MARKET WATCH 9th Oct 2012 - AsianBookie.Com Forums

09-Oct 2012 Tuesday 9:49 AM (4218 days ago)

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STI        3,077     -31    -1.00%
DOW     13,584    -26    -0.19%
S&P       1,456      -5     -0.34%
FTSE      5,842     -29     -0.49%
DAX        7,291     -107   -1.44%
GOLD      1,779      +3      +0.19%
OIL          89.99      +0.65   +0.73%
PRE-HK OPEN +47pts

09 Oct 2012 08:53

DJ MARKET TALK: Singapore STI May Start Weak; Support Near 3000

0053 GMT [Dow Jones] Singapore's STI could kick off with a mediocre showing after a weak lead from U.S. stocks and growth warnings from the World Bank and IMF. The index dropped 1.0% to 3076.65 Monday, dragged by developers and banks in the wake of tighter home-loan rules. "The index may continue to drift slightly lower, as there aren't many positive cues at the moment. 3Q earnings may not be very exciting and that could weigh," says OCBC Investment Research analyst Carey Wong; "we don't expect any large-scale buying for some time--it's a trading market at the moment, with a lot of action in the penny stocks." He tips support for the index closer to the 3000 level--a likely entry point for bargain-hunters--with resistance at about 3080-3088. Corporate news is sparse, but Wong says developers like CapitaLand(C31.SG) and City Developments (C09.SG), and banks including DBS Group (D05.SG), could hold up better after Monday's falls as investors take stock.

AIMS AMP Capital Industrial REIT’s portfolio value up 5.6 percent
Singapore, 9 October 2012: AIMS AMP Capital Industrial REIT Management Limited (the
Manager) as Manager of AIMS AMP Capital Industrial REIT (the Trust) today announced a 5.6
percent uplift in the value of its portfolio, valuing the portfolio at S$965.7 million as at 30
September 2012.
Excluding 20 Gul Way which is under development, the Trust’s portfolio grew in value by 2.6
percent. This was largely due to positive rental growth achieved by the Manager in the execution
of its leasing strategy. 20 Gul Way contributed an additional 3 percent in value uplift due to
capitalised capital expenditure for the redevelopment. Together, the portfolio’s overall valuation
rose by 5.6 percent, compared to previous valuations as at 31 March 2012.

AIMS AMP Capital Industrial REIT Chief Executive Officer, Mr Nick McGrath said: “This higher
portfolio value is largely the result of excellent leasing agreements with new and existing tenants
in the logistics and warehousing sectors. We have experienced strong tenancy demand for
quality logistics and warehousing property. On a weighted average, we have negotiated leasing
agreements that are 9.5 percent higher in value in the quarter ending 30 June 2012.
“The strengthening value in our portfolio is evidence that our active asset management strategy
is building strong relationships with tenants and delivering tangible value to unitholders,” Mr
McGrath said.
Cushman & Wakefield was appointed by the REIT to conduct valuations of 15 of the REIT’s
properties as at 30 September 2012. Colliers International Consultancy & Valuation (Singapore)
Pte Ltd was appointed to conduct valuations for the remaining 9 properties as at 30 September
2012. 20 Gul Way was not subject to a valuation as it is an investment property under
development where capital expenditure is capitalised.

..

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09-Oct 2012 Tuesday 10:04 AM (4218 days ago)

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Completion of sale of KeyPoint

Frasers Commercial Trust (FCOT) announced on 28 Sep that it had

completed the sale of KeyPoint to Bayfront Ventures Pte Ltd for

S$360.0m. With the divestment, FCOT is likely to sit on a hefty net

proceeds of S$357.8m (after professional and related expenses

relating to the sale) and book in a gain of S$72.8m. We are

maintaining our view that FCOT will likely use the bulk of the sale

proceeds to redeem half of its Series A Convertible Perpetual

Preferred Units (CPPUs) and reduce its existing debt liabilities. This is

because the funding costs (distribution rate) of the CPPUs and its

gearing ratio are relatively high at 5.5% and 39.5% respectively.

Based on our understanding, the CPPUs are only redeemable on the

first business day of each calendar quarter. Hence, the earliest period

FCOT will be able to make the redemption and relieve the drag on its

distributable income is in the Dec quarter.

Expecting enhanced performance

Going forward, we are staying positive on FCOT’s financial

performance. Apart from a positive impact from the likely redemption

of the CPPUs, FCOT is also expected to gain from interest savings as a

result of the early refinancing of its S$500m term loan facility at

favourable borrowing margins. In addition, the acquisition of the

balance 50% interest in Caroline Chisholm Centre and direct tenant

leases at China Square Central (CCC) earlier this year are likely to

contribute positively to its rental income. Hence, we expect FCOT to

meet our FY12-13 forecasts comfortably.

Maintain BUY

We continue to like FCOT for its growth potential, strong execution

and attractive P/B of 0.87x. We are holding our FY12-13 forecasts

intact as the recent developments are in line with our expectations.

However, as we roll our valuations to FY13, our fair value is now

raised from S$1.23 to S$1.31. Maintain BUY.

STRONG VALUE PROPOSITION

• Likely redemption of CPPUs

• Expecting uplift in income

• Fair value estimate raised

9 Oct 2012

Company Update

FRASERS COMMERCIAL TRUST | BUY

Asia Pacific Equity Research

Singapore | REITs

BUY (maintain)

Fair value S$1.31

add: 12m dividend forecast S$0.08

versus: Current price S$1.16

12m total return forecast 20%

Analysts

Kevin Tan (Lead) C +65 6531 9810

[email protected]

Eli Lee C +65 6531 9112

[email protected]

Key information

Market cap. (m) S$744.5 /

USD604.9

Avg daily turnover (m) S$0.7 /

USD0.6

Avg daily vol. (m) 0.8

52-wk range (S$) 0.73 - 1.18

Free float (%) 73.0

Shares o/s. (m) 644.6

Exchange SGX

BBRG ticker FCOT SP

Reuters ticker FRCR.SI

ISIN code A48U

GICS Sector Financials

GICS Industry REITs

Top shareholder F&N - 27.0%

Relative total return 1m 3m 12m

Company (%) -2 11 62

STI-adjusted (%) -4 6 42

Price performance chart

0.70

0.84

0.98

1.12

1.26

1.40

Oct-11 Jan-12 Apr -12 Jul -12 Oct-12

2400

2920

3440

3960

4480

5000

Fair Value FCOT SP FSSTI

Shar e Pr ice (S$) Index Level

Sources: Bloomberg, OIR estimates

Industry-relative metrics

0th 25th 50th 75th 100th

ROE

Beta

Mkt Cap

Company Indust r y Aver age

Per cent i l e

Note: Industry universe defined as companies under identical GICS classification

listed on the same exchange.

Sources: Bloomberg, OIR estimates

Key financial highlights

Year Ended 30 Sep (S$ m) FY10 FY11 FY12F FY13F

Gross revenue 117.9 119.6 130.1 126.3

Total property expenses -24.9 -23.6 -26.3 -29.4

Net property income 93.0 96.0 103.8 96.9

Amount available for distribution 34.5 36.3 43.1 51.2

DPU per share (S cents) 5.6 5.8 6.7 7.9

Cons. DPU (S cents) na na 6.8 7.7

PER (x) 20.7 16.3 6.4 17.1

P/NAV (x) 4.2 0.8 0.8 0.8

ROE (%) 5.9 7.5 12.6 4.6

Gearing (%) 38.3 36.0 36.5 36.4

Please refer to important disclosures at the back of this document. MICA (P) 035/06/2012

MARKET CAP: USD 604.9M AVG DAILY TURNOVER: USD 0.6M

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09-Oct 2012 Tuesday 10:05 AM (4218 days ago)

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OCBC Investment Research

Singapore Equities

Company financial highlights

Income statement

Year Ended 30 Sep (S$ m) FY10 FY11 FY12F FY13F

Gross revenue 117.9 119.6 130.1 126.3

Total property expenses -24.9 -23.6 -26.3 -29.4

Net property income 93.0 96.0 103.8 96.9

Borrowing costs -43.8 -45.8 -44.9 -37.2

Manager's management fees -12.5 -12.7 -13.7 -13.3

Other expenses -4.6 -2.3 -3.1 -2.5

Net income 32.3 35.2 42.1 43.9

Total return for the period 50.1 64.9 115.1 43.7

Adjustments -15.7 -28.6 -72.0 7.5

Amount available for distribution 34.5 36.3 43.1 51.2

Balance sheet

As at 30 Sep (S$ m) FY10 FY11 FY12F FY13F

Investment properties 1,906.4 1,942.0 1,802.2 1,815.8

Properties under development 0.0 0.0 0.0 0.0

Cash 99.6 90.5 103.4 95.7

Total current assets 157.9 99.7 113.4 105.4

Total assets 2,094.1 2,041.7 1,915.6 1,921.2

Current liabilities ex debt 33.1 31.4 32.9 32.3

Debt 802.4 735.1 700.0 700.0

Total liabilities 893.4 821.6 787.9 787.4

Unitholders' funds 858.2 877.6 956.5 962.6

Total equity and liabilities 2,094.1 2,041.7 1,915.6 1,921.2

Cash flow statement

Year Ended 30 Sep (S$ m) FY10 FY11 FY12F FY13F

Total return 53.8 67.3 117.5 46.2

Adjustments 34.1 22.4 -19.3 45.7

Operating income before working cap chgs 87.9 89.7 98.1 91.9

Change in working capital 2.7 -4.4 -1.7 -2.8

Cash generated from operating activities 90.6 85.3 96.5 89.1

Cashflow from investing activities -2.9 23.0 217.0 -9.5

Cashflow from financing activities -93.7 -116.2 -300.5 -87.3

Change in cash -6.0 -8.0 12.9 -7.7

Cash at beginning of period 94.2 88.3 90.5 103.4

Cash at end of period 99.6 90.5 103.4 95.7

Key rates & ratios FY10 FY11 FY12F FY13F

DPU per share (S cents) 5.6 5.8 6.7 7.9

NAV per share (S cents) 27.8 139.1 149.2 147.7

PER (x) 20.7 16.3 6.4 17.1

P/NAV (x) 4.2 0.8 0.8 0.8

NPI margin (%) 78.9 80.3 79.8 76.8

Net income margin (%) 27.4 29.4 32.3 34.7

Gearing (%) 38.3 36.0 36.5 36.4

DPU yield (%) 4.8 5.0 5.8 6.8

ROE (%) 5.9 7.5 12.6 4.6

ROA (%) 2.4 3.1 5.8 2.3

Sources: Company, OIR forecasts

NOTE: Lower expected PER in FY12 was due to a gain from divestment of KeyPoint

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09-Oct 2012 Tuesday 10:07 AM (4218 days ago)

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MARKET PULSE: FCOT, Vix Branz, United Envirotech 9 Oct 2012 KEY IDEA Frasers Commercial Trust: Strong value proposition Frasers Commercial Trust (FCOT) announced on 28 Sep that it had completed the sale of KeyPoint for S$360.0m. We are maintaining our view that FCOT will likely use the bulk of the sale proceeds to redeem half of its Series A Convertible Perpetual Preferred Units (CPPUs) and reduce its existing debt liabilities, as the funding costs of the CPPUs and its gearing ratio are relatively high. Going forward, we are staying positive on FCOT’s financial performance. Apart from a positive impact from the likely redemption of the CPPUs, FCOT is also expected to gain from interest savings as a result of the early refinancing of its S$500m term loan facility at favourable borrowing margins. In addition, the acquisition of the balance 50% interest in Caroline Chisholm Centre and direct tenant leases at China Square Central earlier this year are likely to contribute positively to its rental income. Hence, we expect FCOT to meet our FY12-13 forecasts comfortably. We are holding our FY12-13 forecasts intact as the recent developments are in line with our expectations. However, as we roll our valuations to FY13, our fair value is now raised from S$1.23 to S$1.31. Maintain BUY. (Kevin Tan) MORE REPORTS Viz Branz Limited: New substantial shareholder Lam Soon Cannery Private Limited - more commonly known for its "Knife" brand cooking oil -has purchased a 20% stake in Viz Branz (VB) at a price of S$0.735/share. While this share purchase falls short of triggering a general offer, we view this development as a positive and an important first step for an eventual overall takeover. First, VB's instant beverage business complements Lam Soon's existing operational capabilities and is a natural fit in its wide range of products. Secondly, and more importantly, given the fractured relationship between VB's two substantial shareholders, a reduced stake for its current CEO clearly signifies his intent to leave the business eventually. Although future share sales are likely to be transacted at S$0.735/share, it is only 0.7% lower than our fair value estimate of S$0.74/share. Maintain HOLD. (Lim Siyi) United Envirotech: Gets another Shandong project United Envirotech Limited (UEL)has recently announced that its 70%-owned subsidiary has signed a deal to acquire, upgrade and expand an existing industrial waste-water treatment plant in Weifang City, Shandong Province, China; this making it the company’s fourth such acquisition in Shandong. We maintain our BUY rating on the stock as we believe that UEL is well placed to capture more of China’s growing waste-water treatment market. Although we are maintaining our estimates and S$0.50 fair value for now, we see room for upward revisions on more contract wins. (Carey Wong) Tee International: Acquires RM31.2m site in Cyberjaya, Malaysia Tee International (TEE) announced yesterday that it has paid MYR31.2m (S$12.9m) to acquire a freehold commercial site in the Cyberjaya, Selangor Darul Ehsan, Malaysia. The site area is ~9.5 acres and has a plot ratio of 3.0, and the acquisition would be financed by internal funds and bank borrowings. TEE expects to develop the site into a mixed use project comprising of retail and SOFO (Small Office Flexible Office) units. The site is located in the heart of Cyberjaya - 26km away from Kuala Lumpur and a key part of the Multimedia Super Corridor in Malaysia – and is in close proximity to MNC offices and institutions such as Shell, IBM and Multimedia University (MMU). This transaction is expected to have no material impact on the FY13 (ending 31 May 2013) financials. We would speak with management further regarding this acquisition and put our Hold rating and fair value estimate of S$0.28 UNDER REVIEW. (Research Team) For more information on the above, visit www.ocbcresearch.comfor the detailed report. NEWS HEADLINES - US stocks pulled back from near five-year highs in anticipation that the earnings season will be weak. The Dow fell 0.2% to 13,583.65. The S&P 500 Index retreated 0.4% to 1,455.88. - Fraser and Neave has announced that the revaluation of certain properties has revealed an aggregate revaluation surplus of ~S$498m. - Ossia International Limited has agreed to acquire the retail and distribution business of VGO Corporation Limited for a consideration of S$18.7m. - JES International Holdings, a PRC-based shipbuilding group, has expanded into the offshore space, securing a shipbuilding contract for a Platform Support Vessel. - FDS Networks Group has entered into a disposal agreement to dispose of the entire share capital of a wholly-owned subsidiary of the company for a consideration of US$550k.

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09-Oct 2012 Tuesday 10:08 AM (4218 days ago)

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Sunny Side Up: Singapore Property - Round 6… Knockout Time?

What’s cooking

Singapore Property: Round 6… Knockout Time?
Ø The Singapore government has rolled out what is effectively a sixth
round of residential property cooling measures, this time restricting the
tenure of home loans to no more than 35 years. Loans in excess of 30
years will also attract higher loan-to-value (LTV) limits.
Ø We think that the latest measures will nudge prices in the mass market
segment closer to our expected correction of 10% by end-2013, as marginal
buyers/investors potentially face higher monthly payments or higher cash
downpayments. We believe there will be little or no impact on the
high-end segment, where buyers are less highly-geared.
Ø Faced with a sustained period of low interest rates, we think the
measures are the next best alternatives to increasing lending rates
directly. We reiterate CMA as our overall top pick for its retail
property exposure, and Wing Tai for its high-end residential exposure.


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