three contracts were awarded by international EPC players for projects in Jubail Industrial City. The first contract consist of EPC work for 14 tanks for an elastomers plant that produces high spec synthetic rubber, the second for the erection of 28 tanks at the Sadara South Tank Farm within the Jubail petrochemical complex and the third contract is for fabrication works at a multi-feed petrochemical cracker complex. Further, Rotary is exploring business opportunities in Oman after setting up its representative office in Muscat earlier this month. A recent media report cited the expansive growth of the country, estimated to spend US$65b worth in projects over 2013 to 2017, double of the expenditure in the last five years. Notably, the sovereign fund of the Oman government, Oman Investment Fund, currently owns 21.4% of Rotary. Rotary clinched $600m worth of contracts year-to-date and is currently working on two major EPC projects at Fujairah Oil Terminal and Pulau Busing, both worth an aggregate $617.5m, with an expected completion within the next two years.


MGCCT: Announced maiden set of results since listing, distributable income of $46.1m and DPU of 1.73¢ are both 8.3% above its IPO forecast of $42.6m and 1.60¢ respectively. NPI of $59.7m was 7.4% above IPO forecast and gross revenue was $73.8m (+3.4%). This was due to strong rental reversions achieved from Festival Walk (+21%) and Gateway Plaza (+86%). Overall occupancy of 98.3% contributed by robust tenancy of 99.1% at Festival Walk and Gateway Plaza at a stable 97.8%. Average weighted lease to expiry of 2.7 years. Gearing of 41.5% with average debt maturity of 4 years and cost of debt of 2%. The two properties will continue to benefit from the positive demand dynamics in Greater China, given the resilient domestic demand in Hong Kong and organic rental reversions. MGCCT targets organic growth through asset enhancements in the form of kiosks, to provide additional rental income from the space, as well as organizing marketing and promotion activities to increase its footfall. MGCCT currently trades at an implied FY13 annualized yield of 5.8%.

Tuan Sing

Tuan Sing: 2Q13 results largely in-line. Rev at $117.9m, +13% y/y and net profit at $15.3m, +31% y/y. The grp saw higher revenue from the Property segment offset partially by lower revenue from the Industrial Service segment. Higher other operating income was reported as a result of higher gain on disposal of fixed assets, the impact of which was offset by higher foreign exchange translation loss. In addition, the Group’s share of results of GHG and GulTech was down 5% from 1H2012.


Osim: Registered an 18 consecutive quarters of record profit, as overall 2Q13 results came in within bullish street estimates. Net profit at $26.1m (+16% y/y, +4% q/q) brought OSIM’s 1H13 net profit to $51.6m (+15% y/y). Revenue for the quarter at $165.5m (+7% y/y, +10% q/q), which was driven mostly by sales outside of North Asia, with high consumer demand for OSIM slew of products like uDivine App, uAngel, uPhoria, uHug, uPixie, uCozy, uRelax, uPebble, uBio, uSlender and nutritional supplements like Taut, Stem C, Zhi and Liver Protector. Operating margins dipped marginally at 19.8% versus 21.0%, largely due to increases in wages and rental, mitigated by better productivity in sales per outlet . Bottom-line was also buoyed by positive contributions from associates, which rose 213% y/y to $1.5m The grp saw positive growth across its five key countries of China, Hong Kong, Taiwan, Singapore and Malaysia. Nutritional supplements subsidiary ONI Global also grew profits. Profits from associated companies was better with contributions from joint venture factory DT-OSIM and TWG Tea. For its latest uInfinity, premium massage chair, which the grp has soft launch in Hong Kong and Singapore, with an official launch slated in 3Q13, mgt has indicated that the new chair has received strong traction, depsite its S$7,000 price point (vs usual price of S$6,088 for uDivine App). Launch of a new leg massager is also on track to take place in 4Q13. CS maintains O/p with $2.20 TP Maybank-KE maintains Buy with $2.34 TP


SMRT: Continues its downward dive as net profit came in at $16.3m (-55% y/y, net loss q/q) despite revenue inching up to $284.8m (+3% y/y, +1% q/q). The mildly higher top-line was due mainly to higher train (+25), rental (+9%) and taxi revenue (+6%), however operating profits tumbled 49% with operating margins slumping 8.2 ppt to 7.8%, as continued increase in operating expenses for the fare business was not being offset by fare increases, resulting in lower train profits and higher bus and LRT losses. Operating expenses rose 11% to $272.1m mainly due to higher staff costs and depreciation. Staff costs was up 23% due to increased headcount, although this was partially offset by the Wage Credit Scheme, while depreciation net amortization rose 12% due to the capitalization of operating assets taken over from LTA and a larger bus and taxi fleet. Repairs and maintenance costs rose 4% with more scheduled repairs and maintenance. Going forward, SMRT notes that the next twelve months remain challenging for the group in the absence of fare adjustments and continuing absorption of fare concessions. Operating costs are expected to increase with the annual wage increment and higher headcount, higher trains repair and maintenance, and depreciation from additions of trains operating assets as well as a larger bus and taxi fleet. The Group aims to continues its discussion with the S’pore government on a new rail financing framework, with aims of a smooth transition which will improve the overall sustainability of the Trains business. We note that net gearing has risen substantially, at 64% versus 8% y/y, which could raise some investor’s concern. Majority of the street continues to take a negative and/or neutral view on the counter, with no signs of any ‘turnaround’ in fortunes in the near-term. At current price, SMRT trades at 25x forward P/E versus closes peer Comfort Delgro of 16.3x. Latest brokers ratings as follows: Maybank-ME maintains Sell with $1.00 TP CIMB maintains U/p with $1.24 TP Deutsche maintains Hold with $1.57 TP Nomura maintains Reduce with $1.16 TP OCBC downgrades to Sell with $1.30 TP UOB Kay Hian maintains Sell with $1.02 TP

HPH Trust

HPH Trust: 2Q13 results slightly ahead of estimates, as earnings fell 25.9% y/y to HK$421m mainly due to sluggish volume. The overall throughput from Hong Kong (HIT, Cosco-HIT, and ACT) was down 6.7% YoY in 2Q. The HIT itself, due to the strike, recorded 20.1% YoY decline in throughout in 2Q. While Yantian’s was off to a strong start in 1Q (+6.3% YoY), its volume fell by 1.3% YoY in 2Q, primarily due to the drop of cargo to EU and slowdown of shipments to US. Revenue of HK$3.0b declined 2.6% y/y beating estimates due to higher revenue per TEU. A bizarre occurence was that the dock strike in HK diverted the lower yielding transhipment volumes. Yantian, a beneficiary of the diversion, saw unit revenues slide as a consequence of handling more transhipped goods and a higher number of empties. Management toned down on its full year guidance and expects volume to be flattish YoY instead of 5% growth previously. Interim 1H13 DPU of HK18.7¢ was announced, 22% lower as compared to the previous period's distribution of HK24.1¢. Consensus FY13 DPU of HK40¢ remains firm, implying a forward yield of 7%. There is an upside risk of a higher DPU, as management's previous expected refinancing rate of 3-3.5% will be likely secured at below 3%. Broker recommendations: DB maintains BUY rating with TP of US$0.83; CS upgrade to NEUTRAL with TP of US$0.72; UOB KayHian maintains BUY rating with TP of US$0.88.

SG Market (31 Jul 13)

SG Market: S’pore shares are likely to be muted after Wall Street closed little changes, as investors weighed the strong rise in home prices against a slip in consumer confidence amid mixed corporate earnings. Market watchers are also keenly awaiting the FOMC statement on Wed and monthly jobs report on Fri although it is very unlikely that the policy makers will want to rock the boat even if expectations are for the Fed to begin cutting back its bond purchase come this Sep. US 2Q GDP growth is also forecast to slow to 1% from 1.8% last quarter. In S’pore, focus will be on the corporate results just released which saw SMRT disappointing but Osim and HPHT beating estimates. Traders are also eyeing the three bank results next two days although they are not expected to outdo the record 1Q performances. Near term upside for STI index remains capped at 3,260 with underlying support at 3,210 (200-day moving average). Stocks to watch for: *SMRT: 1QFY14 results badly missed estimates as net profit derailed to $16.3m (-55.2%) on revenue of $284.8m (-3.5%). Operating profit tumbled 49.4% to $22.2m as higher staff costs (+23.4%) and depreciation (+12.2%) led to lower train earnings and wider LRT and bus losses. Prospects remain challenging in the absence of fare adjustments and continuing absorption of fare concessions and the group is in talks with the government over a new rail/bus financing/operational framework to ensure the viability of the business model. *Osim: 2Q12 results in line with record quarterly net profit of $26.1m (+15.9%) on revenue of $165.5m (+7%). The better performance was due to higher consumer demand for Osim products and nutritional supplements as well as improved productivity. The group saw positive growth across its five key markets in China, HK, Taiwan, S’pore and Malaysia. Pretax margins improved to 20.8% from 19% in 2Q12 and 19.2% in 1Q13. 2Q interim DPS doubled to 2¢, taking 1H13 total to 3¢. *Hutchison Port: 2Q13 results beat estimates; net profit -25.9% y/y, +10.6% q/q to HK$420.5m, revenue -2.6% y/y, +5.6% q/q to HK$3.03b. Container throughput at HK ports fell 20% y/y on weaker transshipment and US/EU cargoes, while volume at its Yantian terminals in Shenzhen was relatively flat, down 1%. Revenue per TEU for HK was higher due to favourable box mix, while that for China was maintained. 1H13 DPU at HK18.70¢ vs HK24.05¢ in same period last year. *MGCCT: Maiden set of results since listing; distributable income of $46.1m and DPU of 1.73¢ are both 8.3% above its IPO forecasts of $42.6m and 1.60¢ respectively. This was due to strong rental reversions achieved from Festival Walk (+21%) and Gateway Plaza (+86%). Occupancy at Festival Walk was robust at 99.1% and Gateway Plaza at a stable 97.8%, with weighted average lease to expiry of 2.7 years. Gearing was at 41.5% with average debt maturity of 4 years and cost of debt of 2%. MGCCT currently trades at an implied FY13 annualized yield of 5.8%. *Broadway Industrial: 2Q13 net profit tanked to near breakeven at $0.2m (-97%) vs $5.8m in prior period, while revenue dipped to $158.6m (-8.5%) on continued weakness in HDD shipments, partially mitigated by growth in precision component sales. Gross margins shrank to 2.3 ppt to 7.9% due to sub-optimal capacity utilisation. No interim dividends declared compared to 1¢ for 1H12. *Tuan Sing: 2Q13 net profit +31% to $15.2m, revenue +13% to $117.9m, bringing 1H13 earnings to $20.9m (+14%) and revenue to $182.8m (+4%). Property sales rose 23% to $92.1m attributable mainly to Sennett Residence and remained the key driver, contributing 58% of the group profits, while share of results from GHG (Grand Hyatt Melbourne & Hyatt Regency Perth), SP Corp (industrial services) and GulTech slipped. *UPP Holdings: 2Q13 net profit -5% to $0.8m, revenue +1% to $12.7m. Gross margins stayed constant at 18%. Balance sheet is sound with net cash of $82.2m. Meanwhile, group is looking to participate in the development of an industrial park in Mysnmar via its proposed acquisition of a 16.67% interest in a JV company MMID Urban Development for US$25m with option to raise its stake to 70%. *Genting HK: The three largest shareholders of Norwegian Cruise Lines – Genting HK, Apollo Global Management and TPG Capital have filed to sell up to 23m of their holdings in a secondary offering, including an option for underwriters UBS and Barclays to purchase 3m shares. Genting HK’s stake in NCL will fall from 43.4% to 37.7-38.5% after the sale. *Rotary Engineering: Awarded $200m worth of EPC contracts in S’pore and Saudi Arabia, comprising a contract to build a shared lubricant storage facility for three oil companies in Tuas South, two EPC tank contracts and fabrication works for the Jubail petrochemical complex in Saudi Arabia. Group is also eyeing the US$10b refinery and petrochemical complex in Oman. Contract wins year to date exceed $600m. *Mermaid Maritime: 49% owned Subtech Qatar has won several subsea contracts with combined value of US$40m, most of which will be completed this year. Included in this suite of awards is a contract for the laying of subsea cables and installations that will be undertaken by its newly established specialized ROV division. *GLP: Leased 23,000 sqm of space at GLP Zengcheng (18,000 sqm) and GLP Yunpu (5,000 sqm) to a e-commerce player, which intends to use both facilities to provide express services in Guangzhou and throughout China. *Fortune REIT: Placement of 143m new units at HK$6.82 each to more than six institutional/professional investors. The placement price is at a 4.5% discount to the last closing price of HK$7.14. Net proceeds of HK$947m will be used to partially fund the proposed HK$5.85b acquisition of the Kingswood Ginza mall in Tin Shui Wai in HK.

Tuesday, July 30, 2013


Memstar - Proposed arrangement between both parties is made up of an aggregate $293.4m. Cash: $73.4m- $0.0276 per Memstar share. Shares: $220.1m- UEL will issue 200.1m new shares at $1.10/share for Memstar shareholders by way of a distribution-in-specie of 10-for-1 UEL share. The deal is negative for UEL shareholders based on the 11% premium they are offering for Memstar shares, which will not boost EPS substantially. The 11% premium or $29.1m equates to $0.049 per UEL share. Based on the last closing price of $1.025, UEL should theoretically be priced at [$1.025 - $0.049] = $0.98 per share. If UEL is trading at its theoretical pricing of $0.98, Memstar's theoretical pricing should be $0.095. Based on Memstar's current price of $0.093 and UEL's current price of $0.955, Memstar shareholders potentially has a paper loss of $0.0026 loss per share. Distribution-in-specie: $0.093 * 10 = $0.93 Including cash portion = $0.93 + $0.0276 = $0.9576 $0.955 - $0.9576 = $0.0026


Aussino - The grp today officially terminated the proposed reverse-takeover offer by Max Strategic Investments (the energy business of Max Myanmar group, owned by Myanmar’s tycoon U Zaw Zaw). The group also informed shareholders that it is actively seeking other potential investments and proposals to enhance its financial position and is requesting a time extension to meet the minimum listing criteria in order to be removed from SGX Watch-List by 6 Sep 13, failing which the company will be de-listed.

Soilbuild Business Space REIT

Soilbuild Business Space REIT Offering: Soilbuild has priced its Trust offering at a Price Range of $0.77-0.80, offering 586.5m units, subject to over-allotment option, which may see the co. raise up to $469.2m ($369.6m). Link to prospectus can be found via the link below:$File/1. Soilbuild REIT Prelim Prosp (30 Jul 2013).pdf ($File/1. Soilbuild REIT Prelim Prosp %2830 Jul 2013%29.pdf)

Asian Pay TV

Asian Pay TV: CIMB initiates Coverage with O/p call and $1.00 TP. note that although its post-IPO performance has lagged behind, APTT is still set to deliver a stable dividend pay-out due to its defensive utility-like Taiwan cable TV business. As growth weakens across Asia, a high and stable dividend yield should remain attractive. House remain unconcerned about new licence approvals as a capital-intensive build out suggests new competition is not a credible threat. While bond yields have ticked upwards, rates in Taiwan are expected to remain low for some time, keeping financing costs low. Add that since listing, QE tapering and spiking SGlong bond yields have caused yield plays to weaken considerably. However, stabilising SG bond yields and the stable Taiwan rate outlook mean APTT’s high yields remain attractive, in house view. TP indicates a CY14 yield of 8.2%, still a discount of 180bp to S-REITs and a 410bp discount to pay TV-related names.

Ying Li

Ying Li Technicals are indicating contrasting views, with Stochastics exhibiting further downside, whhile RSI and ADX does suggest that yesterdays selldown could be weakening. Share price is trending btwn its 200 day and 20 day MA at $0.43 and $0.44, would wait for a close up / down, which could reconfirm the trend.


Venture - Counter is down 0.14% today, hardly a surprise, with the counter having been range bound after it reported a dismal set of results in May, which saw weak financial performance across most segments, exacerbated by higher income tax expense and lower contributions from associates. Going forward, management notes that the operating environment for the global electronics industry remains challenging with no clear signs of recovery in the near term. The group aims to sharpen its focus on increasing market share and win new programs and customers, while considering strategic investments to meet longer-term goals. Nevertheless, with a net cash position of $294.1m ($1.07 cash / share), Venture’s balance sheet remains sturdy, which should enable the group to ride out the current storm. However, with a dividend payout at almost 100% and capex doubling to at least $68m in FY13, it may be difficult for Venture to sustain its DPS of 50¢, hence putting its attractive 6.5% yield under pressure.


SIA: SIA conducted an informal analyst briefing following the recent release of its 1QFY14 numbers. Conversation centred on three areas: SQ's yield composition, the outlook for the freight business and specific market performance, in particular, Australia. While SIA tends to be economical with guidance, it would appear that the greatest contributions to passenger yield (and its 1QFY14 decline was currency—especially JPY and AUD, with the mix actually quite stable. While discounting to fill additional seats to Australia remains a reality, CS see the impact of better business class load and a less aggressive YoY currency track taking some pressure off yields in future periods. CS retain its OUTPERFORM rating and $12.50 TP. House view is that airlines continue their gradual firming in both earnings and stock price, absent any sharp movement in jet fuel and/or currency.


Soilbuild: Expect to see positive sentiment, as the group marks its foray into Myanmar, which will see it entering into its first overseas development project, in Myanmar, yangon to develop a high end condo of abt 250 units. The project has a gross development value of abt US$120m and will see Soilbuild partner the Ayeyar Hinthar Group of Companies. The group intends to market the units at between US$300 and US$350 per square foot when it is launched. The grp would consider industrial projects going forward, although it is not their primary focus at the moment. Industrial will be the second stage when Myanmar has more infrastructures to support the industry.


Goodpack: DBSV note that after a slow 2H13, Goodpack’s volume growth momentum is set to accelerate from 1Q14, underpinned by additional demand of: 1) 15k boxes /month from new synthetic rubber (SR) customer, Sibur in Russia; and 2) 8-9k boxes/month from newly commenced SR plants of Lanxess and Asahi in Singapore. This lays the ground for 8-10% vol growth in FY14. In addition, Goodpack stands to benefit from the lower handling and logistic costs on its global tender exercise and leasing cost after the buyback of 300k leased boxes in FY13. Goodpack’s share price has corrected by 21% from its YTD high of $1.91 in early March against the backdrop of slow recovery in US/Europe and fear of slowdown in China’s economic activities, which would affect global rubber demand. The tide is changing for Goodpack in the light of improving rubber demand and as contributions from new SR contracts in Singapore and Russia kick in as well as the growing autopart segment. Given that fundamentals are intact, the overhang in the stock created by the selldown of a substantial shareholder should not be a cause for concern but is a window of opportunity for long term investors to accumulate Goodpack. Besides, Goodpack should not be affected by any potential rate hikes as 90% of its debts are fixed rate. On the back of brighter prospects and 25% potential upside to $1.90 TP, house upgrade Goodpack to BUY. The finalisation of autopart contracts is an imminent catalyst.

Casa Holdings

Casa Holdings: 34.3%-stake JV acquired 25 lots of land with land area of 53.7k sqm in Teluk Jawa, Johor, from Giant Star Sdb Bhd for an aggregate RM115m, based on the historical book value. The land acquired will be developed into a mixed residential and commercial development project, located at the sea front less than 1km from the current Senibong Cove and ~12km away from Woodlands checkpoint. Acquisition is in line with group's strategy to include property development within its portfolio. Casa is currently in the business of distributing home appliances and manufacturing of central air-conditioning units and dryers machines.

Memstar/ United Envirotech

Memstar/ United Envirotech (UEL): Memstar entered into an agreement with UEL to dispose its shares for an aggregate $293.4m, or $0.11/share, via a cash and share swap arrangement. Cash portion of $73.4m will be offered to existing shareholders of Memstar, and the remaining will be via the issue of 200.1m new UEL shares at $1.10, which equates to a distribution-in-specie for Memstar shareholders on the basis of 1-for-10 UEL shares. The acquisition by UEL is subjected to approval of Memstar shareholders. A non-approval would place Memstar into voluntary liquidation and assets will be distributed to shareholders upon liquidation. The acquisition makes sense for both players, as UEL has been a major customer of the Group, accounting for more than 50% of Memstar's sales. As a combined group, it will be transformed into a vertically integrated water solutions provider with the ability to offer such one-stop solutions to its customers.


Yoma: Booked 1Q14 results with net profit at $0.42 (-81%) and top-line revenue at $15.2m (+12%), which was driven mainly by the group’s real estate division. Gross margins remained healthy, rising 2.2 ppt to 39.3%. The moderated growth in revenue was due to the slower-than-expected pace of construction for Buildings 3 and 4 in Zone A of Star City, which Yoma expects it to improve and see more of sales recognized in the remaining periods of FY14. Revenue generated by the sales of residences and Land Development Rights (LDR) contributed about 94% of Yoma’s total revenue for 1Q14. Operationally, take-up rate remained strong for the Star City residential project, with 513 out of a total of 528 units in Buildings 3 and 4 in Zone A. Based on a percentage-of-completion revenue recognition, Yoma has recognized revenue of $7.2m for its Star City Project with a remaining balance of approximately $53.8m to be recognized within the next 24 months, in tandem with construction progress. The Group has also entered into a conditional agreement with a third party investor for the sale of LDRs for 5 buildings comprising 1,043 units in Zone B of Star City, and will also earn additional incentive fees when certain sales targets to end buyers are met. Pertaining to the sale of LDRs in Building 1 in Zone B, Yoma recognized revenue amounting to $5.9m in 1Q14. Bottom-line was also weighed by administrative and other operating expenses which increased 86% to S$4.1m due to an increase in the group’s headcount and staff cost, as Yoma attempts to build up a competent management team to support future expansion. Going forward, Yoma note that as Myanmar’s economic activities increase, demand for high quality housing is likely to outstrip supply and support residential prices, and seeks to enter the commercial real estate market through the acquisition and development of the Landmark Development, a prime 10-acre site at downtown Yangon. Once acquired, along with its existing landbank, Yoma will cement its position as a leading real estate developer in Myanmar. Overall, we note that the group’s fundamentals remain fairy strong, with a net cash position of $58.1m and at current price of $0.88 trades at 2.8x P/B. Latest broker ratings as follows: OCBC maintains Hold with $0.87 TP under review

SG Market (30 Jul 13)

SG Market: S’pore shares are likely to be sidelined as investors braced for a busy week of economic and corporate news. In the US, the Fed will weigh in with its policy statement on Wed with the monthly jobs report slated on Fri. In between are reports on 2Q GDP report and home prices. In S’pore, the corporate earnings season will be getting into full swing with all three local banks reporting their 2Q results later this week, along with SMRT Sembcorp Marine, Cosco, HiP, Golden Agri and SingPost. Bank earnings are not expected to shine with analysts looking for downside risks from bond holdings and slowdoen in non-interest income. Near term upside for STI index remains capped at 3,260 with underlying support at 3,210 (200-day moving average). Stocks to watch for: *United Envirotech/Memstar: UEL is proposing to acquiring 100% of Memstar for $293.4m (or 11¢ per share) via issue of 200.1m UEL shares at $1.10 each and $73.4m cash. This will entitle Memstar shareholders to 1 UEL share for every 10 shares held plus a cash distribution and can vote to maintain the listing status of Memstar or delist via liquidation. The proposed transaction is subject to approval by shareholders of both companies. *Yoma: 1QFY14 net profit tumbled 80.6% y/y to $0.4m, impacted by increased headcount and higher staff costs to meet the group’s expansion plans. Revenue rose 11.6% to $15.2m, driven mainly by sale of residences and land development rights. Gross margin widened to 39.3% from 37.1% a year ago. The group has $61.1m of sales bookings from Star City, of which only $7.2m has been recognized. Cash and bank balances stood at a healthy $72.5m as at Jun. *OKP: Barely broke even for 2Q13 with net profit of $0.7m (-77%) despite achieving higher revenue of $62.1m (+28%) as margins were hurt by higher sub-contracting and labour costs as well as cost overruns on some sewer-related projects. Gross margins shrank to 8.2% from 24.3% in 2Q12. As of Jun, order book grew to $428.8m, lasting till 2015, with free cash of $42.5m and NTA of 30.13¢. *Blumont: Sank into the red with a 2Q13 loss of $22.4m vs net profit of $11.9m in 2Q12 on negligible revenue of $0.7m. The negative botton-line was almost entirely due to marked-to-market fair value losses of $26.6m from the 50% plunge in share price of its 8.65% stake (252.3m shares) in Innopac during the 2Q. To replenish the paper loss, group is proposing a 1-for-2 rights issue at $0.05 (96.5% discount to last close) to raise net proceeds of $42.7m, of which 80% will be earmarked for business expansion and 20% for working capital. *LionGold: Acquiring Acadian Mining Corp at CAD$0.12 each or up to $9.1m. Acadian is listed on the TSX Venture Exchange with multiple gold tenements in Nova Scotia, Canada. Its two main projects hold a combined gold resource of 1.333m oz with open pit development potential. *Global Palm: Issued a profit guidance to warn of of a substantially weaker 2Q13 and 1H13 earnings due to lower sales. The group reported net profit of Rp20.3b on revenue of Rp106.4b in 2Q12.

Monday, July 29, 2013

Kep Corp (technical)

Kep Corp - No indication of a reversal of its current downtrend, with ADX, RSI and Stochastics all trending lower. Moreover, the counter has broken past allits key MA's. The year low of $10.23 will provide near-term support.

UOL (technical)

UOL - Technicals are indicative of further downtrend, with RSI and Sotchastics all hooknig downwards from overbought territory. The counter appears to have breached its 20 day MA at $6.80 today too. The 50 day MA at $6.68 will provide near-term support.


Kori: Highlighted previously on the cheap valuations for the structural steel player. The group is also backed by a solid balance sheet with net cash of $14.2m versus net gearing of 0.4x for TTJ and 0.1x for Yongnam. We have been noticing increasing trading volumes since 12 Jul when CEO Nobuaki Kori pared down one-third of his stakeholding to 20.6% from 31.6% via a married deal of 10.9m shares to an undisclosed buyer. No disclosure had been made by the company on the details of the buyer of the 11% stake yet. Kori has been a fairly illiquid counter with a small free float of only 38m shares but could see improved trading activity with a bigger float now out in the market. With structural steel plays Yongnam and TTJ gaining favour among investors on the back of strong orders and robust construction demand in Singapore, interest could spill over to Kori. To this end, the group has utilized $1.8m of its IPO proceeds for the expansion of its structural steel works and tunnelling services in Singapore.

TEE International

TEE International: OCBC notes that its FY13 PATMI of $13.1m was judged to be somewhat below its full year expectations. However, FY13 top-line increased 51% to $216.4m as the group recognized higher levels of contributions from engineering and property development projects. The order book of the engineering segment now stands at $215.4m, which remains fairly stable on a y/y basis. OCBC believe the spinoff on TEE Land will yield a few key benefits. First, a separate listing structure would allow the equity market to value the property segment alongside similar property peers. Second, this IPO would raise significant capital for growing the engineering, infrastructure and property development businesses. OCBC has a HOLD rating for TEE International, with TP of $0.38. House believe the downside may be capped from here, given the yield of 6.8% on the last closing price of $0.37.

Golden Agri Resources

Golden Agri Resources (GAR): OCBC downgrades to HOLD as CPO prices turn lower again where the front month futures contract has just hit MYR2170/ton, probably the lowest level since Oct 2009, amid concerns that stockpiles (both CPO and soy) are expanding to record levels as production continues to climb even as global demand (especially out of China and India) remains weak. More worrying, market watchers expect to see further softening in CPO prices on supply concerns, given that production of CPO tends to improve in the second half of the year. Over the past three years, GAR share price has shown a strong 0.7 correlation to CPO prices. Hence, further weakness in CPO prices could also lead to downside risk for GAR, both in terms of profitability and share price. Despite the brief spike in CPO price in 2Q, OCBC note that the average CPO price has actually come off some 5% from 1Q, suggesting that its performance is likely to be quite muted. At the topline, OCBC are expecting around US$1.28b (down 6% q/q) and a core net profit of US$100.7m (down 11%). OCBC downgrades Golden Agri to HOLD with TP of $0.57. On the flipside, CS maintains its OUTPERFORM rating (TP of $0.67) on GAR, although cutting FY13e and FY14e earnings by 22% and 15% respectively. GGR remains one of the most leveraged plantation companies to palm oil prices—for every RM100/t decrease in palm oil prices, its earnings would fall by 8%. Therefore, it works both ways—when palm oil prices eventually improve, GGR's share price should be quick to react positively. In 2013, GGR profits are expected to be hit on all fronts: (1) Weaker palm oil prices should result in a much weaker profit contribution YoY; (2) Refining margins in Indonesia should be further eroded, as numerous new refining capacities in Indonesia kick in; and (3) Crush margins in China remain depressed and the operating environment remains difficult due to overcapacity.


Dukang: Counter has been declining since an article was posted on 19 Jul, with relation to Baijiu producers have resorted to aggressive discounting in China to maintain sales volumes as consumers switch to beer and wine over the summer months. A retailer from He Ping district believes that the reason for the downturn in the Baijiu industry is more than just seasonal consumption patterns and cites other factors, such as a ban on buying luxury goods among government officials, and the negative press surrounding vintage Baijiu – a term that has been abused in China due to the lack of laws governing the use of the term on Baiju labels. However, even though Baijiu will see some recovery in its prices, it is unlikely to surpass the hefty price tag of its yesteryears.

HPH Trust

HPH Trust: Group reports its 2Q13 profits after market close on 30 July, CS expect pre-ex NPAT of HK$390m, down 34% y/y and 6% below consensus of HK$416m. Earnings typically build in 2Q towards the 3Q summer peak; however, the impact of the dockworkers strike, slower PRC export volumes and changes in shipping patterns are expected to have combined negatively with the pernicious effect of higher wages to keep NPAT at around 1Q13's levels. Key focus will be on distributions and the read-through to full-year from the company's recommendation for 1H13. Assuming that capex is split as it was last year, CS expect a distribution of HK$0.18/unit to be consistent with a full-year payout of HK$0.41. HPH Trust remains modestly above CS' TP of US$0.72, based on a target yield of 7.5% that is comparable to other SGX-listed business trusts with similar risk profiles. CS has an UNDERPERFORM rating.

Keppel Reit

Keppel Reit (KREIT): KREIT launched a placement of 95m new units (3.5% of existing unit base) at issue price of $1.26/unit. Net proceeds of $119.7m will be used to part-fund the 50% stake for the Melbourne office at 8 Exhibition Street. This is the second placement done this year following the $53m placement in Feb with proceeds used to repay debt. This implies a leverage ratio of 38% and should cap KREIT’s gearing at around the 45% level (pro-forma 2Q gearing declines from 44.2% to 43.9%). Mgmt expects the acquisition to be DPU accretive. This lifts the near-term equity raising overhang, medium term earnings risk from the expiry of income support structures and its higher-than-peer gearing in a rising interest rate environment remain key concerns. DB maintain HOLD rating, with TP of $1.36. Counter currently trades at 6.1% FY13e yield and 1.0x P/B.


Biosensors: Mgmt indicated that it will continue to be on the lookout for M&A opportunities to grow the group into a global medical devices platform group. The acquisition of Spectrum Dynamics (SD) provides an opportunity for the group to broaden its offering in the cardiovascular space. The SD imaging machine could potentially help doctors ascertain the appropriate treatment for patients with heart disease. A trial is being conducted in Japan to confirm the applications that the SD imaging machine can offer. As at 31 March 2013, Biosensors has a net cash position of US$337m. Management appeared confident of its guidance of 15% growth in product revenue, underpinned by its core DES business as it gains market share in spite of a stagnating global DES market. Biosensors will launch 4 new products this year including Biomatrix Neoflex, BioFreedom and two balloon catheters under license from Eurocor. Through joint marketing efforts with Terumo, Biosensors hopes to stabilize its market position in Japan and improve sales. Plans are underway to seek regulatory approval for BioFreedom in Japan. Nomura reiterate its BUY rating for Biosensors with price target of $1.80. The counter look attractively valued at 12x FY2014 EPS with an earnings CAGR of 11% over the next 3 years.


Swiber: Announced that it has clinched contracts worth ~US$435m. Not much details, apart that contracts are worth ~ US$330m under the Swiber Grp and ~US$1055m under the grp’s JVs. We note that the latest wins nrings the grp’s order book to ~US$1.5b, which streches its earnings visibility for at least 2-3 yrs, while valuations remain compelling, with the grp Stub valuations vs subsidiary Kreuz is still at a 50% discount on a P/B ex-Kreuz basis.


HI-P: We note of a rising trend in various brokers calling for a buy on Hi-P. Following OSMDMG’s Buy Call last week, Lim & Tan reiterated its BUY recommendation on Hi-P as house expect 2Q’13 profit to improve 50% qoq and turnaround from last year’s loss of $2m to $10.5m on the back of a revival in orders from Blackberry; and are expecting 2H13 profit to surge a further 124% hoh to close to $40mln as the company secures a new contract from Apple for their low cost iPhones which are made of plastic casing (which is the forte of Hi-P) as well as a new program launch from Blackberry for their new A10 smart-phone. Also understand that Motorola under their new parent company Google will be launching a new smart-phone called Moto X, and Hi-P will be involved in the new program as well; other customers providing stable orders include P&G, Nike and Amazon.

GMG Global

GMG Global: 2Q13 earnings deteriorated 90% y/y to $1.2m as revenue slipped 4.9% to $260.5m. This brought 1H13 earnings to $14.1m (-39% y/y) and revenue to $494.1m (-11.2%), mainly caused by a 20.8% decrease in rubber prices to $3,621 per ton over the period due to the weak economic data from U.S. and China. This was partially mitigated by a 12% increase in sales tonnage to 136,449 tons in 1H13 as a result of higher contribution from its Ivory Coast subsidiary, ITCA, and Belgium-based 35%-owned associate, SIAT SA. Management expects prices to remain range-bound at the current price of US$2,100 for 2H13, but remain optimistic on the longer-term demand for rubber with the global on-going industrialization and urbanization. Gearing lowered slightly to 0.14x (from 0.15x at FY12). GMG trades at 30x trailing P/E and 0.96x P/B.

Lian Beng

Lian Beng: FY13 results missed estimates; Earnings dropped 24.3% y/y to $39.4m due to the absence in a sale of industrial property recognized in the previous year. Excluding the gain in FY12, core earnings fell 7.1% despite a 13.6% improvement in revenues to $505.6m. This was due to an increasing sales mix coming from the ready-mixed concrete segment, which has lower margins compared to its construction business. Throughout FY13, Lian Beng doubled its investment properties to $136.6m (+106%) on the purchase of two 111 Emerald Hill residential units, progressive payment for long term investment in residential units and development cost incurred for the Mandai workers' dormitory. Lian Beng's gearing went from net cash to 0.38x as the group took on debt to finance its development projects at Spottiswoode Suites, The Midtown, M-Space and the Mandai workers' dormitory. Construction projects clinched year-to-date was strong at $915m, underpinned by BCA's forecast on increased construction demand of $26-32b for 2013, followed by a 25% slowdown to $20-28b per annum for 2014 and 2015. This brought Lian Beng's order book to $1.3b, providing activities through to FY16. Management continue to explore business opportunities in the region through acquisition(s), JVs/ strategic alliances to sustain its growth prospects going forward. Lian Beng proposed final dividend of 1 cent and a special 0.25 cents dividend; implied dividend yield of 2.2% and trades at 7.8x P/E and 1.2x P/B. Maybank KE recommends a BUY rating with TP of $0.69.

First REIT

First REIT: Registered 2Q13 results which was largely in-line. Excluding the gain on divestment of the Adam Road property, of which a portion was paid in 2Q12, and the issuance of 35.5m new units, core distributable income came in at $12.7m (+27% y/y, +9% q/q) and DPU at 1.85¢ (+16% y/y, +6% q/q), bringing 1H13 DPU to 3.59c (+13%). Net property income rose 43% y/y and 15% q/q to $19.7m, largely due to the contributions from four recently acquired properties, namely Siloam Hospitals Makassar (SHMK) and Siloam Hospitals Manado & Hotel Aryaduta Manado (MD Property), Siloam Hospitals Bali (SHBL) and Siloam Hospitals TB Simatupang (SHTS). Contributions from SHBL and SHTS are expected to further boost the REIT’s top-line in 3Q13 as the full impact of their contributions will be realized. Going forward, First REIT remains confident of its prospects, citing the buoyant healthcare growth in Indonesia, while its acquisition pipelines remain strong, with sponsor, Lippo Karawaci having in its pipeline,14 hospitals, to which First REIT has a right-of-first-refusal. Apart from Indonesia, the group will continue to search for more yield-accretive and quality healthcare assets in other parts of Asia, and explore asset enhancement initiatives with existing properties. Barring any unforeseen circumstances, the group does not expect any significant or adverse changes to First REIT’s performance for FY13. Overall, we note that group’s fundamentals remain fairly strong, with gearing ratio at 33.4%, below MAS regulation of 35%, with 64.2% of its lease expiry stretching more then 10 years and its earliest rental renewals at 2017. An advance distribution of 0.99c was paid on June 26. The distributable amount of 0.86c per unit for the period from May 22 to June 30 will be paid on August 29. At current price, First REIT trades at 1.34x P/B with an annualized FY13E yield at 6.1%.

SG Market (29 Jul 13)

SG Market: S’pore shares may continue to grind along following Wall Street’s dramatic recovery from earlier losses last Fri on optimism that the Fed will keep its easy monetary policy in play a while longer. Speculation over who will succeed Fed Chairman Ben Bernanke had caused some anxiety in the market but news that President Obama had not reached a decision on the next appointment, Fed Vice Chair Janet Yellen or the more hawkish ex Treasury Secretary Lawrence Summers. soothed the market somewhat. Earnings were mixed with Starbucks beating forecasts while Expedia missed estimates. But investors are likely to look ahead to this week’s FOMC meeting, GDP and monthly jobs reports for further clues on the Fed’s intended timeline for scaling back its quantitative easing. Meanwhile, consumer prices in Japan excluding food rose 0.4% in Jun, reducing the need for Japan to bosst stimulus, while China directed more than 1,400 companies in 19 industries to cut excess capacity by year-end in an effort to restructure the economy by shifting to a slower but more sustainable growth. The STI index appears to be entering a corrective phase with stochastics pulling back from overbought levels and both RSI and MACD losing momentum. Expect the benchmark index to range trade between 3,210 (200-day moving average) and 3,260 in the near term. Stocks to watch for: *First REIT: 2Q13 distributable income +26.6% to $12.7m, DPU +16.4% to 1.85¢ (including advance DPU of 0.99¢ paid pre-rights issue). Gross revenue and NPI surged 43.4% and 41.7% to $20.1m and $19.7m respectively, largely due to contributions from four recently acquired properties - Siloam Hospitals Makassar and Siloam Hospitals Manado & Hotel Aryaduta Manado, as well as partial contributions from Siloam Hospitals Bali and Siloam Hospitals TB Simatupang, acquired in Nov 12 and May 13. Gearing rose to 33.4% with NAV of $0.90. *Lian Beng: FY13 results slightly missed estimates; net profit was 24.3% lower at $39.4m due to a $7.9m gain from sale of industrial property last year. Excluding this one-off item, core earnings fell 7.1% despite a 13.6% increase in revenue to $505.6m as higher ready-mixed concrete was offset by lower construction margins, sales, which led to a 3.6-ppt drop in gross margin to 12.9%. Construction order book remained robust at $1.3b but gearing reversed from net cash to 0.38x as the group took on debt to finance its development projects at Spottiswoode Suites, The Midtown, M-Space and the Mandai workers' dormitory. Final DPS of 1.25¢ proposed vs 2¢ in FY12. *GMG Global: 2Q13 net profit plunged 90% y/y to $1.2m despire revenue showing a 5% drop to $260.5m on higher volume of 63,342 tons (+5.5%) sold. For 1H13, earnings slumped 39% to $14.1m as revenue fell 11.2% to $494.1m on a 20.8% slide in rubber prices to $3,621 per ton due to the weak demand US and China. This was partially cushioned by a 12% increase in sales tonnage to 136,449 tons as a result of higher contribution from its Ivory Coast subsidiary, ITCA, and 35%-owned Belgium associate, SIAT SA. Gearing is lowered marginally to 0.14x (from 0.15x as at Dec 12). *Kori Holdings: Acquired three acres (130,680 sf) land from Johor Corp for RM3.3m for the establishment of a new storage yard as the lease on its existing storage yard will expire in Aug 13. The medium-industrial land is located at Pasir Gudang Industrial Area, Johor, and has a lease of 60-years. Kori will fund the acquisition via its IPO proceeds as planned. *China Fishery: Tightened grip on Peruvian fish meal producer Copeinca, raising its stake to 74.3% from 65.3% after settling a dispute with Peruvian investor Veramar Azul, which had earlier refused to honour a call option agreement with China Fishery. *Otto Marine: Group sold and leased back two AHTS for $170m for an eight-year period. The two vessels are currently under construction at Otto's shipyard in Batam, Indonesia. Group has been trying to strengthen its balance sheet via rights issue and sale and leaseback agreements. *AsiaMedic: Issued profit warning for 1H13 due mainly to the increase in operating costs and initial development expenses for China and Myanmar. *Sino Grandness: Proposed a 1-into-2 share split to increase liquidity and broaden shareholder base.

Friday, July 26, 2013

WE Holdings

WE Holdings: goes ex-rights on 29 Jul. This involves a renounceable 1-for-1 rights issue @ $0.015 plus one free warrant with exercise price @ $0.03. The warrants may be exercised from the date of issue and have a life span of 2 yrs. The corporate action is a complex one that involves derivatives, hence we can only give a broad estimate of the ex-rights price. Since the rights and warrants are deep in the money, we assume full acceptance of the rights and expected full conversion of the warrants. Assuming the last traded cum-rights price is $0.096, we estimate the ex-rights price = [ 0.096 + 0.015 + 0.03 ] / 3 = $0.047

Keppel Corp (technical)

Keppel Corp: the declining indicators suggest that near term price action could continue to head south. The key moving averages have flattened out and are starting to taper downwards. See support at the $10.35 level, which if broken, could see a further move down to $10 in extension.

First Resources (technical)

First Resources - Very neutral indicators, with the 20 day MA as of late acting as tough resistance to break. The trend line support at $1.67 will be a critical support to watch out for, while a close above the 20 day MA at $1.73 could signal further upside.

Overseas Education (technical)

Overseas Education: technically, the stock has charged to an inception high of $0.77. The bullish break of the $0.74 resistance-turned-support is a positive indication for the stock to trend higher. Next pyschological resistance at $0.80.


Guocoleisure: spings back to life, is +4.5% at $0.82. No recent corporate devts to highlight. Guocoleisure has been a perennial deep asset value play. In Apr, an independent financial advisor valued Guocoleisure's UK hotels at £890m or $1.28/share, which represents a 35% discount to the last traded share price.

AIMS AMP Capital Industrial Reit

AIMS AMP Capital Industrial Reit: 1QFY14 DPU was 2.5c (flat yoy), in line with DMG's forecast, and would have been higher if not for the Apr new unit placement. Revenue jumped 17% yoy to $24.5m, while net property income rose 5.7% to $15.7m. This was mainly driven by additional rental contribution from Phase One of 20 Gul Way as the property started earning income from the start of 2013, higher rental rates (+14.2% on expired leases) and the recovery of 27 Penjuru Lane and 8 & 10 Pandan Crescent, which reverted to multi-tenancy properties. During the quarter, AAREIT received its TOP for Phase Two of 20 Gul Way, 7 mths ahead of schedule. This should provide a boost to next quarter's earnings. DMG pencils robust DPU growth in FY14/15, underpinned by the expected completion of 103 Defu Lane, and extension of Phase 2 at 20 Gul Way by mid 2014. The house maintains at Buy with TP $1.81.


Hisaka : Sias maintains at Buy with TP $0.315. Hisaka entered into a MOU for the reverse takeover (RTO) of Temasek Regal Capital, a Msian property and construction company. Sias believes the transaction raises the promise of higher group profitability as the core semiconductor business has been weak. Notes the consideration of $127m for Regal would generate a slight premium to Hisaka’s book value per share of $0.243, raising it to ~$0.283 per share post issue of new shares. Further more, the consideration includes a significant discount on the RNAV of Regal, hence there is potentially further upside to be realized upon completion of the RTO. Established in 2005, Regal has completed various devts predominantly in Kuching, Sarawak. Regal has at least 10 on-going projects with a total of about 1,753 units of houses, apts and shop houses in progress.

TEE Land

TEE Land: FYMay13 results. Revenue at $29.7m, +275%, mainly due to revenue recognized from the group’s devt at 448@East Coast upon obtaining TOP and revenue recognized from other devts at Peak @ Cairnhill 1 and 91 Marshall. Net profit however, grew at a slower 32% to $2.0m, dragged by more rapid growth in cost of sales (+457% to $24.2m), higher admin/marketing expenses occurred in launching new devt projects (+110% to $5.4m) and bogged by one-off IPO related expenses of $1.5m. Mgt has proposed a final div of 1ct. Going forward, mgt remains cautious in view of the recent cooling measures introduced in Singapore, but continues to see growth opportunities in the Asean region. The group has contracted sales of $77.7m for its on-going residential property projects in Singapore (excl JV projects) and the group’s associates have also contracted sales of ~$22.2m in Thailand for its on-going residential property devt projects. The group has further signed an MOU to explore opportunities in industrial estate devt in Thailand. The stock trades at 1.55x P/B.


HI P:OSK DMG reiterates buy, cite that the counter is set for an exciting 2H13. Its top customers, Apple, Blackberry and Motorola, will be launching new products for which it will be supplying components and providing assembly services. Expect its 2Q results to be strong as orders may already be pouring in. Reiterate BUY, with TP unchanged at $0.96,

TEE International

TEE International: FY13 earnings below street estimates; 4QFY13 earnings dipped 43.9% to $6.4m mainly due to a $4.1m increase in administrative expenses. Tee reported that these expenses were incurred for marketing property development projects and also included administrative expenses for its newly acquired integrated turnkey material handling subsidiary. Subsequently, 4QFY13 revenues soared 124.5% to $88.7m due to the recognition of construction projects from its engineering segment as well as associate TEE Land's recognition of developments. This takes FY13 earnings to $13.1m (-31.7%) and revenues to $216.3m (+50.6%). Group reported a healthy outstanding order book of $215.4m for its engineering segment. Final dividend of 2.5¢ proposed, bringing FY13 dividends to 3.15¢/share implying an attractive yield of 8.75%. Broker recommendations: NRA has OVERWEIGHT with TP of $0.42; SIAS has OVERWEIGHT with TP of $0.47


SATS: Announced 1Q14 results which was in-line. Rev at $434.5m, -1% y/y while net profit at $46.2m, +12% y/y. Revenue for Gateway Services was $167.9m, (+8% y/y, +2% q/q) helped by a 9% y/y and 6% y/y growth in flights and passengers respectively. This was also helped by continuing momentum in signing and renewing contracts with existing and new custom Food Solutions at $265.2m, (-6%. y/y, -6% q/q) mainly due to loss of business from Qantas’s move to Dubai hub for Kangaroo routes and lower load factors in airlines. The performance of TFK in Japan was also weak due to lower traffic, weaker Yen. Management also commented that although TFK is operationally profitable, the profits have contracted from an already anemic $2m EBIT last year. Yet operating profit for the quarter at $40.7m, +3.6% y/y, largely attributed to the cost saving initiatives undertaken by the Group. Associates and JVs also contributed positively at $12.5m, + 6.8% y/y At current price, the grp has a fairy attractive yield of 4.6%. Nomura maintains neutral with $3.40 TP


SIA: Registered 1Q14 results which was in-line with estimates, with core net profit at $103m (+33% y/y). Including exceptional, reported net profit came in at $122m (+56%), due to the result of a $336m gain via the disposal of Virgin Atlantic to Delta Air Line and a $317m impairment charges on freighters and property, plant & equipment. Revenue at $3.84b (+2% y/y) was aided by $75m recognized from settlement pertaining to changes in aircraft delivery slots, baring which Passenger revenue improved marginally, with a 2% growth in passenger carriage, but this was offset by weaker yields. Intense competition and unfavorable foreign exchange rates also depressed yields down by 2.6%. Cargo revenue was affected by lower loads (-5.3%) and yields (-5.5%) signaling overcapacity. SIA parent airline’s saw operating profit at $89m (+5%), although yield for 1Q14 dipped to 11.1c/pkm (1Q13: 11.4¢) and passenger load factor fell to 78% (1Q13: 79.5%) versus breakeven load factor at 82%, highlighting a decline in y/y operating stats on back of increased competition. SilkAir registered an operating profit of $14m (-22% y/y). While yields rose to 14.1¢/pkm (1Q13: 13.6¢), passenger load factor fell to 69.6% (1Q13: 76.4%) an inch above the breakeven load factor at 69.5%. The Cargo segment continues to be the weakest link, registering an operating loss of $40m (1Q13: -$49m), as total cargo yields declined further to 84.3¢/ltk (1Q13: 85.1¢/ltk) and load factor at 68.8% (1H13: 68.4%) below the overall breakeven load factor of 72.2%. This has resulted in SIA removing four Cargo freighter aircrafts from its service. Going forward, management maintains a cautious outlook, and guides for weaker yields ahead in all segments, which will likely be offset by higher passenger traffic from capacity expansion. It also expects weak load factors on the cargo business due to low demand. Analyst briefing is at 10 am this morning. UOB Kay Hian maintains Hold with $11.50 TP Deutsche maintains Sell with $9.40 TP Nomura neutral with $11.10 TP

WE Holdings

WE Holdings: CEO Sim Mong Keang has resigned on his own accord, to facilitate the scaling down of his involvement in the businesses of the group and to pursue other unrelated business interests. Nevertheless, he will remain as a consultant to the company for 3 yrs, to advise on the operations and devt of the group’s components business, as well as any M&A activity. Company sponsor, PrimePartners is satisfied that there are no other material reasons for the Mr Wong’s resignation. Executive Chairman, Terence Tea shall in the interim assume the role of CEO. Mr Sim's resignation comes as WE has been seeking to diversify beyond its traditional business. Mr Sim took his current position in 2010 as a result of a reverse takeover of debt-ridden Westech Electronics by Plexus Components, which Mr Sim co-founded. Westech was renamed WE in 2011. The company this year has been actively exploring business opportunities in Myanmar, announcing plans to look into the cement and oil and gas industries in the newly opened South-east Asian country. Those announcements of potential investments have sent WE's stock on a volatile ride this year.


SMM: The Court of Appeal has ruled in favor of SMM, with regards to certain parts of the High Court’s decision on SMM’s claims against PPL Holdings back in 2012. As a result, SMM will have complete control of PPLS Board. PPLH has also lost the right under the JV agreement to appoint its nominees to PPLS’s Board. SMM will also have the right to appoint PPLS’s key mgt positions. There will be no change in the consolidation of PPLS as an 85% owned subsidiary of SMM. The Court of Appeal has awarded SMM 90% of its costs of its appeal and 90% of its costs before the High Court. SMM was also awarded its costs of defending the cross appeal by PPL Holdings. While this is not expected to have material impact on SMM’s EPS and NTA for FY13, this brings closure regarding the issue of SMM’s control over PPLS.

Mapletree Industrial Trust

Mapletree Industrial Trust (MINT): 1QFY14 results in line; distributable income increased 9% y/y to $40.2m, DPU to 2.43 (+7.5%). Gross revenue surged 12.3% to $75.1m and NPI grew 8.5% to $52.5m led by higher rent reversions (10-41%) across all segments. CS expect rent reversions are expected to normalise eventually. Portfolio occupancy remain fairly resilient at 95.5% with weighted average lease to expiry of 2.5 years. Gearing of 35.8% with 2.5 years average term of debt and 2.4% average cost of debt. AEI updates: (1) 63% of the new space at Woodlands Central Cluster has been committed (received TOP); (2) AEI at The Signature has been completed (enhanced frontage and conversion of gym to business park space), and (3) Kulicke & Soffa and Equinix (both BTS) and Toa Payoh North 1 AEI are on track to complete in 4Q13-2H14. DB expect near-term growth to slow as a few tenants vacate, ongoing AEIs and its Build-To-Suit project should underpin medium term growth. Mgmt expects rents to remain stable near-term although the large incoming supply may exert pressure in the medium term. Mgmt is actively back-filling the space to be vacated by CS (c. 12% committed). The relocation of SMEs to Iskandar is a longer-term risk, mitigated by MINT’s well-diversified tenant base. Valuations are attractive at FY13/14E yield of 6.7%, implying 430bps spread. Broker recommendations: CS maintain OUTPERFORM with TP of $1.67; DB has BUY rating and TP of $1.54;

CDLH Trust

CDLH Trust: 2Q13 results reflect challenging Singapore and Australia environment. Net property income of $32.6m, -4.4% yoy, largely due to lower contribution from its Spore hotels, and translation loss from the Australian hotels due to a weaker AUD. This was mitigated by a $1.9m revenue boost from the Angsana Velavaru resort in the Maldives, which was acquired in Jan ’13. Distributable income fell 6.4% yoy to $29.4m; accordingly DPU dropped 6.8% to 2.72 cts. Operationally, the Singapore hotels recorded lower average occupancy of 87.7% (-1.6 ppt yoy) and revenue per available room (RevPAR) of $193 (-8.5%), due to softer corporate demand, especially for corporate meetings and conferences. Mgt remains cautious on outlook. Notes an additional 2,200 room slated to open in 2H13, on top of the 1,800 rooms opened in 1H13, thereby resulting in more challenging competitive landscape. Meanwhile, visitor arrivals are expected to grow at a slower pace than in 2012. In Australia, CDLH Trust’s hotels in Brisbane and Perth are expected to experience weaker performance as a result of the slowing Australian economy and mining sector. Mgt will continue to maximize the potential of its assets through asset enhancement initiatives and yield accretive M&A. As planned, Orchard Hotel Shopping Arcade will undergo a 12-mth AEI commencing late 2013, resulting in the closure of the mall. Gearing stands at 29.7%. CDLH Trust offers 6.4% annualized 2Q13 yield, which appears less attractive vs hospitality peers Ascott Residence Trust (7.2%) and OUE Hospitality (FY13e: 7.4%).

SG Market (26 Jul 13)

SG Market: No fresh leads for the S’pore market as the advance on Wall Street lacks conviction amid mixed earnings and a positive durable goods report, with perhaps the bright spark coming from Facebook’s stellar results, which sent its stock soaring 30% to US$34.36. Meanwhile, homebuilders sank 4.8% after PulteGroup. and DR Horton reported lower-than-forecast orders. In economic news, US orders for durable goods jumped 4.2% in Jun, three times the median forecast but stripping out the volatile transport equipment sector, the numbers were not so hot, suggesting a tepid recovery still. Jobless claims rose 7,000 to 343,000 last week, meeting expectations. Asian markets ended with losses even as the Chinese government announced a mini stimulus plan to boost specific sectors of the economy, including small businesses and railway investments. The STI index appears to be correcting from its overbought levels, with downside support seen at 3,210 (200-day moving average) and overhead resistance at 3,260. Stocks to watch for: *SIA: Logged 56% rise in 1QFY14 net profit to $121.8m, which included gains from aircraft sales ($13.9m), sale of 51% Virgin Atlantic stake ($336m) and impairment charge ($293m) on four marked-for-sale freighters taken off the fleet. Group revenue edged up 1.7% to $3.84b on higher pax carriage (+1.8%) but weaker yields (-2.6%) due to intense competition and unfavourable FX impact, while cargo was affected by lower loads (-5.3%) and yields (-5.5%) due to overcapacity and slower global economic growth. Jet fuel, which accounted for 38% of total expenditure, fell 4% to $1.44b, sending operating profit up 13.5% to $81.7m. Forward pax bookings are expected to pick up in coming months in line with capacity growth but yields and demand for cargo will remain depressed. Book value climbed 1.3% q/q to $11.30. *SATS: 1QFY14 results were spot on, chalking net profit of $46.2m (+11.9%) on flat revenue of $434.5m (-0.8%) as sales were affected by reduced contributions from food solutions (-5.6%) due to a decline in airline catering unit TFK’s volume, which was impacted by weaker JPY and lower load factor of China routes. Volume of meals produced also declined after Qatar Airways shifted its transit hub from S’pore to Dubai. However, operating cost savings, higher contributions from associates and JVs (+6.8%) and a tax write-back helped lift the bottom-line. Balance sheet remains in a net cash position of $364m or $0.325 per share. *Mapletree Industrial Trust: 1QFY14 distributable income +9% y/y to $40.2m, DPU +7.5% to 2.43¢. Gross revenue jumped 12.3% to $75.1m, while NPI rose 8.5% to to $52.5m due to higher rental rates secured across all property segments with higher occupancies in flatted factories, business parks and hi-tech buildings. Average passing rents improved to $1.71 psf/month from $1.68 last quarter with occupancy steady at 95.5% and rentention rate of 84.1%. Aggregate leverage increased slightly to 35.8% with weighted debt tenor of 2.5 years and average fuding costs of 2.4%. *CDLH Trust: 2Q13 results reflect challenging Singapore and Australia environment. NPI -4.4% y/y to $32.6m were largely due to lower contributions from its S’pore hotels, and FX translation loss from the Australian hotels due to a weaker AUD. This was mitigated by a $1.9m revenue boost from the Angsana Velavaru resort in the Maldives, which was acquired in Jan 13. Distributable income fell 6.4% to $29.4m; DPU dropped 6.8% to 2.72¢. Operationally, the Singapore hotels recorded lower average occupancy of 87.7% (-1.6 ppt) and RevPAR of $193 (-8.5%), due to softer corporate demand, especially for corporate meetings and conferences. Gearing stood at 29.7%. *Stamford Land: 1QFY14 net profit +41.3% to $6.3m, revenue +5.8% to $64.4m. Despite a strong performance from its Sydney hotel, its hotel business was affected by lower sales and FX translation losses from its two Adelaide hotels, while its property development segment reported higher sales and profits from the sale of two apartments in TSRA, one commercial unit and one apartment from the Stamford Residences & Reynell Terraces compared to four apartment sales in the same period last year. *First Ship Lease Trust: 2Q13 loss widened to US$7.2m from US$2.5m in previous period as revenue dropped 27.2% y/y to US$21.3m due to default in lease payments for two crude oil tankers. Its other 23 vessels remained gainfully deployed under bareboat/time charters and pool employment. The fleet has a a weighted average lease period of eight years. Net gearing stood at 119%. The group is still seeking replacements for its CEO and CFO, both of whom resigned end of Jun. *WE Holdings: CEO Sim Mong Keang resigned but will remain as consultant for three years. Executive chairman Terence Tea will assume the interim CEO role. Group has been actively exploring business opportunities in Myanmar this year, announcing plans to look into the cement and oil and gas sectors. *Keppel REIT: Requests trading halt pending announcement on possible cash call to fund purchase of 8 Exhibition Street in Melbourne or perhaps, potential acquisition of one-third stake in Marina Bay Financial Centre Tower 3.

Thursday, July 25, 2013

Genting SP

Genting SP (GENS): GENS’ 2Q13 results to be announced on 6 Aug evening may show similar strength as MBS (estimated $300-350m vs 1Q13: $250m dragged by a poor 2.1% VIP win rate; 2Q12: $313m). 2Q13 should start seeing recovery in EBITDA margins as Western Zone ramps up. Further, Japan may accelerate approval for gaming liberalisation given the strong mandate for current Prime Minister in the recent upper house election. New gaming bill may be tabled as early as Nov, and it could take another 2 years for legislation to be up including deciding which prefectures to house the integrated resorts, and selection of operators. Thereafter it will take 3-4 years for construction. DBSV see Japan as an attractive US$10b market where GENS can diversify earnings and boost growth. GENS and Las Vegas Sands are front-runners given their strong balance sheets and IR operating track records. DBSV maintain its HOLD rating with TP of $1.42 based on 11x 2014F EV/EBITDA (Macau sector average).


Midas: Counter will be a beneficiary of China's accelerated construction on its Central-Western railway. Previously, funding was the key issue on investors' unfavourable liking to the sector. With the issue gradually being removed coupled with Midas' positive order flow in 1H13, counter could see renewed interest by investors going ahead. Chinese Premier Li Keqiang said the nation will speed up railway construction with a focus on the central and western parts of the country, adding support for an economy that’s set to expand at the slowest pace in 23 years. China will set up a railway development fund with fiscal revenue and public investment, and the government also plans to grant ownership and operating rights on some city and regional railways to local government and private investors.

Genting Singapore

Genting Singapore (GENS): According to CIMB, MBS operating numbers for 2Q13 showed that it was very much business as usual. The VIP market continues to be very narrow, driven by credit and high betting limits. The mass market business continues to struggle for growth as yields have been maximised and there is limited scope for capacity expansion. GENS will report its 2Q13 on 6 Aug. CIMB are expecting $308m adjusted EBITDA (+1.8% y/y) and $156m net profit (+12.8% y/y). House are assuming that GENS pulled back on VIP credit following the cautious outlook by management in 1Q13. However, if it maintained VIP liquidity, GENS is likely to beat its 2Q13 estimate. CIMB has an UNDERPERFORM rating with TP of $1.08.

Rotary/ Hiap Seng/ PEC

Rotary/ Hiap Seng/ PEC: According to a Bloomberg article (24 Jul), Singapore LNG Corp might expand its LNG terminal operations by adding a fourth storage tank, after engineering consultant WorleyParsons completed its design study. PEC, Rotary and Hiap Seng effectively dominate the market for the EPC and maintenance services to the petroleum refineries and petrochemical facilities in Singapore. PEC has about half of the petroleum-refinery maintenance market, with the remainder split between Rotary and Hiap Seng. The company is also working on Singapore Refinery Company’s refinery and has maintenance service contracts for Shell and ExxonMobil facilities. Hiap Seng, which also fabricates gas compression units, has announced one contract win a month since April. In June, the company started work on a $31.2 million contract for piping, equipment and tank construction works for the Singapore LNG Terminal project. Rotary in 2011 secured contracts in Singapore include ground preparation and civil works for Chang Chun’s planned petrochemical plant on Jurong Island, as well as the construction of three tanks for Alstom Power Singapore on the island. Rotary has seen its share price come back to life since the start of Jul, gaining a respectable 21%. This is compared to the 1.7% and -1.7% share price performance for PEC and Hiap Seng respectively. Both counters should see positive spillovers upon any further newsflows.

OUE H-Trust

OUE H-Trust: Strong public approximately 19.1x subscribed by retail investors, while the Placement Tranche fully subscribed on the back of strong demand from institutional and other investors. Debuts today at 2pm. IPO price of $0.88 per unit has implied 2013 annualized yield of 7.36% and 2014 yield of 7.46%. This is compared to hospitality REIT average of 6.45% and 6.35% for 2013E and 2014E respectively.


Armada: UOB Kayhian issued a non-rated note on Armarda Group shortly after 45%-owned associate co, China Mobile Satellite Communications Group announced a twofold increase in subscriber usage a mth after launching its mobile satellite service. CMSCG launched its sale of ‘1349’ mobile satellite SIM cards in early May together with China Telecom Satellite, promoting Thuraya mobile satellite handsets and mobile satellite airtime services to key Chinese distributors. ICSMCG and CTS are the first and only joint-licensee to provide Thuraya’s L-band satellite mobile telecommunications services in China. According to AC Nielson, demand for dual-mode satellite handsets in China is estimated at 320,000-410,000 units a year and could reach 1.33 million to 3.84 million units in 2-3 years’ time. This represents growth of 60% to 110% per year. Armarda’s peers in the satellite communications industry trade at an average historical PE of 18.9x


Sarin: Announced that EXELCO one of the world’s leading manufacturers and wholesale suppliers of high quality polished diamonds, announced that it is offering Sarine LightTM Light Performance grading for its polished diamonds, for use by its retailer customers worldwide. Consumers will be able to view the digital Light Performance reports of the offered diamonds on interactive tablets and follow a tutorial which explains what Light Performance is and how it is graded, thus allowing consumers to compare diamonds of interest and make informed decisions based on clear and intuitive visual information


Armada: UOB Kayhian issued a non-rated note on Armarda Group shortly after 45%-owned associate co, China Mobile Satellite Communications Group announced a twofold increase in subscriber usage a mth after launching its mobile satellite service. CMSCG launched its sale of ‘1349’ mobile satellite SIM cards in early May together with China Telecom Satellite, promoting Thuraya mobile satellite handsets and mobile satellite airtime services to key Chinese distributors. ICSMCG and CTS are the first and only joint-licensee to provide Thuraya’s L-band satellite mobile telecommunications services in China. According to AC Nielson, demand for dual-mode satellite handsets in China is estimated at 320,000-410,000 units a year and could reach 1.33 million to 3.84 million units in 2-3 years’ time. This represents growth of 60% to 110% per year. Armarda’s peers in the satellite communications industry trade at an average historical PE of 18.9x

Frasers Commercial Trust

Frasers Commercial Trust (FCOT): 3QFY13 results in line as DPU increased 28.8% to 2.17¢ due to the redemption of CPPU holders and reduction in interest expenses. Gross revenue dipped 16.1% y/y to $30.0m and NPI declined 13.4% to $23.1m due to divestment of KeyPoint and its Japanese properties and the weaker AUD. Overall portfolio occupancy of 98.1% and weighted average lease to expiry of 4.6 years. High leverage of 39.5% with average cost of debt at 1.9%, estimated to drop to 1.5% after issuing its new one-year debt. Stanchart see potential positive rental reversions at Alexandra Technopark, when its master lease expires in Aug 2014. Stanchart expect FCOT could look to acquire its sponsor's office assets, Alexandra Point and Valley Point, but it would require equity raising to keep leverage below 40%. However, Stanchart expect AUD to weaken a further 3% p.a. through to 2016. As Australian properties contribute ~52% of FCOT's income, earnings will be impacted severely. FCOT's portfolio valuation has declined 2.5% q/q and Stanchart estimate a 15% decline in the AUD to result in a ~8% decline in FCOT's NAV. FCOT trades at 0.91x P/NAV and 5.7% 3QFY13 annualized yield. Stanchart has an UNDERPERFORM rating with TP of $1.25.

Mapletree Commercial Trust

Mapletree Commercial Trust: 1Q14 results was ahead of grp's forecast. DPU at $1.753,+11% Y/Y while NPI at $47.1m, +6% y/y. NPI from VivoCity grew 12.6% y/y respectively. In addition, shopper traffic increased 1.2% y/y while tenant sales +5.6% despite a significant number of tenants undergoing fit-out during 1Q. Good progress was also made in renewing/re-letting leases due to expire in FY2013/14, with 57 of the 99 leases having been committed by the end of the first quarter with fixed rental uplift of 42.8% for the leases committed to date. The office component of PSAB continues to perform well, achieving committed occupancy of 100% in 1Q FY 2013/14 with a number of tenants having expanded within the building. Rental uplift was 23.8% for the 11 leases committed to date. In addition, ARC has achieved committed occupancy of 87.6%. Reflecting the improving occupancy and rental rates, GR and NPI at PSA. Div yield stands at 5.6% and trades at 1x P/B SCB upgrade to O/p with $1.34 TP.

Cache Logistics Trust

Cache Logistics Trust: Announced a good set of 2Q13 results which was in-line. DPU at 2.15c, +8% y/y while NPI at $19.6m, +17% y/y. Result brings 1H13 DPU to 4.38c, +8% and NPI to $39.6m, +15%. Increase in NPI was primarily attributable to rental contributions from new properties and improved performance from existing assets due to rental escalation. Group's latest acquisition 'Precise Two', provided a full quarter’s rental contribution, while its total portfolio remains fully occupied, with no renewal risk for this year. Balance sheet remains fairly strong with a leverage ratio of 29.2% Going forward, grp note that growth in developing Asia will remain sluggish this year and next amid a slower expansion in China and muted export demand from advanced nations. Despite this and concerns of interest rate hikes, believes Cache’s quality portfolio, but strong Sponsor support and prudent capital management should provides a solid foundation to continue to deliver sustainable returns for the full financial year. At current price, trades at 6.9% yield and 1.3x P/B OCBC maintains Buy with $1.40 TP


Capitaland turned in 2Q13 results which were broadly in-line with estimates. Net profit at $383.1m (-1% y/y, +104% q/q) with the lower y/y bottom-line attributed to weaker portfolio gains, baring which core net profit at $322.1m (+9% y/y) brings 1H13 core net profit to $599m (+15% y/y) Top-line revenue of $1.2b (+37% y/y, +79% q/q) was buoyed by higher revenue from the group’s development projects in Singapore, China and Australia as well as higher rental revenue from its shopping mall and serviced residence businesses, with the core markets of S’pore and China accounting for 64% of total revenue. For the quarter, CL S’pore revenue rose 33% as the group sold 139 residential units (2Q12: 202 units) bringing total sales in 1H13 to 683 units with total sales valued at $1.6b. Revenue contributions stemmed from The Interlace, Urban Resort Condominium and Sky Habitat as well as the commencement of revenue recognition for Bedok Residences. Revenue from China rose 44.0% as CL China sold 736 units (2Q12: 812 units) bringing total sales in 1H13 to 1,691 units valued at Rmb3.2b. The units sold were mainly from The Loft in Chengdu, The Metropolis in Kunshan, Dolce Vita in Guangzhou and iPark in Shenzhen. Amongst other key subsidiaries, CMA’s underlying revenue rose 25% due to contributions from Olinas Mall (acquired in Jul12) and The Star Vista (opened in Sept12) and commencement of revenue recognition for Bedok Residences, while Ascott’s revenue climbed a modest 8% due to contributions from properties that were acquired in 2H12, partially offset by the absence of revenue from properties divested in 3Q12. Going forward, grp will continue to focus on its core markets of Singapore and China to develop homes, offices, shopping malls, serviced residences and mixed developments. Aims to further expand and entrench its leading position in integrated and mixed developments in line with our core competencies and macro trends in Asia.

SG Market (25 Jul 13)

SG Market: S’pore shares are likely to turn their attention to events in China after US stock retreated as investors weighed stronger economic data against disappointing earnings from Caterpillar, Broadcom and AT&T although better-than-forecast results from Apple, Facebook and Baidu limited the losses. US new home sales climbed 8.3% to an annualized pace of 497,000 homes, the highest level since May 2008, while an manufacturing index rose to 53.2 in July from 51.9 a month earlier, lending support to the view that the Fed will trim its monetary stimulus measures soon. But focus will be on the weak China PMI numbers, which has prompted the government to scrap taxes for small firms, offer more help for ailing exporters and widen funding channels to speed railway investment in an effort to boost the flagging economy. The STI index appears a little overextended and some pullback may be imminent. Expect the benchmark index to face some resistance at the 3,260 level with the next hurdle pegged at 3,310. Underlying support remains at 3,200. Stocks to watch for: *CapitaLand: 2Q13 net profit was almost flat at $383.1m (-0.7% y/y), bringing 1H13 earnings to $571.3m (+10.1%). Excluding the $27.7m one-time loss incurred on repurchase of convertible bonds, net profit would be 6.5% higher at $410.8m on revenue of $1.18b (+37.1%). The group sold 139 (vs 202 in 2Q12) units in S’pore with a sales value of $300m (vs $379m) and 736 (vs 812 in 2Q12) units with a sales value of $1.3b (vs $1.8b) in China. Net gearing remains healthy at 45% with cash reserves of $5.2b. End Jun NAV was $3.69. *Mapletree Commercial Trust: 1QFY14 distributable income +26.4% y/y to $36.3m, DPU +14.1% to 1.753¢. Gross revenue and NPI climbed to $64.4 (+26%) and $47.1m (+31.4%) respectively with sharp rental uplift in Vivio City, higher occupancy at PSA Building and maiden contributions from Mapletree Anson (acquired in Feb 13). Overall portfolio occupancy reached 98.3% with a weighted lease to expiy of 2.5 years. Gearing stayed at 40.2% with average debt maturity of 3.2 years and borrowing cost of 2.22%. *Cache Logistics: 2Q13 distributable income +19.8% y/y to $16.6m, DPU +8.4% to 2.147¢, which translates to an annualised yield of 6.9%. Gross revenue grew 16.5% to $20.4m, while NPI jumped 17% to $19.6m due to rental escalation at existing assets and contributions from new properties. Portfolio occupancy was maintained at 100% with a weighted lease to expiy of 3.6 years. Aggregate leverage stood at 29.2% with average debt duration of 2.4 years. *Frasers Commercial Trust: 3QFY13 distributable income fell 6.9% y/y to $14.6m but DPU leapt 31% to 2.19% due to savings from the CPPU redemptions. Revenue declined 16.1% to $30m, while NPI dipped 13.4% to $23.1m as positive rental reversion of 0.5-17.4% and contributions from additional 50% interest in Caroline Chisholm Centre were offset a weaker AUD and divestment of KeyPoint and Japan properties. Occupancy at its S’pore and Austrailian portfolios stayed at healthy 97.4% and 99.5% respectively with weighted lease to expiry of 4.6 years. Gearing is at 39.5% with an effective interest rate of 2.8%. NAV slid to $1.47. *MTQ: 1QFY14 net profit swelled 38% y/y to $6.5m as revenue soared 146% to $94.4m, boosted by inclusion of results from oilfield engineering subsidiary Neptune Marine Services. But operating profit eased from 15.8% to 9.3% due to change in sales mix, higher staff and operating costs following the acquisition of Neptune. *Hisaka Holdings: Entered MOU to acquire Temasek Regal for $127.3m in a reverse takeover deal via the issue of 195m new shares at a post 2-into-1 consolidation price of $0.55 each plus cash consideration of $20m. Upon completion, the vendors would own 65% of the enlarged share capital of the group. Temasek Regal is a Malaysian property development, construction, building materials trading and asset management company based in Kuching, Sarawak. *Keppel Land: Divesting its 51% stake in integrated township Jakarta Garden City to its JV partner PT Modernland Realty for $290.5m. The group will reap a net gain of $186m from the sale, and increase its proforma NTA per share by 13¢ to $4.24. *Sarin: Announced that EXELCO one of the world’s leading manufacturers and wholesale suppliers of high quality polished diamonds is offering the Sarine LightTM Light Performance grading of its polished diamonds for use by its retail customers worldwide. *Mirach Energy: Commenced drilling for four new infill wells in South Sumatra, Indonesia.

AP Strategic

AP Strategic: the lack of trading interest in this counter renders the chart less accurate. From a short term perspective, today's share price bounce and hooking up of the key RSI and MACD indicators suggests outlook is getting less negative. Nevertheless would prefer to wait for the RSI and Stochastics to rise back above the oversold levels, which would provide a better confirmation signal for positive reversal. Support at $0.084, initial resistance at the pyschological $0.10 level.

Wednesday, July 24, 2013


Unionmet: Last night, Unionmet announced a married share trade involving Chairman Zeng Fuzu selling his direct 10.85% stake, and a further 18.2% stake via his Ultra Plus Ventures vehicle. This brought down his total stake in the company to 4.4% from 33.4% previously. The buyer, Asia Capital Group (ACG), has emerged as a new significant shareholder and the largest shareholder, with a 29% stake in Unionmet. Market watchers may note a potential mis-pricing opportunity in the market, given that ACG bought its stake for an aggregate $24.9m or $0.14 per share, almost double the current share price. Moreover, ACG’s stake is just shy of the 30% level that will trigger a mandatory general offer for the company. Should such a scenario materialize within the next six months, SGX rules mandate that the offer price will have to be tabled at a price not less than the $0.14 per share that ACG recently acquired for.

Centurion (technical)

Centurion - Counter is trading at an all-time high today at $0.42, which is hard to do any projections based on historical levels. However as a rule of thumb, the market could use psychological whole numbers as a gauge. E.g $0.45 & $0.50


HI-P: Counter is u p 5.2% today, following Apple’s ~5% jump in after trading hours, as the tech giant delivered stronger then expected 3Q results buoyed by strong quarterly sales of its iPhone. Analysts guides that in a bid to regain market share, Apple could begin rolling out smartphones and tablets with bigger screens in the coming quarters, with unconfirmed rumors that the tech giant and suppliers are currently testing on smartphone screens which are larger than four inches and tablet screens slightly less than 13 inches. Apple’s CEO, Tim Cook also refused to disclose the possibility of a lower cost iPhone or any other products in the pipeline, despite market sources earlier indicating that Apple could be launching a low cost iPhone within the next few quarters as they attempt to win market share in emerging markets. We note that the latest Apple’s earnings figures could offer some respite to the recent share price decline in SGX-listed Hi-P, after key client Blackberry saw a less then successful take-up in its Blackberry 10 devices and industry leader Samsung lost ~US$25b of its market capitalization last month, as sales of Galaxy S4 missed estimates. Unconfirmed rumours has also tipped Hi-P to be involved in the manufacturing or production of Apple’s new low-cost iPhone. Overall, we note that Hi-P’s fundamentals remain strong, with share price backed by a net-cash of $96.7m or 15.5¢ per share and current valuations are undemanding, with the group trading at 10.5x ex-cash forward P/E versus its historical average of 17x.

Midas (technical)

Midas - Counter appearsto be tresting the key resistance at $0.465, which gels with its key moving averages. A break above these levels could see further upside. RSI appears to be trending upwards, although would prefer see a close above the 200 day MA for confirmation of more upside.

Ying Li (technical)

Ying Li - Counter is currently testing its 50 day MA, where a close above these levels could signal further highs. RSI and Stochastics are indicative of further upside.

Chip Eng Seng (technical)

Chip Eng Seng - Counter appears to be going through a consolidation phase between its 20 and 50 day MA, with no clear indication from its key technicals. A break out either up or down could happen, which would be confirmed either by a close above the 50 day MA or below the 20 day MA.

WE Holdings

WE Holdings: Counter will go XR on 29 Jul for its proposed renounceable underwritten 1-for-1 rights-cum-warrants issue, with rights issue price at $0.015 and warrant exercise price at $0.03 per share. Maximum net proceeds of $10.1m will be used towards repayment of bank borrowings, funding the growth and expansion of the group through its proposed new resources businesses in Myanmar, as well as improving its general working capital position.


Yoma: DBSV hosted hosted Yoma on a two-day roadshow in Hong Kong. Investors who are keen on Myanmar opening up mostly agreed that Yoma is a direct and liquid access to this frontier market. Discussions centered on Yoma’s property business, with key concerns being sustainability of demand and pricing, Yoma’s funding needs and its ability to execute an aggressive and diversified expansion plan. Also, the share price has more than doubled within the year and investors are apprehensive of entering at current levels, and asked about possible rerating catalysts. Property sales remain healthy but house cut FY14F/15F earnings by 14%/9% as higher costs would squeeze margins and growth. No change to long term positive view on Yoma; maintain BUY with lower TP of $1.02 (Prev $ 1.08).

Breadtalk (technical)

Breadtalk: Trading Central has a Technical Buy Call. Note that the the upside prevails as long as $0.878 is support. Note that the RSI is above 50. The MACD is above its signal line and positive. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at 0.91 and 0.92).

Sinostar PEC

Sinostar PEC: profit guidance for upcoming 2Q13 results. Expects loss due to prolonged sluggish demands in the oil and petrochemical pdts which led to over-supply situation in the mkts and lower mkt selling price. Results due on or before 15 Aug. The counter has been trending to new 52 lows.

Soilbuild Construction

Soilbuild Construction: landed a US$1.1m contract by a third party developer in Myanmar, to provide project mgt and professional consulting services for the erection of a 24 storey residential tower in Myanmar. Soilbuild Myanmar has been granted a temporary certificate of incorporation pending completion of the registration process in Myanmar. The contract is for a period of 3 yrs from the date of permit to commence work, expected to be obtained by 1H14. Soilbuild’s maiden Myanmar contract highlights that the group is making positive inroads into the country. With the Myanmar investment theme gaining traction, and interest in M-Chips, this may be a catalyst for the stock to rebound. The stock has been trending to new lows since its recent IPO inception.

Nam Cheong

Nam Cheong: sold three vessels (2 PSVs, 1 accommodation work barge) worth a combined US$70.5m to three customers. The three vessels are being constructed as part of the group’s build-to-stock series in two of its subcontracted yards in China. They are scheduled for delivery btwn 1Q-4Q14, and expected to contribute positively to the group’s FY13-14 financials. Year to date, Nam Cheong has sold 16 vessels vs 7 vessels over the same period last yr. Given the robust industry momentum, mgt believes it is on track to surpass its record high of 21 vessel sales achieved last yr. As at end Jun 2013, Nam Cheong’s order book stood at an estimated RM 1.3b for recognition up to 2015. The stock trades at 9.7x P/E.


GLP: Continuing on its leasing momentum, GLP signed another agreement to lease 44,000 sqm of space at GLP Park Qiandeng and GLP Park Langfang in China to Goodbaby, a leading provider of children products. The new lease brings Goodbaby's total lease area with GLP to 51,000 sqm. At GLP Park Qiandeng in Suzhou, Goodbaby expanded 38,000 sqm to serve as its customer's national distribution center. With this lease, GLP Park Qiandeng will be 90% committed. A further 6,000 sqm of space was pre-leased at GLP Park Langfang ahead of its completion, and will be meant for Goodbaby's regional distribution. GLP has been undergoing a strong leasing momentum for its China and Japan properties. Several global funds have increased their stakes into the chinese warehouse space, betting China's emerging middle class will lead to higher domestic consumption and demand for logistics operators. At $2.85, GLP trades at a premium valuation of 33.1x forward P/E and P/B of 1.28x. This high valuation multiple could be attributed to the group's vast land reserve in China. As at 31 Mar, GLP had 6.9m sqm gfa of completed properties. This is compared to an additional land reserve of 15m sqm gfa and 3.1m sqm gfa of properties under development currently. China contributed 39% to GLP's revenue in FY13.


SGX: 4Q13 results came in broadly in-line, with net profit at $87.6m (+43% y/y, -10% q/q) bringing FY13 net profit to $335.9m (+15%). This was in tandem with a rise in revenue to $202.3m (+28% y/y, +6% q/q) which brought FY13 revenue to $647.9m (+10%) The Securities division (+9%) remained the biggest earnings contributor, forming 38% of FY13 total revenue, fueled by a rise in total stock market capitalization to $954b as at end June13, +13% y/y. This was on back of improved market activities during 2H13 which raised the Securities daily average value (SDAV) by 11% to $1.5b and total turnover by 10% to $363.4b. The Derivatives division (+23%) registered a record year, contributing 28% to total group revenue from 25% y/y, as total traded volumes rose 32% to a record 100.6m contract, and average month-end open interest for the year grew 86% to a record 2.6m contracts. Issuer Services (+6%) was also a beneficiary of improving market sentiments, with total equity funds of $13.5b raised, +120% y/y, with primary equity funds of $8.1b raised from 30 new listings and secondary equity funds of $5.4b raised. The number of new bond listings also grew to 424, raising $196b, +21% y/y. Other divisions, namely market data, member services & connectivity, depository services and others saw muted improvements on a y/y basis for FY13, and formed 25% of remaining total revenue. Going forward, SGX note the need for capital raising and risk management remains robust in Asia despite uncertain global economic conditions and will continue to develop new products and services to capitalize on new opportunities, while strengthening its regulatory and risk management capabilities. The Board has proposed a final dividend of 16c per share, bringing FY13 dividend payout to 28c per share, representing a 3.7% yield. At current price, SGX trades at 22x forward P/E versus its 5 year historical average of 24x. Latest brokers ratings as follows: HSBC reiterates O/w with $8.50 TP Nomura maintains Neutral with $7.60 TP


CMA: 2Q12 results was broadly in-line, as net profit came in at $245.6m (+6% y/y, +236% q/q) fuelled largely by portfolio and revaluation gains of $198.6m, baring which core net profit at $53.6m (+41% y/y, -20% q/q). The result brings CMA’s 1H13 core net profit to $120.2m (+62%) Revenue for the quarter at $93.4m (+25% y/y, + 2% q/q) was due largely to contributions from nine new malls opened, two asset enhancement initiatives complete and acquisitions of stakes in four Japan malls in 2012, as well as profit recognition for units sold in Bedok Residences. Meanwhile, net property income of CMA’s China Malls +12.1% with total tenants’ sales on a same-mall basis growing by 14.9%. During the quarter, CMA secured higher pre-commitment at Westgate to 75% (50%) and Bedok Mall to 90% (70%), with both malls scheduled to open in 4Q13, while the group opened one mall, CapitaMall Meilicheng in Chengdu, China and targets to open another the phase 2 of CapitaMall Jinniu, in Chengdu by 3Q13. Going forward, the group will continue to pursue selective acquisitions in key markets of S’pore, China and Malaysia, as well as other good opportunities that satisfy its criteria for returns and have potential for growth. At current price, CMA trades at 1.1x P/B and remains Maybank-KE’s top big-cap pick as the house continues to like CMA’s retail mall business and expect its China operations to continue to exhibit steady growth. Maybank-KE has a revalued net asset value of $2.78 per share on CMA, representing a 30% discount from current share price. Latest brokers ratings as follows: Maybank-KE maintains Buy with $2.51 TP Deutsche maintains Hold with $2.01 TP Nomura maintains Buy with $2.49 TP StandChart maintains O/p with $2.29 TP

Frasers Centrepoint Trust

Frasers Centrepoint Trust (FCT): 3QFY13 results in line, distributable income increased 9.8% y/y to $23.5m alongside with a DPU of 2.85¢ (+9.6%). NPI leaped 15.4% to $28.5m driven mainly by 9.4% rent reversion and higher contributions from Causeway Point-post AEI works and Northpoint. Overall portfolio Occupancy grew slightly to 98.4% (+0.2 ppts) with weighted lease to expiry of 1.7 years. Gearing maintained at 30.4% with average term of debt at 3.1 years and cost of debt at 2.72%. FCT's upcoming rent renewals would come substantially from Causeway Point and Northpoint. Mgmt expect further upside to rental reversions given that operations at both malls were strong. In addition, Stanchart estimates that supply growth is 0.5% pa in 2013-15E compared to 4.2% islandwide, which would benefit retail landlords such as FCT. NAV of $1.54 per unit and 9MFY13 annualized yield of 5.6%. Broker recommendations: OSK DMG upgrades to BUY rating with TP of $2.20; CS maintain NEUTRAL with TP of $2.20; SC upgrades to OUTPERFORM with TP of $2.04;