MARKET PULSE
Transcription
MARKET PULSE
Asia Pacific Equity Research | Singapore MARKET PULSE Key Idea Key Singapore Indices STI Catalist Finance Property Electronics Vol(m) Val(S$m) Close 3167.7 150.5 814.5 724.1 427.0 1467.9 1145.4 Chg 13.5 1.5 3.6 2.3 2.0 -134.3 -204.4 % Chg 0.4 1.0 0.4 0.3 0.5 -8.4 -15.1 Close 16380.4 4258.4 1886.8 6310.3 1788.3 23023.2 14532.5 1528.7 1900.7 8512.9 Chg 263.2 41.0 24.0 114.4 20.5 122.3 -205.9 2.6 -18.2 -120.8 % Chg 1.6 1.0 1.3 1.8 1.2 0.5 -1.4 0.2 -0.9 -1.4 2,953 3,388 321 175 159 World Indices Dow Jones Nasdaq S&P500 FTSE KLCI Hang Seng Nikkei SET KOSPI TWSE Morning Call 20 Oct 2014 CapitaMall Trust: Resilient quarter CapitaMall Trust (CMT) reported its 3Q14 results which were in-line with ours and the street’s expectations. Gross revenue increased 2.9% YoY to S$164.6m, while DPU grew at a stronger 6.2% to 2.72 S cents. We expect S$11.2m, or 0.32 S cents/unit of taxable income retained in 1H14 to be distributed in 4Q14. Despite softness in its shopper traffic and tenants’ sales psf, we note that the magnitude of decline has moderated, while portfolio occupancy rate was stable at 98.5%. Positive rental reversions of 6.3% were also achieved for 9M14. We retain our forecasts given this in-line set of results. CMT is trading at 5.7% FY14F and 6.0% FY15F distribution yield, above its 10-year average blended 12-month forward distribution yield of 5.3%. Maintain BUY, with an unchanged fair value estimate of S$2.20. This implies total potential returns of 21%. More reports: - First REIT: Another reliable performance Tiger Airways: Wings clipped by weak balance sheet Sembcorp Marine: Secures orders worth S$222m Singapore Airlines: To take control of Tiger Airways Market Statistics (SG) STI No. No. No. 52-week range of gainers of losers of unchanged Economic Statistics S$/US$ Yen/US$ 3-mth S$ SIBOR 3-mth US$ SIBOR Crude futures (US$) 1.3 107.2 0.4 0.2 83.4 0.0 0.2 0.0 0.0 0.7 News Headlines Weakness in Europe and a stronger dollar are the major concerns for corporate America going into this earnings season but that may apply more to outlook than results for 3Q. Commodity markets were haunted by demand fears last week in the face of mounting global economic worries, with crude oil prices striking 4-year lows and base metals also suffering heavy falls. Buying surged with directors and listed firms posting huge trading last week based on SGX filings. A total of 28 companies recorded 50 director purchases worth S$11.9m up sharply from the previous week's S$7.06m. Manhattan Resources Ltd said that it has exercised its call option to acquire a 60% stake in investment holding company Starsmind Capital Pte Ltd (SCPL) for S$40m. Research Team (65) 6531 9800 e-mail: [email protected] Keppel Land has unveiled its plan to redevelop the existing International Financial Centre (IFC) Jakarta Tower 1 which would more than double the net leasable area (NLA) of premium grade office space. In the biggest office leasing deal for a new suburban project so far this year, CPG Corporation has taken a lease of 83,000 sq ft at Westgate Tower next to Jurong East MRT Station. Sources: MasNet, Bloomberg, Business Times, Straits Times and other media Xxx xxxx xxx. document. Xxx xxxx Please refer to important disclosures at the back of this xxx. MCI (P) 006/06/2014 OCBC Investment Research Market Pulse 20 Oct 2014 CapitaMall Trust: Resilient quarter forward distribution yield of 5.3%. Maintain BUY, with an unchanged fair value estimate of S$2.20. This implies total potential returns of 21%. (Wong Teck Ching Andy) 3Q14 DPU rose 6.2% YoY 6.3% rental reversions achieved YTD Ongoing AEIs to drive growth ahead . 3Q14 results within expectations CapitaMall Trust (CMT) reported its 3Q14 results which were in-line with ours and the street’s expectations. Gross revenue increased 2.9% YoY to S$164.6m, underpinned largely by the completion of the AEIs at Bugis Junction in Oct 2013 and Sep 2014, coupled with higher rentals on new and renewed leases. DPU grew at a stronger 6.2% YoY to 2.72 S cents (ex-dividend on 24 Oct), partly due to a +0.3 ppt increase in its NPI margin to 69.3%. For 9M14, revenue rose 3.7% to S$493.6m, while DPU climbed 5.7% to 7.98 S cents. This constituted 74.9% and 72.6% of our FY14 forecasts, respectively. The latter is within expectations as S$11.2m, or 0.32 S cents/unit of taxable income retained in 1H14 is expected to be distributed in 4Q14. . . . . First REIT: Another reliable performance 3Q14 DPU +3.1% YoY Another record DPU Trim forecasts but retain HOLD 3Q14 results in-line with our expectations First REIT’s (FREIT) 3Q14 results came in within our expectations. Revenue, distributable income and DPU rose 4.6%, 6.1% and 3.1% YoY to S$23.8m, S$14.7m and 2.02 S cents (ex-dividend on 24 Oct), respectively. Notably, its DPU achieved another record high (+1% QoQ), aided by organic growth in its portfolio and a full quarter of contribution from Siloam Hospitals Purwakarta (SHPW), which was acquired in May this year. For 9M14, revenue, distributable income and DPU jumped 14.7%, 13.5% and 8.3% to S$69.4m, S$43.3m and 6.01 S cents; and this formed 74.4%, 72.0% and 72.4% of our FY14 projections, respectively. Softness in retail scene; but portfolio still resilient CMT recorded a 1.5% and 3.0% YoY decline in its shopper traffic and tenants’ sales psf in 9M14, respectively, in-line with the softness in Singapore’s retail sales. Nevertheless, we note that the magnitude of decline has moderated (shopper traffic and tenants’ sales psf were down 2.0% and 3.7% in 1H14, respectively). Its portfolio occupancy rate was also stable at 98.5% as at end Sep 2014, versus 98.6% as at end 1H14 and 98.5% as at end Dec 2013. CMT managed to achieve positive rental reversions of 6.3% for 9M14, despite a slight drag coming from IMM (-2.8%). We expect the situation to improve at IMM, as management plans to carry out Phase 2 of AEIs to incorporate more outlet stores. Three other malls are also undergoing AEIs at the moment. More acquisitions could come in 4Q14 Management believes the victory by Joko Widodo at the recent Indonesian presidential elections augurs well for the economy and the healthcare sector, in particular. Hence, we expect FREIT to maintain its core focus on the Indonesian market for future acquisitions-fuelled growth. Siloam International Hospitals, a subsidiary of FREIT’s sponsor Lippo Karawaci, recently won the Healthcare Services Provider of the Year title in the Frost & Sullivan Indonesia Excellence Awards 2014. Its Strategic Development Director, Dr. Anang Prayudi, highlighted plans to achieve growth of ~3040% via greenfield projects and M&A activities. We expect FREIT to be a beneficiary of this trend, and believe it is currently in negotiations with Lippo Karawaci on possible acquisition targets, with 4Q14 a possible timeline for an agreement to be reached. Maintain BUY In terms of financial position, CMT has maintained a comfortable gearing ratio of 34.1%, with an average cost of debt of 3.6%. We retain our forecasts given this inline set of results. CMT is trading at 5.7% FY14F and 6.0% FY15F distribution yield, above its 10-year average blended 12-month 2 OCBC Investment Research Market Pulse 20 Oct 2014 Pare estimates slightly; maintain HOLD We trim our FY14 and FY15 forecasts slightly by 2.8%, as we input higher tax expenses and a larger unit base in our model to account for its distribution reinvestment plan. Correspondingly, our DDM-derived fair value estimate declines from S$1.21 to S$1.18. Despite our lowered DPU forecast, FREIT still offers a healthy FY14 and FY15 dividend yield of 6.8% and 7.0%, respectively. Nevertheless, we are maintaining our HOLD rating on the stock as valuations appear fair, in our opinion, with the stock trading at 1.3x FY14F and FY15F P/B. (Wong Teck Ching Andy) . . . . Proposed rights issue to strengthen balance sheet The large provisions charged during the quarter weakened Tigerair’s balance sheet tremendously and reduced its book value by 91.9% from S$278.7m as at 31-Mar to S$22.6m as at 30-Sep. It announced last week the proposal to undertake an 85-for100 rights issue to raise gross proceeds of up to ~S$234m at S$0.20 per rights share. SIA has undertaken to subscribe for its pro rata entitlement as well as excess rights shares up to total of S$140m. In addition, SIA announced that it will convert all of its perpetual convertible capital securities (PCCS) holdings into shares prior to the rights issue, raising its stake in Tigerair from 40% to ~55%. Simply put, if the rights issue is approved, the minimum gross proceeds that Tigerair should receive is at least S$138m. . Tiger Airways: Wings clipped by weak balance sheet Large provisions charged to 2QFY15 Proposed rights issue has SIA’s support Change in valuation; maintain SELL Change in FV estimate; maintain SELL With large provisions and a weak performance in 2QFY15, we increase our forecasted FY15F net loss by 145.3% to S$254.4m. But given the reduction in cash burden from the sublease of the 12 aircraft, we narrow our FY16F estimated net loss by 62.7% to S$6.0m. We also have not factored in the effects of the rights issue as it is only at the proposal stage. With the tremendous drop in book value, we change our valuation methodology to EV/EBITDA instead P/B. We will review our estimate again when the rights issue is approved. Hence, at 8x FY16F EV/EBITDA (regional LCCs average blended FY15F/16F EV/EBITDA: 8.2x), we lower our FV estimate to S$0.21 (prev: S$0.35) while maintaining a SELL rating. We will revisit our estimate once again when the rights issue is approved. (Eugene Chua) Disappointing 2QFY15 results once again Tiger Airways Holdings (Tigerair) reported a 10.5% YoY decline in its 2QFY15 revenue to S$146.7m while its 1HFY15 revenue declined 21.1% to S$315.7m due to exclusion of Tigerair Australia, meeting 96.2% of our forecasted 1HFY15 revenue. It also recorded a 107.7% YoY increase in 2QFY15 core loss to S$26.6m, mainly due to weaker yields albeit higher traffic volume, which led to a 126.0% increase in 1HFY15 core loss to S$44.3m. Tigerair’s 2QFY15 results were further worsened by large provisions amounting to S$159.1m. Out of the S$159.1m, S$99.3m was provided for onerous aircraft lease contracts while the remaining provision was for the loss expected from the planned divestment of Tigerair Australia. Taking into account these provisions, Tigerair’s 2QFY15 net loss amounted to S$182.4m, against its 2QFY14 PATMI of S$23.8m. . 3 . . . . OCBC Investment Research Market Pulse 20 Oct 2014 Sembcorp Marine: Secures orders worth S$222m Sembcorp Marine (SMM) announced that its subsidiaries Sembmarine SLP and Jurong Shipyard have secured offshore energy related contracts valued at a combined S$222m. Sembmarine SLP has won a contract from Siemens to design and build the offshore substation platform for the Dudgeon Offshore Wind Farm, while Jurong Shipyard has been contracted by regular customer MODEC to complete the repair and life extension, and conversion of a VLCC into a FPSO vessel as part of the TEN Development Project. With these contracts, SMM has secured new contracts worth about S$3.9b YTD, accounting for close to our full year new order win estimate. Maintain BUY with S$4.18 fair value. (Low Pei Han) . . . . . Singapore Airlines: To take control of Tiger Airways Singapore Airlines Limited (SIA) last Friday announced that it had entered into an irrevocable undertaking with regards to the rights issue of Tiger Airways Holdings Limited (Tigerair). SIA currently holds a 40% stake [~394.6m ordinary shares and 189.4m nonvoting perpetual convertible securities (PCCS)] in Tigerair. As part of its undertaking, SIA will be converting all of its PCCS into 358.7m new Tigerair shares at a price S$0.565 per share, bringing its stake in Tigerair up to ~55% before the rights issue, effectively taking control over Tigerair. As part of the Whitewash Resolution of PCCS, SIA is not required to make a general offer and has no intention to do so. Furthermore, SIA also undertakes to subscribe in full its pro rata entitlement (~55%) of the rights issue as well as any excess rights up to a total of S$140m. Buying Tigerair’s shares at a significant premium is probably a strategic move to gain control to align Tigerair’s direction with Scoot as well as to participate in the rights issue with a larger base. As the Tigerair’s rights issue is still in its proposal stage, we continue to maintain our HOLD rating with unchanged fair value estimate of S$10.05 on SIA. (Eugene Chua) . . . . . 4 OCBC Investment Research Market Pulse 20 Oct 2014 Calendar of key events 20-Oct-14 21-Oct-14 Keppel Land 3Q14 Mapletree Industrial 2Q15 Frasers Commercial Trust FY14 Mapletree Logistics 2Q15 22-Oct-14 23-Oct-14 24-Oct-14 Cache 3Q14 MGCCT 2Q15 Keppel Corp 3Q14 Aztech 3Q14 United Overseas Insurance 3Q14 Triyards FY14 Cambridge Ind Trust (am) 3Q14 Mapletree Commercial Trust 2Q15 SGX 1Q15 Frasers Centrepoint Trust FY14 SG Sep Industrial Production SoilbuildBizREIT 3Q14 27-Oct-14 28-Oct-14 Second Chance FY14 SG Sep CPI 29-Oct-14 30-Oct-14 31-Oct-14 CDL Hospitality Trust 3Q14 OCBC 3Q14 DBS 3Q14 OSIM 3Q14 UOB 3Q14 NOL 3QFY14 Forterra Trust 3Q14 SG Sep Bank Loans and Advances SG Sep Money Supply 03-Nov-14 04-Nov-14 05-Nov-14 06-Nov-14 07-Nov-14 Cosco 3Q14 GLP 2Q15 Noble 3Q14 SIA 2Q15 Venture Corp 3QFY14 SIAEC 2QFY15 China Aviation Oil 3Q14 Innotek 3Q14 Valuetronics 2Q15 Sembcorp Ind 3Q14 10-Nov-14 17-Nov-14 11-Nov-14 18-Nov-14 12-Nov-14 13-Nov-14 14-Nov-14 SP Ausnet 1H14 SATS 2Q15 SG Sep Retail Sales HTL Int'l 3Q14 SG 3Q GDP 20-Nov-14 21-Nov-14 19-Nov-14 SG Oct NODX Notes: Sourced from Bloomberg All US Tech results dates have been adjusted to Singapore dates. US Initial jobless claims are released every Friday. MBA mortgage applications are released every Wednesday. 5 OCBC Investment Research Market Pulse 20 Oct 2014 SHAREHOLDING DECLARATION: For shareholding disclosure on individual companies, please refer to the latest reports of these companies. DISCLAIMER FOR RESEARCH REPORT This report is solely for information and general circulation only and may not be published, circulated, reproduced or distributed in whole or in part to any other person without our written consent. This report should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities mentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in this publication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness, and you should not act on it without first independently verifying its contents. 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RATINGS AND RECOMMENDATIONS: - OCBC Investment Research’s (OIR) technical comments and recommendations are short-term and trading oriented. - OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. - As a guide, OIR’s BUY rating indicates a total return in excess of 10% based on the current price; a HOLD rating indicates total returns within +10% and -5%; a SELL rating indicates total returns less than -5%. Co.Reg.no.: 198301152E Carmen Lee Head of Research For OCBC Investment Research Pte Ltd Published by OCBC Investment Research Pte Ltd 6