Warrants Highlight

CapitaLand - Price target of $3.76

CapitaLand one of Southeast Asia’s largest property developers has Singapore’s state investor, Temasek Holdings, owning 39.5% of the company’s equity. Macquarie Equities Research (MER) previously released a research paper on 1 August, with an ‘Outperform’ rating on CapitaLand and a 12 month price target of S$3.76. As of yesterday’s close, the counter was trading at $3.27.

Macquarie’s Capitaland warrants

+85.1% compared to 3Q2011
Before the STI started its trading session yesterday, CapitaLand announced its third quarter corporate earnings on the SGX. The group announced a profit after tax and minority interest of S$148.5 million, which was an increase of 85.1% compared to the same period last year.

Their earnings can be attributed to 3 main areas of their business:
1. Development revenue from Singapore, Australia and China increased this year with the largest increase coming from China. China contributed S$67.9 million to CapitaLand’s revenue, an improvement of 67% compared to the same period last year.

2. Shopping mall business also gained, mainly due to the acquisition of malls in Japan. Another contributor was serviced residences which rose slightly due to newly opened properties as well as higher property management fees.

3. Fee-based income business did well as a result of enlarged asset under management portfolio, improved performance of managed properties as well as new management contracts. Portfolio gain was S$75 million, arising from the divestment of Ascott Guangzhou and Ascott Raffles Place to Ascott Residence Trust.

Management pleased with results
Chairman Mr Ng Kee Choe said that results were “commendable” despite the shaky economic situation globally. Going forward, he feels that the company’s “core markets will continue to provide them with opportunities for long-term sustainable growth”.

CEO Mr Liew Mun Leong added on, saying that “we have done well again”. He feels that the results reinforce the “continued confidence and commitment in the markets where we operate”. Looking ahead, he sees that CapitaLand is still going to be ahead of the competition since the company’s strategy has been “long-term” and hence he expects to see their “investments bear fruits in the coming years”.

Cooling measures – no “significant impact”
When queried about the cooling measures that the government has imposed, the developer said that “they do not expect a significant impact from these measures on new home sales in the short term. However, they are monitoring the situation closely”.

The Singapore home prices have been on an uptrend and property developers like CapitaLand has benefitted. Since the start of this year, CapitaLand’s share price has increased by 48%, outperforming the STI which has increased by 14.8% across the same period.

Singapore Market Wrap

Strong Europe stocks performance boost Singapore Market

European stocks rose the most in 2 weeks as earning results of major companies such as Deutsche Bank and BP meet estimates. This is in spite of Spain contracting for the Fifth quarter, falling 0.3%, and Germany's unemployment rising twice as much as economists expected to climbed a seasonally adjusted 20,000 to 2.94 million. The STI rose 0.3% to 3038.73 for the trading session.

Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Put STI 2800MBePW130131 (PA8W) exercise level 2,800.*

GLP leases to H&M
GLP announced the signing of a new lease to International Retailer H&M. The approximately 21,000 square metres facility will be H&M's first Japan distribution centre, allowing H&M to deliver it's products nationwide while it continues to expand in Japan. GLP rose 0.39% to $2.55 day-on-day.

Call GLP MB eCW130603 (Q8UW) exercise price $2.90.*

NOL sells notes
NOL is selling $300 million of 4.4% Medium Term Notes which are due 2019. This came shortly after it's recent third quarter results, where it fought it's way into the black with a net profit of US$50 million after 6 quarters of losses. NOL rose 0.44% to $1.15 for the day.

Call NOL MB eCW130604 (Q8FW) exercise price $1.30.*

Overnight Market Wrap

US markets closed for the second day

The US markets continued to be shut as Hurricane Sandy moves West across Pennsylvania.

In Europe, stocks gained the most in 2 weeks after companies like BP Plc and Deutsche Bank announced earnings that beat estimates. BP Plc and Deutsche Bank gained 4.2% and 4.5% respectively.

The good earnings helped to mitigate the lower economic confidence and the lower consumer sentiments in the Eurozone. Economic confidence in October hit a low in three years while consumer sentiments fell to 84.5 from 85.2. The Euro Stoxx 600 added 0.9% for the day.

Overnight Markets

Indices	Last	Change
STI	3038.73	0.3%
HSI	21428.60	-0.4%
DJIA	13107.20	-
S&P 500	1411.94	-
Nasdaq	2987.95	-
China A50	7110.04	0.3%

Corporate News

Corporate Announcements

Olam will be issuing a second trache of S$100 million 6% fixed rate notes due 2022.

GLP increases stake in GLP Park Suzhou to 70%, signed 2 lease agreements to bring occupancy rate to 91%.

Capitaland has entered into a strategic co-operation agreements with Agricultural Bank of China, Bank of China, China Construction Bank and Industrial and Commercial Bank of China to grant a credit limit allocation of up to RMB50 billion (around S$10 billion).

Earnings release dates:
Wed 31 Oct: IndoFood Argi (3Q12)
Thurs 1 Nov: DBS (3Q12)
Fri 2 Nov: SIA (2Q12)
Fri 2 Nov: Starhub (3Q12)
Fri 2 Nov: Cosco (3Q12)
Mon 5 Nov: SembCorp Marine (3Q12)
Tues 6 Nov: Ezion (3Q12)
Tues 6 Nov: SATS (2Q13)
Wed 7 Nov: UOB (3Q12)
Wed 7 Nov: Biosensors (2Q13)
Thurs 8 Nov: Noble (3Q12)
Thurs 8 Nov: UOL (3Q12)
Fri 9 Nov: SembCorp Industries (3Q12)
Fri 9 Nov: OCBC (3Q12)
Fri 9 Nov: Wilmar (3Q12)
Mon 12 Nov: Genting (3Q12)
Wed 14 Nov: GLP (2Q13)
Wed 14 Nov: City Dev (3Q12)
Wed 14 Nov: Singtel (2Q12)
Wed 14 Nov: STX OSV (3Q12)

Ex-dividend dates:
Tue 6 Nov: Olam ($0.05)
Fri 7 Dec: SPH ($0.17)