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| MARKET PULSE: Residential Property, First REIT, STX OSV |
|----------------------------------------------------------------------------------------------------------------------------------------------------|
| 3 Oct 2012|
|----------------------------------------------------------------------------------------------------------------------------------------------------|
| KEY IDEA |
| |
| SG Residential Property: Prices still creeping up |
| 3Q12 flash estimates for the URA Residential Price Index showed a sustained increase of 0.5% QoQ (versus 0.4% in 2Q12), cumulating to a total rise |
| of 0.9% year to date. Again, the most bullish action was in the mass-market segment (Outside Central Region) where prices increased 1.0% in 3Q12 |
| (versus 0.5% in 2Q12). In addition, we also saw a 0.2% and 0.7% price increase in the high-end (Core Central Region) and mid-tier (Rest of Central |
| Region) segments, respectively. We believe an environment of ample liquidity would continue to drive residential demand and prices, particularly |
| after QE3 and consequently increased visibility of low interest rates further out to 2015. Maintain OVERWEIGHT on residential developers. Our top |
| pick is City Developments [FV: S$13.18, BUY]. (Eli Lee) |
| |
| MORE REPORTS |
| |
| First REIT: Entrenching its Indonesian footprint |
| First REIT (FREIT) recently announced its proposal to acquire two Indonesian properties (one integrated hospital and hotel and the other a |
| hospital) from its sponsor Lippo Karawaci for a total purchase consideration of S$142.9m. This would be funded largely by debt and partly by a |
| private placement exercise. While the lease structure was largely similar to its existing Indonesian asset portfolio and would continue to provide |
| unitholders with stability and income visibility, there were some lease terms which we were disappointed with. We had previously assumed new |
| acquisitions in our model and hence finetune our assumptions in accordance to the updated details. We also roll forward our valuations to FY13, |
| although this is partially mitigated by an enlarged unit base from its impending private placement exercise. Our RNAV-derived fair value estimate |
| increases from S$0.96 to S$0.98. Maintain HOLD given FREIT’s rich valuations. (Wong Teck Ching Andy) |
| |
| STX OSV: Secures contract for cable laying vessel |
| STX OSV has secured a contract for the design and construction of one Cable Laying Vessel worth about NOK 450m (approx USD 80m). The vessel will be|
| of STX OSV’s own CLV 01 design. Delivery is scheduled from Norway in 3Q14. As contract win already forms part of our forward assumption (estimated |
| NOK12-14b new orders over the next 12 months), we will be keeping our projections unchanged. Maintain BUY with unchanged fair value estimate of S |
| $2.00. (Chia Jiunyang) |
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| |
| For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
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| |
| NEWS HEADLINES |
| |
| - The Dow dropped slightly following the Spanish PM’s denial that a bailout request was imminent. The Dow closed down 0.2% to 13,482.36. The S&P |
| 500 Index climbed 0.1% to 1,445.75. |
| |
| - Loyz Energy has signed an agreement to sell its sanitary ware division for S$9.0m so as to concentrate on its exploration and production |
| business. The sale is subject to shareholders’ approval. |
| |
| - Olam International, the largest shareholder in NZ Farming Systems Uruguay, is offering to acquire the remaining 14.07% it does not own in the |
| diary farm company for NZ$25.8m (S$26.4m). |
| |
| - Jason Parquet Holdings has been awarded three contracts worth a total of S$5.1m. |
| |
| - Frasers Property Australia has started work on Australia’s first cantilevered high-rise garden located in Central Park, its residential project |
| along the southern edge of Sydney’s CBD. |
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03-Oct 2012 Wednesday
8:51 AM (4224 days ago)
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