From UOB KH:
Ho Bee Investment- 1Q13: Watch out for overseas acquisitions.
(HOBEE SP/BUY/S$2.15/Target: S$2.45)
FY13F PE(x): 17.8
FY14F PE(x): 14.9
Results below expectations. Ho Bee Investment (Ho Bee) reported a 1Q13 net profit of S$52.1m, up 230% yoy mainly due to divestment of a stake in Chongbang Holdings Limited (CHIL) for S$48.1m. Core PATMI of S$13m excluding disposal gains came in
below our expectations, accounting for 15% of our full-year forecast of S$85m. This was mainly due to lower-than-anticipated recognition from the Trilight and Parvis projects.
Maintain BUY with unchanged target price of S$2.45/share, pegged at 20% discount to our RNAV of S$3.07/share. The stock is currently trading at 27% discount to its book value and 38% discount to our RNAV.
Hutchison Port Holdings Trust 1Q13: Net income declines 15% yoy on one-off costs.
(HPHT SP/BUY/US$0.83/Target: US$0.96)
FY13F DPU Yld (%): 6.3
FY14F DPU Yld (%): 7.0
Revenue edged up by 1.1% with flat throughput. Container throughput at HIT declined 7.4% yoy due to weaker-than-expected transshipment and EU cargoes. However, throughput at Yantian improved 6.3% yoy due to double-digit growth of transshipment cargoes as well as strong intra-Asia and empty boxes. Average revenue per TEU in HIT remained flat but declined in Yantian, hit by the VAT reform in Shenzhen. Recently-acquired ACT had very limited contribution in 1Q13.
Reiterate BUY and target price of US$0.96, based on a 3-stage DCF model. Despite recent share price strength, we believe 2013F dividend yield of 6.3% is still within the lower range among large-cap trusts/REITs listed in Singapore. There is no asset devaluation risk for HPHT as deep water coastline is a scarce resource.
Oversea-Chinese Banking Corp- 1Q13: Continued pressure on margins.
(OCBC SP/BUY/S$10.85/Target: S$12.02)
FY13F PE(x): 14.3
FY14F PE(x): 12.9
OCBC reported a net profit of S$696m for 1Q13 (-16% yoy, +5% qoq), slightly below our forecast of S$720m. OCBC achieved healthy loan growth of 3.1% qoq, driven by expansion of 3.8% qoq in Singapore. NIM contracted by a severe 6bp sequentially to
1.64% due to refinancing for housing loans. As a result, net interest income fell 4% yoy.
Maintain BUY. We have lowered our target price for OCBC to S$12.02, based on P/B of 1.67x, derived from Gordon Growth Model (ROE: 11.0%, required return: 7.8% and growth: 3.0%).
SMRT Corporation- FY13: Weak FY13 but clouds still looming. Maintain SELL.
(MRT SP/SELL/S$1.48/Target: S$1.26)
FY14F PE(x): 18.4
FY15F PE(x): 18.0
Weak FY13; hit by rising costs. FY13 net profit of S$83.3m (-31% yoy) was broadly in line with our expectations. The loss in 4QFY13 was not surprising as management provided a profit warning on 28 March over the S$17m provision for its associate
Shenzhen Zona. The rising costs in FY13 (+12.4% yoy) overwhelmed the tepid revenue growth of only 5.9% yoy. Key increases in costs include staff (+16.2% yoy), depreciation (+14.2% yoy), repairs & maintenance (+32.7% yoy). Staff costs increased due to
a combination of new hires, salary increments and restructuring of the defined benefit plans.
Maintain SELL; better yield elsewhere. We remain SELLERS with a DCF-derived target price of S$1.26/share (previously S$1.30/share, slight reduction to reflect an updated cost of equity).
Venture Corporation 1Q13: End-market demand remains weak. Downgrade to HOLD due to limited upside.
(VMS SP/HOLD/S$8.32/Target: S$8.58)
FY13F PE(x): 16.0
FY14F PE(x): 13.5
Venture reported a net profit of S$28m for 1Q13, below our expectations of S$32.5m. Venture was affected by contraction in endmarket demand in the Printing & Imaging and Networking & Communications segments. Revenue growth was also hampered by a
2.7% depreciation of the US dollar against the Singapore dollar on a yoy basis.
Downgrade to HOLD. We have downgraded our recommendation for Venture to HOLD given the limited upside. The stock continues to provide an attractive dividend yield of 6%.
From Maybank KE:
Venture Corp: Just Can’t Catch A Break; Cut to Sell, TP $6.70
VMS SP | Mkt Cap USD1.8b | ADTV USD3.2mCut to SELL from Buy with TP slashed to SGD6.70. Results were below
expectations with net profit down 21% YoY and more of the same can be
expected in 2Q13. Visibility is low until 2H13 as economic conditions are
turning against Venture again, and new customer contributions are taking
longer than expected to ramp.
Venture is still guiding for full year growth but it is increasingly
difficult to see how they will pull it off. There are just too many
macroeconomic uncertainties and the company has been too slow in taking
the needed actions for a long-awaited turnaround.
To cap it off, capex will shoot up this year, and with a weak earnings
outlook, dividends could be under pressure as well. We downgrade the stock
to SELL (TP SGD6.70) ahead of the FY12 final dividend payout. Relook below
SGD7.00.
Bumitama Agri: Sweet Young Trees; Initiate at Buy, TP $1.24
BAL SP | Mkt Cap USD1.4b | ADTV USD0.8m
Initiate coverage with a BUY and SGD1.24 TP on 16x FY14 PER, implying
just 0.9x PEG. Underappreciated and relatively undiscovered, Bumitama
Agri’s (BAL) value will rise organically as its young trees mature.
BAL has figures that can make heads turn. It is the fastest-growing
plantation company in our coverage universe, having planted an average of
~9,700 ha of nucleus area p.a. over the past nine years.
Sizeable (nucleus planted area of 101,182 ha) with young trees (~5
years old) and robust growth (3-year forward FFB output CAGR of 21%), BAL
has it all. It was also the third most profitable planter in our stock
universe in 2012.
Ho Bee Investment: Overseas Expansion Eyed; Buy TP $2.66
HOBEE SP | Mkt Cap USD1.2b | ADTV USD1.1m
Excluding divestment gains, Ho Bee’s 1Q13 core PATMI of SGD18m (+29%
YoY, -66% QoQ) was in line with expectations. We remain sanguine on Ho
Bee’s strong cash position and cheap valuations. Maintain BUY.
With limited acquisition opportunities in Singapore, Ho Bee intends to
cast its eyes overseas. It has already acquired three parcels in Gold
Coast, Australia, at near distressed prices. These site could potentially
add another 11 cts/share to our RNAV estimate.
We relooked at our previously conservative assumptions for Ho Bee’s
investment properties and have raised our target price to SGD2.66, pegged
to a 30% discount to RNAV. Positive deployment of its cash hoard and
further leasing updates at The Metropolis will be near-term catalysts.
OCBC: NIMs to Stabilise in Subsequent Quarters; Hold, TP $11.30
OCBC SP | Mkt Cap USD30.2b | ADTV USD29.6m
OCBC’s 1Q13 core net profit of SGD696m (+5% QoQ, -12% YoY) was slightly
below our expectations on lower-than-expected NIMs, but in line with
consensus.
Given expectations of stable NIMs over the next few quarters though,
our forecasts are maintained and our TP is raised to SGD11.30 from
SGD10.50, pegging on a higher P/BV multiple of 1.5x (1.4x previously),
taking valuations up to the long-term mean for the group and supported by
ROEs of about 11.9% for 2013.
HOLD – prefer DBS for its more attractive valuations 2013: PER 11.5x,
P/BV 1.2x, ROAE: 10.6%, yield: 3.4%) and the strong growth in its
non-traditional income channels.
From DBS:
1Q13 results for Hutchison Port Holdings Trust lagged
expectations; overall volume growth was flattish. The
disruptions caused by port workers’ protest in Hong Kong will
have an impact on FY13/14 distributions. However, recent
acquisition and fast ramp up of ACT will help mitigate the
impact to an extent. Given the impact of lower capacity
utilisation in 2Q13, and a likely increase in operating costs in
future, we cut our DPU projections for FY13/14 by 9%/7% to
5.74UScts and 6.15SUcts, respectively. This still implies
dividend yield in excess of 7% at current prices. Maintain BUY
with slightly lower TP of US$0.87 (Prev US$ 0.89).
Earnings for OCBC were above consensus but in line with
ours. 1Q13 net profit was 23% of our FY13F.Sustained net
interest margin (NIM) pressure and lower trading gains hit
topline, but earnings were supported by lower provisions.
OCBC is still guiding for high single digit loan growth.
Prospects for wealth management remain positive. Downgrade
to HOLD on valuations; TP unchanged at S$11.50. OCBC still
remains our preferred pick over UOB despite our downgrade.
Broadway’s 1Q13 results below forecast, Foam Plastic/Non-
HDD did well but insufficient to offset HDD weakness.
FY13F/14F earnings cut by 29% and 25%. Restructuring is at
tail-end, and we expect recovery in 2H. TP revised to S$0.30
(Prev S$ 0.26), upgrade to HOLD.
Losses for SMRT in 4Q were larger than expected; FY13 below
expectations. Key negative surprise is the huge cut in dividend
payout and DPS. A final dividend per share (DPS) of 1
Scts/share was proposed, equating to a full-year DPS of 2.5
Scts (interim 1.5 Scts) and yield of 1.7%, substantially lower
than last year’s 7.45 Scts (4.9% yield). We have cut FY14F/15F
earnings by 8%/6% on higher costs. Maintain FV, TP revised
to S$1.20 (Prev S$ 1.30).
From OCBC:
Venture Corp: Disappointing start to FY13
Venture Corp (VMS)
reported a sluggish set of 1Q13 results which came in below ours and the
street’s expectations. Revenue fell 7.6% YoY to S$530.5m, forming 20.6%
of our full-year estimate. PATMI fared worse, dipping 21.1% YoY to
S$28.0m, or just 16.9% of our original FY13 forecast. Management sounded
cautious during the analyst briefing, given the still uncertain
macroeconomic environment. We believe that VMS’s 2H strength would be
weaker than our previous expectations. We expect some near term selling
pressure on the stock given this lacklustre set of results and also
because the stock trades ex-dividend today (2 May, from 9 a.m.). We cut
our FY13 revenue forecasts by 5.7% (FY14 by 4.8%) and our PATMI
estimates by 11.9% (FY14 by 5.4%). Consequently, our fair value estimate
is lowered from S$9.08 to S$8.00 (15x FY13F EPS). Downgrade VMS from
Buy to HOLD.
DBS: Stronger-than-expected 1Q
DBS
Group Holdings Ltd posted stronger-than-expected 1Q13 net earnings of
S$950m, up 2% YoY and -21% QoQ, and this is sharply ahead of market
expectations of S$824m (based on Bloomberg poll). Net Interest Income
fell 1% YoY to S$1327m, but higher Non-Interest Income, which rose 21%
YoY to S$990m, helped to give total income a boost to S$2317m (+7.5%
YoY). The key contributors were the strong double-digit increase in Fee
and Commission Income, +25% YoY to S$507m, as well as higher Trading
Income (+26% YoY to S$410m). With this strong set of 1Q performance,
there is likely to be upward revision of its full year 2013 earnings
forecast, as 1Q now accounted for 27% of consensus full-year earnings.
We will provide more details after the analysts’ briefing later in the
day. Meantime, do note that we have a BUY rating on DBS but we are likely to revise our fair value estimate.
OKP Holdings: 1Q13 misses expectations
OKP's
1Q13 revenue grew 28.4% YoY to S$32.0m but gross margin fell to 15.1%
from 21.0% in 1Q12, chiefly due to increased subcontracting and labour
costs. PATMI dropped 22.2% YoY to S$2.4m. 1Q13 EPS of 0.77 S cents was
lower than expected, forming 18% of ours and 15% of the street's FY13
estimates. The effective tax rate fell from 16.0% in 1Q12 to 13.2% in
1Q13 due to tax-deductible purchases under the Productivity and
Innovation Credit plan, which will apply through 2015. We have adjusted
our forecasts for OKP’s FY13 and FY14 performance. Applying the same P/E
multiple of 11x to FY13F EPS, we derive a FV of S$0.46, slightly lower
than our previous FV of S$0.48. We maintain our HOLD rating on OKP.
CapitaLand Limited: Capital recycling at serviced residences
CAPL
announced that it would divest three serviced residences in China and
11 rental housing properties in Japan for a total of S$165.0m to Ascott
Residence Trust. The divestment of these properties, which include
Somerset Heping in Shenyang, Citadines Biyun in Shanghai and Citadines
Xinghai in Suzhou, would take place by 28th Jun 2013 and result in a net
gain of S$15.1m for CapitaLand. We like that management continues to
recycle capital steadily for stabilized assets in its serviced
residences business segment, which would free up capital for deployment
and further consolidate its balance sheet. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.29 (20% discount to RNAV).
Ascott Residence Trust: Proposed acquisition of assets in China and Japan
Ascott
Residence Trust (ART) has entered into conditional agreements to
acquire three prime serviced residences in China and a portfolio of 11
rental housing properties in Japan for an aggregate purchase
consideration of S$165.0m. ART expects to acquire the target properties
at an EBITDA yield of 5.4% on a pro forma basis for FY12. On a pro forma
basis, these accretive acquisitions are expected to have increased FY12
distribution per unit by 2.9% from 8.76 S cents to 9.01 S cents. The
acquisitions will be funded partly by the S$150m recently raised from an
equity placement and the balance will be funded by debt. We are placing
our Hold rating and S$1.35 fair value UNDER REVIEW pending incorporation of the acquisitions into our model.
As Featured in The Sunday Times
Nicolas Darvas Box Trading Secrets
Success Switch
Thursday, May 2, 2013
Local Brokerages Stock Call 2 May 2013
Tuesday, April 30, 2013
Local Brokerages Stock Call 30 April 2013
From OCBC:
Frasers Commercial Trust: Advancing steadily
Frasers
Commercial Trust’s (FCOT) 2QFY13 DPU came in at 1.9883 S cents,
representing a 14.4% YoY growth. This is slightly above our
expectations, as 1HFY13 DPU of 3.5715 S cents already formed 51.4% of
our full-year DPU forecast. Key rental growth drivers for the quarter
came from FCOT’s Australia properties. As at 31 Mar, the portfolio
occupancy remained strong at 95.3%, with weighted average lease to
expiry at 4.8 years. Looking ahead, we hold our view that FCOT will
continue to perform strongly. While the actual occupancy at China Square
Central stood at 73.0%, a high committed occupancy of 92.6% was
secured. The passing rents for several of its properties are also below
the market rates, thus presenting potential for rental upside. In
addition, the redemption of another 157.1m CPPUs in Apr is likely to
provide further uplift in DPU. We maintain our BUY rating with a higher fair value of S$1.66 (S$1.52 previously) on FCOT.
Global Premium Hotels: No surprises in 1Q13
Global
Premium Hotels (GPH) performed in line with our expectations in 1Q13.
Revenue fell 2.1% YoY to S$14.6m and gross profit declined 2.9% YoY to
S$12.6m. Interest expense was S$1.3m higher YoY due to the restructuring
exercise undertaken by GPH pursuant to the IPO in 2Q12 and this was the
primary reason that net profit contracted 32.0% to S$4.3m. Revenue and
net profit came out to 23% and 24% of our full-year estimates
respectively. 1Q13 hotel room revenue decreased 1.1% YoY was mainly due
to the lower average occupancy rate (AOR) of 89.6%, down 2.1ppt YoY. We
expect slightly better YoY performance in the remaining quarters,
especially because 1Q13 was slow for the industry because of the later
occurrence of Chinese New Year, which pushed back corporate travel.
Using a 10% discount to RNAV, we maintain our fair value of S$0.33 and BUY rating on GPH.
SMRT Corporation: A loss-making quarter to end the year
As
expected, SMRT reported a loss-making 4Q13 to end the year. Although
revenue grew 2.4% YoY to S$281.3m, increases in operating expenses
namely staff (+28.5% YoY) and repair costs (+41.6% YoY) resulted in a
net loss of S$12.1m. For FY13, SMRT reported a 30.6% YoY decline in net
profit to S$83.2m despite a 5.9% YoY increase in revenue to S$1,119m.
SMRT also declared a final dividend of 1 S cent (versus 5.7 S cents last
year) to bring its total dividends declared to 2.5 S cents. Pending a
results briefing with management, we maintain our HOLD rating on
SMRT as we feel that much of the negatives have been priced in by the
street. Nonetheless, we place our fair value estimate of S$1.51 under
review.
OCBC: 1Q net earnings of S$696m
OCBC posted net earnings of
S$696m, -16% YoY or +5% QoQ, and above market expectations of S$640m
(based on a Bloomberg poll). Net Interest Income fell 4% YoY and 1% QoQ
to S$912m. NIM was 1.64% in 1Q13 versus 1.70% in 4Q12 and 1.86% in 1Q12.
Non Interest Income fell 20% YoY and 11% QoQ to S$676m (1Q12 included
higher trading income and mark-to-market investment gains from the
insurance business). Loans grew 4% from the previous quarter to
S$146.8b. Loans to deposits ratio also moved up from 86.2% in 4Q12 to
87% in 1Q13. We do not have a rating on OCBC. DBS and UOB will be
releasing 1Q results on 2 May 2013 (Thu). The consensus 1Q13 net profit
estimates are S$824m for DBS and S$660m for UOB.
From CIMB:
| CapitaLand | |
| Post-results investors meeting | |
| OUTPERFORM - Maintained | S$3.75 - Tgt. S$4.33 Mkt.Cap: US$12894m | Avg.Daily Vol: US$32.45m | Free Float: 60.50% |
| Indofood Agri Resources | |||
| Wrestling with cost pressures | |||
| UNDERPERFORM - Downgrade | S$1.12 - Tgt. S$1.02 Mkt.Cap: US$1296m | Avg.Daily Vol: US$1.80m | Free Float: 31.10% |
| Singapore Press Holdings | |
| More realistic expectations | |
| NEUTRAL - Upgrade | S$4.39 - Tgt. S$4.32 Mkt.Cap: US$5691m | Avg.Daily Vol: US$19.68m | Free Float: 90.00% |
From UOB KH:
CPO ASP and higher cost. Expect CPO production growth
of 5-10% yoy for 2013. (IFAR SP/HOLD/S$1.12/Target:
S$1.25)
Maintain HOLD with a lower target price of S$1.25, or 11.6x
2014F PE, based on the SOTP valuation and after a holding
company discount of 25%. Entry price is S$1.05.
Raffles Medical- 1Q13: Steady results, well-contained
costs. (RFMD SP/HOLD/S$3.44/Target: S$3.57)
Maintain HOLD but raise our DCF-based target price to S$3.57,
up 6.6% from S$3.35 previously.
Starhill Global REIT- 1Q13: Feedback from management
luncheon. (SGREIT SP/BUY/S$0.985/Target: S$1.06)
Maintain BUY with a higher target price of S$1.06 (from
S$1.03), based on a dividend discount model (required rate of
return: 6.5%, terminal growth: 2.0%).
World Precision Machinery- 1Q13: Sequential recovery.
(BWPM SP/BUY/S$0.425/Target: S$0.54)
Reiterate BUY. World Precision is trading at an attractive 7.2x
2013F PE (Chongqing Machinery: 5.8x, Haitian International:
13.6x). Our 12-month target price is S$0.54, based on 9x
2013F PE.
Technical BUY with +21.3% potential return
Last price: S$0.515
Resistance: S$0.625
Support: S$0.465
BUY with a target price of S$0.625 with tight stops placed
below S$0.475. The stock appears to be trending sideways
and above its rising 100-day moving average. Prices also
closed above its middle Bollinger band. Its Stochastics
indicator has turned up after forming a bullish crossover.
Watch to see if prices could break above its upper Bollinger
band for it to trend higher.
People's Food Holdings (PFH SP, P05) -
Technical SELL with +22.6% potential return
Last price: S$1.37
Resistance: S$1.60
Support: S$0.96
SELL with a target price of S$1.06 with tight stops placed
above S$1.49. The stock appears to form a top and lately a
tweezer top with a bearish engulfing pattern. A break below
S$1.30 is likely to see more selling pressure. Its Stochastics
indicator has formed a bearish crossover and it is turning
down. Its RSI indicator appears to turn down below a reading
of 60. Watch to see if its MACD could break below its
centreline.
Take profit from previous technical BUY
Last price: S$3.84
Resistance: S$3.85
Support: S$3.55
The stock was featured as a technical BUY when it opened at
S$3.58 on 16 Apr 13. It has since returned 7.3% on closing
prices, one tick shy of hitting the target of S$3.85. Some
profits could be taken off the table should prices fail to close
above S$3.86 and watch to see if its Stochastics indicator
could form a bearish crossover.
Our institutional research has a fundamental SELL with a
target price of S$3.41.
From DBS:
Frasers Commercial Trust, Buy S$1.54, Bloomberg: FCOT SP
Growth story intact
Price Target : 12-Month S$ 1.69 (Prev S$ 1.45)
Attractive growth over FY13-15F. Supported by its restructuring exercise coupled with underlying growth, we like FCOT’s growth story over FY13-15F, which is visible and achievable. Maintain BUY with a higher TP of S$1.69 as we raise our FY15F earnings from Alexandra Technopark master lease expiry.
From OSK-DMG:
Frasers Commercial Trust: Reaping What Has Been Sowed (BUY,
S$1.50, TP: S$1.65)
FCOT reported 2QFY13 DPU of 1.99 cents (+14% y-o-y). Together with
its 1QFY13 DPU of 1.58 cents, 1HFY13 DPU accounts for 43.4% of our
full year forecast. With the main boost in DPU (a result of the buyback
of c.96% of CPPU) to come through in 2HFY13, together with its
resilient portfolio and bright prospects, we maintain our BUY rating on
FCOT with a higher DDM based (COE: 7.1%; TGR: 2.0%) TP of
SGD1.65.
Raffles Medical Group: Growth Momentum Continues (NEUTRAL,
S$3.41, TP: S$3.30)
Raffles Medical achieved 16% y-o-y growth in PATMI on the back of a
11.2% y-o-y increase in revenue, due to improved patient acuity and a
wider range of medical specialties. This was in-line with our
expectations. Improved cost efficiencies allowed it to achieve better
margins y-o-y. Raffles Medical plans to focus on expanding its hospital
operations into China. Maintain NEUTRAL with TP of SGD3.30.
NeraTel: Nera Malaysia To Drive Up Earnings (BUY, S$0.675, TP:
S$0.79)
NeraTel’s 1QFY13 results came in within expectation with SGD6.0m
PATMI (-10.0% y-o-y) on the back of SGD36.5m revenue (-16.3% y-o-y).
Notably, the group had fully acquired its associate Nera Malaysia. We
adjusted our forecasts upwards to cater for the extra earnings
contribution. Reiterate BUY with a higher TP of S$0.79 based on 9.8x
FY14 P/E. The counter remains our top pick for the Tech sector.
From Maybank KE:
OSIM International: Touched By An uAngel; Reiterate Buy, TP $2.60
OSIM SP | Mkt Cap USD1.2b | ADTV USD2.1m
OSIM is announcing its 1Q13 results on 7 May after market close. We are expecting net profit of around SGD25.5m for the quarter (up 15% yoy), on double-digit sales growth.
The uAngel has proven to be very popular according to our channel checks, and will likely boost YoY sales growth. However, the full effect will only be apparent from the 2nd quarter onward.
Our TP of SGD2.60 remains a Street high, reflecting our bullishness for 2013. OSIM is our top pick within the Singapore consumer sector and we reiterate BUY.
Sheng Siong Group Ltd: David versus the Goliaths, Maintain Buy, TP $0.80
SSG SP | Mkt Cap USD801.3m | ADTV USD1.4m
Since the beginning of the year, Sheng Siong has done well. Its stock has outperformed the market by 36%, and despite rising competition and domestic labour constraints, core profits have jumped 30+%, driven by aggressive store expansion.
Competition has stepped up a notch this year. Apart from switching into 24-hour outlets services, Shop N Save has rebranded to Giant outlets, which are offering 10% off on all house brand items in April. Sheng Siong has kept up the pace with the market and we believe there would not be an impact in the near term.
We raise our earnings forecasts by 6-8% for FY13-15F. Maintain BUY with a TP of SGD0.80 (raised from SGD0.70).
Vard Holdings: NDR Feedback; Maintain Buy, TP $1.66
VARD SP | Mkt Cap USD1.2b | ADTV USD6.7m
We hosted a NDR for Vard last week. Investors were concerned about 3 key issues: (1) margin expectations, (2) order win prospects and (3) Vard’s direction after the change in ownership. Maintain Buy, TP SGD1.66.
We believe that recent sell-down was due to consensus cutting estimates on overly optimistic FY13F forecast. We were well aware of the risks and our FY13F figures have been and remained the lowest in the Street.
However, we think that the market has underestimated the strength of recovering order wins. Management is confident of winning close to NOK12b in new orders against consensus expectation of NOK10-11b. We see room for upside surprise in contract wins.
Monday, April 29, 2013
Local Brokerages Stock Call 26 April 2013
From OCBC:
CapitaLand Limited: Firm performances across key segments
Summary:
1Q13 PATMI came in at S$188.2m – up 41% YoY mostly due to heavier
income recognition of property developments in Singapore and China and
S$46m net gain from the sale of a Beijing project. Excluding one-time
items, 1Q13 operating profit is S$133.3m which increased 70% YoY and we
judge this to be generally within expectations. Despite incremental
curbs from Chinese authorities, a good 955 residential units were sold
in China over the quarter; this is a strong start to the year and
significantly higher than the 189 units sold in 1Q12. There was also a
stark pickup in Singapore residential sales, with 544 units sold over
1Q13 versus 681 units sold in the entire FY12. In addition, retail mall
segment CMA’s 1Q13 PATMI was above view due to lower-than-expected
opening costs, increased contributions from new malls and better
performances from CMT, ION Orchard and the China Funds. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.29 (20% discount to RNAV).
Starhill Global REIT: Not in its prime yet
Summary:
Starhill Global REIT’s (SGREIT) 1Q13 results came in within our
expectations. DPU for the quarter stood at 1.37 S cents, representing
27.0% of our FY13F DPU. Excluding the Toshin arrears payout, we note
that DPU would have increased 10.3% YoY to 1.18 cents, still impressive
in our view. Noteworthy was the strong operational performance at its
Singapore portfolio, which contributed 66.3% to 1Q13 NPI. For the first
time, both Ngee Ann City and Wisma Atria achieved full occupancy for
both its office and retail segments, while positive rental reversions
were secured. This helped to offset the decline in NPI at its Japan and
Chengdu properties. We are currently maintaining our view that SGREIT is
likely to perform well going forward, as it continues to ride on the
strength of its Singapore portfolio, gain from its newly acquired Plaza
Arcade, and a 7.2% rent increase from its Malaysia master leases.
Maintain BUY with a higher fair value of S$1.05 (before: S$0.98) as we lower our cost of equity to 6.7% from 7.0%.
Ascott Residence Trust: Excluding one-off item, 1Q13 misses expectations
Summary:
Ascott Residence Trust (ART) reported a 3% YoY decrease in revenue to
S$69.2m for 1Q13. RevPAU fell 10% YoY to S$124 and gross profit fell 9%
YoY to S$33.8m. However, unitholders’ distribution increased by 14% YoY
to S$27.6m. Unitholders’ distribution included S$8.1m from the
replacement of foreign currency bank loans using proceeds from the
S$150m placement in Feb. Without this one-off item, unitholders’
distribution would have fallen by 19% YoY, missing ours and the street’s
expectations. 1Q13 DPU increased 5% YoY to 2.25 S cents, forming 25% of
ours and the street's FY13F expectations. We are cutting our FY13F DPU
estimate to 8.1 S cents from 8.7 S cents. Our fair value for ART
declines from S$1.36 to S$1.35 and we maintain our HOLDrating.
CDL Hospitality Trusts: 1Q13 results miss expectations
Summary:
CDLHT reported 1Q13 revenue of S$37.9m, down 1.3% YoY. Lower gross
revenue from the Singapore hotels was partially offset by higher revenue
from the overseas properties. Net property income fell 2.1% to S$35.3m.
Total return for the period dipped 0.7% YoY to S$28.4m. 1Q13 DPU of
2.69 S cents fell slightly short of expectations, forming 23.0% and
22.6% of ours and consensus FY13F estimates respectively. RevPAR for
CDLHT's Singapore hotels fell 7.9% YoY to S$191 on the back of 1.2ppt
drop in occupancy to 87.0% and a 6.8% drop in average room rate to
S$219. We are lowering our FY13 RevPAR growth assumption for CDLHT's
Singapore hotels from 3.2% to 0% and cut our RNAV-based fair value for
CDLHT from S$2.11 to S$2.05. We maintain our HOLD rating on CDLHT.
Raffles Medical Group: 1Q13 results within expectations
Summary:
Raffles Medical Group (RMG) reported its 1Q13 results this morning
which were within our expectations. Revenue rose 11.2% YoY to S$81.1m,
while PATMI increased by 16.0% YoY to S$13.5m, such that topline and
bottomline formed 23.3% and 22.2% of our FY13 forecasts, respectively.
This is unsurprising as 1Q is seasonally RMG’s weakest quarter and we
had expected this trend to continue this year. RMG’s Hospital Services
division was the main growth driver in 1Q13, with healthy revenue growth
of 16.4% YoY. This was attributed to higher patient acuity and the
expansion of specialist services provided. Revenue growth for its
Healthcare Services division came in at a more modest 4.0% YoY. We will
provide more updates after the analyst briefing. We maintain our HOLD rating on RMG but place our S$3.01 fair value estimate under review.
Frasers Commercial Trust: Strong uplift in 2QFY13 DPU
Summary:
Frasers Commercial Trust (FCOT) announced its 2QFY13 results this
morning. NPI fell 7.0% YoY to S$23.0m due to the loss of income arising
from divestments of KeyPoint and the Japan properties. However,
distributable income grew 16.8% to S$13.1m due mainly to savings
following the redemption of its Series A Convertible Perpetual Preferred
Units (CPPUs). DPU for the quarter stood at 1.9883 S cents,
representing a 14.4% YoY growth. This is largely in line with our
expectations, as 1HFY13 DPU of 3.5715 S cents formed 51.4% of our
full-year DPU forecast. We will be speaking to management later in the
morning for more details on its outlook. For now, we place our Buy
rating and S$1.52 fair value under review.
Vard: Name change for STX OSV from today
Summary: STX
OSV will now commence trading under the new trading counter name Vard
Holdings (SGX-ST: MS7) with effect from today. This follows its
acquisition by Fincantieri in Dec last year and the passing of the
special resolution to rename itself during its AGM last week.
Separately, we quizzed the management on the 4% fall in its share price
last Friday, and management replied that it is equally baffled and has
not seen any negative developments which could have trigger such a
sell-off. If anything, the management is now more excited about the new
majority shareholder and the opportunities they would bring. We
currently have a BUY rating with S$1.52 fair value estimate, and will provide further updates together with its 1Q results in the coming weeks.
From UOB KH:
Super Group (SUPER SP, S10) –
A leader in Myanmar’s branded coffee market
Last price: S$3.91
Target Price: S$4.54
Super has a more than 40% share in Myanmar’s branded coffee
market. We are upbeat on its rebranding exercise and push into
China’s coffee market. In our view, the rebranding exercise will
refresh its brand positioning as well as enhance its pricing
power in the medium term. In conjunction with this,
management plans to venture into China more aggressively in
2H13, where they will primarily target the younger and lifestyle
coffee consumers. After this year’s S$50m capex, maintenance
spending going forward will only be minimal. Based on this, the
group’s projected free cash flow is more than S$100m from
2014 onwards. Management will stick to its 50% payout policy
and the excess cash will be maintained for potential M&As. The
stock remains a BUY with a PEG-based target price of S$4.54.
Technically, the stock has been supported above S$3.30 and
only a break above S$4.06 may increase its odds for further
upside towards S$4.50.
Yongnam Holdings (YNH SP, Y02) –
Exciting potential venture into Myanmar
Last price: S$0.305
Target Price: S$0.40
Earlier this month, Yongnam announced that it has joined a
consortium to evaluate a project tender for the construction and
management of an international airport in Myanmar. In
addition, Yongnam said it will be diversifying by investing in
infrastructure developments locally and overseas either through
joint ventures and/or strategic alliances. We view the move as
positive as the construction industry in Singapore has been hit
hard by rising labour costs and competition from foreign
players. With this diversification, Yongnam will be able to enjoy
recurring income from infrastructure development investment
rather than lumpy project earnings recognition. The
construction pipeline remains healthy and the group is also
looking to secure projects within Singapore, HK, and Kuala
Lumpur’s metro rail lines. We have a BUY on the stock and a
target price of S$0.40, based on 9x 2013F PE.
Technically, the stock has been resisted at S$0.32 and has since
retraced. Watch for a break out towards S$0.40 should the said
retracement find support near S$0.28.
Yoma Strategic Holdings (YOMA SP, Z59) –
Purest proxy to Myanmar’s economic growth
Last price: S$0.795
Target Price: S$-
Yoma is viewed as a proxy for the Myanmar story as it builds
itself a portfolio of businesses in the country. Most recently, it
signed an agreement to jointly build a 5-star Peninsula hotel in
Yangon. Prior to this, it joined a consortium that has been prequalified
to apply for one of two new mobile phone licences in
the country, which is expected to be awarded later this year. Its
property portfolio continues to grow which now includes hotels,
residential buildings, office towers, and retail spaces. Yoma’s
other ventures in Myanmar are in the automobile, agriculture
and tourism sectors. The group has an exclusive dealership with
Dongfeng Automobile of China and is continuing to expand its
services in this sector. It has a wholly-owned subsidiary that is
currently involved in planting black pepper. It also aims to
dabble in tourism through partnerships with travel industry
players.
Technically, the stock could form a large bullish flag pattern and
a break above S$0.90 may test S$1.30. Support remains at
S$0.65.
Singapore Property- Residential measures prompt further switching.
Urban Redevelopment Authority’s (URA) real estate statistics for 1Q13 show that prices of residential, office, retail and industrial properties changed 0.6% qoq (4Q12: 1.8%), 2.1% (0.3%), 2.1% (-0.2%) and 4.5% (-0.7%) respectively. Rentals for residential,
office, retail and industrial properties adjusted in tandem by 0.8% (4Q12: 0.7%), -0.2% (-0.3%), -0.6 % (0.2%) and 0.4% (3.9%) respectively.
The slowdown in residential prices follows the seventh round of property measures in Jan 13. We anticipate that residential volumes will moderate by 20-40% yoy and prices to correct by 3-8% as investment demand slows. We prefer deep value and diversified stocks with exposure to the office sector. Top picks include Suntec REIT, CapitaCommercial Trust, OUE and Ho Bee.
Ascott Residence Trust- 1Q13: Well positioned for acquisitions.
(ART SP/BUY/S$1.46/Target: S$1.57)
FY13F DPU Yld (%): 5.8
FY14F DPU Yld (%): 5.6
Ascott Residence Trust’s (ART) 1Q13 DPU of 2.25 cents (+5% yoy) was in line with our and consensus expectations. Unitholders distribution rose 14% yoy to S$27.6m on the back of better performances from China and Japan, lower financing costs and an exchange gain. AEI works will continue to enhance yields. During the quarter, ART completed asset enhancement intitiatives (AEIs) in Citadines Croissette Cannes. Management sees this as an undervalued asset and expects the AEI to boost yields. Recent AEI works in Ascott
Jakarta and Citadines Prestige Trafalgar Square London have lifted rentals by up to 30%. Other AEI works in progress include one each in Belgium, Spain, China, Indonesia and Australia. Maintain BUY with a higher target price of S$1.57 (from S$1.52), factoring in the increased DPU. Our target price is based on a two-stage dividend discount model (required rate of return: 7.3% and terminal growth rate: 2.0%). ART is currently trading at 2013 and 2014 dividend yield of 5.8% and 6.2% respectively.
CDL Hospitality Trusts- 1Q13: Weaker results but acquisitions to boost future performance.
(CDREIT SP/HOLD/S$2.05/Target: S$2.36)
FY13F DPU Yld (%): 5.7
FY14F DPU Yld (%): 5.8
Results in line. CDL Hospitality Trusts (CDREIT) reported 1Q13 DPU of 2.99 cents (-3.2% yoy). The final 1Q13 DPU after working capital deductions (90% payout ratio) of 2.69 cents was in line with our expectation, accounting for 23% of our full-year DPU forecast.
Weaker 1Q13 Singapore performance in line with guidance, expect a better 2H. The weaker 1Q13 Singapore performance with RevPAR down 8% yoy was mainly due to a 7% fall in room rates. This is in line with management guidance of a softer 1Q due to
the absence of the bi-annual Singapore Airshow and CNY falling in February (2012: January), disrupting corporate travel. The most impacted was Grand Copthorne King, which saw a 23% yoy decline in NPI due to lower room bookings from key accounts in
the shipping and marine sectors. This was, however, partly offset by stronger performances from its overseas hotels. We see these results as one-off and expect a pick-up in room rates in 2H13 on the back of major events, such as Broadcast Asia 2013 and CommunicAsia 2013.
Maintain BUY and target price of S$2.36, based on a two-stage dividend discount model (required rate of return: 6.9% and terminal growth rate: 2%). CDREIT is currently trading at 2013 and 2014 dividend yield of 5.7% and 5.8% respectively.
Yangzijiang Shipbuilding Holdings- 1Q13: Earnings drop by 30% as expected.
(YZJ SP/BUY/S$0.96/Target: S$1.22)
FY13F PE(x): 7.1
FY14F PE(x): 7.8
Yangzijiang Shipbuilding’s (YZJ) 1Q13 results were in line with expectations. Revenue was Rmb2.87b (-22% yoy), of which shipbuilding revenue was Rmb2.47b (-26% yoy), and investment revenue generated from held-to-maturity investments, cash and
Runyuan micro financing was Rmb395m (+15% yoy). 1Q13 net income was Rmb717m (-30% yoy), representing 1Q13 EPS of Rmb0.19.
New contracts saw substantial recovery in 1Q13. YZJ has secured four 10,000 TEU orders from Seaspan, one 94,000 dwt transload vessel, five 82,000 dry bulks, and two 36,000 dwt multi-purpose vessels. The total contract value secured in 1Q13 was US$600m, which is double 2012’s full-year contract value of US$300m. Total value of orderbook reached US$3.3b, consisting of 36 containerships and 29 bulk carriers. Seaspan may further exercise 7-9 options of 10,000TEU within 2013, which would boost YZJ’s newbuild 2013 orders value to US$1.3b-1.5b.
Maintain BUY on YZJ and lower target price to S$1.22 from S$1.52, based on 9x 2013F PE. As a shipyard with adequate cash, we put YZJ as our top pick with Chinese shipyards sector amid an industry downturn.
From CIMB:
| CapitaLand | |
| Operational pick-up in progress | |
| OUTPERFORM - Maintained | S$3.65 - Tgt. S$4.33 Mkt.Cap: US$12550m | Avg.Daily Vol: US$32.56m | Free Float: 60.50% |
potential for REIT spin-off will enable both companies to
unlock hidden value. This should continue to underpin their
stock price. We maintain our accumulate recommendation for
SPH. Technically, the stock is building a base at slightly above
$4.30. Our fundamental TP is $4.75. For OUE, the stock’s
gradually ascending 15-day EMA (currently at $3.05) has lent
support to the stock in the past 2 weeks. Our technical view is
for a rise to $3.52 should the REIT spin-off materializes.
We are selective on S-REITs after the sector’s strong
performance. Our S-RIETs picks are PCRT, MGCCT and
Cambridge.
Yangzijiang’s 1Q13 net profit of RMB717mil (-30% y-o-y) on
the back of slower shipbuilding activities and a higher tax rate
was below our expectations but in line with the consensus.
Going forward, the yen depreciation has reduced the cost
competitiveness of Chinese yards. Our analyst trims FY13/14
net profit by 8.2/0.2% respectively. The stock is currently
trading inexpensively at 1x P/Bv and 6x FY13PE. Our TP is
reduced to S$1.02, based on 1.1x revised NBV. Dividend yield
of 4-6% could lend support to the stock price. Maintain HOLD
