Friday, April 26, 2013

Mixed Views On Pavilion REIT's Q1 Results
Pavilion Real Estate Investment Trust (Pavilion REIT) received mixed reviews after releasing its first quarter results for the financial year 2013. For the first quarter ended 31 March, 2013, its net profit rose to RM54.2 million from RM47.8 million from a year ago. Its revenue increased to RM94.75 million from RM85.33 million for the corresponding period. In a note, HwangDBS Vickers Research said Pavilion REIT's net profit was in line with expectations, 14 percent higher than last year brought about by higher retail and office revenues. "This was mainly contributed by retail rental from Fashion Avenue which commenced in third quarter of 2012 and Pavilion Office Tower being fully tenanted from third quarter 2012," it said. The research house points that Pavilion REIT was still a prime beneficiary of the country's macroeconomic and retail positive outlook, especially when the mass rapid transit works and links to Fahrenheit88, Banyan Tree Signatures and upcoming Harrods Hotel are completed. The research house has maintained a 'buy' call on the stock with a target price of RM1.70.

Significance: RHB Research maintained that the REIT's next earnings kicker will likely be its major rental renewals in the third quarter of this year. Alliance Research on the other hand said the results were better than expected, with core profit making up 23.6 percent of the research house's and consensus full-year forecast.

Tambun Indah Net Profit Jumps 28 Percent
Tambun Indah Land's net profit for the first quarter ended 31 March 2013 surged 28 percent to RM11.7 million from RM9.2 million a year earlier. Its revenue rose 18.7 percent to RM78.3 million from RM66 million previously. The company attributed the improved results to strong sales and higher income generated from on-going projects, especially its integrated township development - Pearl City in Penang. Meanwhile, RHB Research expects the company to record an earnings growth of at least 20 percent per annum over the next two years, as sales at Pearl City would accelerate to meet its forecast of RM450 million this year, compared to the RM400 million achieved last year. The research house also believes the growth prospect of Tambun Indah's 242.81 hectares anchor landbank at Simpang Empat has yet to be fully priced in, despite the 57 percent share price appreciation since the company first announce in the last October. "The upcoming opening of the Penang Second Bridge will also provide significant economic impact in the Batu Kawan area and visibility on the mainland property market," it added.

Significance: RHB Research expects Tambun Indah's strategic anchor land bank, capable management, solid balance sheet and attractive dividend yield to reinforce its value. The research house has initiated coverage on the company with a "buy" recommendation and fair value of RM1.28, while recognising the stock as its top small cap pick based on a bright growth outlook.

SJ Raises LBS Fair Value
SJ Securities has maintained its 'overweight' call on LBS Bina Group (LBS) with a higher fair value of RM2.16 after the group's proposed divestment of its China investment to Zhuhai Holdings Investment Group Limited. The deal will result in the group attaining 226 million new ordinary shares in Zhuhai Holdings at an issue price of HK$1.33 (RM0.52) and resulting in LBS becoming the second largest shareholder with a 16.78 percent shareholding. "It is worth to note that a recent research report by a stockbroker based in Hong Kong has a target price of HK$1.63 (RM0.64) on Zhuhai Holdings' share," said the research house. According to the research house, the divestment will enhance LBS' value in unlocking its China's investment. The research house also stated that with expected substantial cash inflows, it is not ruling out the possibility of a potential privatisation if the share continues to stay undervalued for long.

Significance: It also noted that the group may declare bonus shares as its retained profit will be substantial after the divestment. Furthermore, LBS may pay special dividend to shareholders as part of the investment merits, which the cash portion constitutes at nearly 82 percent of the disposal's consideration.

By http://www.sharesinv.com