ARA Asset Management - Tentacles of growth; maintain BUY with target price of S$2.08 

ARA Asset Management recently entered into a conditional sale and purchase agreement to acquire a real estate platform in Korea; making immediate foothold into a new market. The private funds business continues to grow steadily, with the launch of a new platform, Morningside Investment Partners, LLC. We believe that the group remains on track to meet its targeted S$2bn growth in asset under management (AUM) for 2014, supported by new private funds, while its REITs continue to acquire and grow its recurring income fee base. Maintain BUY with target price of S$2.08.

SPH REIT reported results for the period July 24, 2013 to Nov 30, 2013 which were in line with expectations. The resilient results were supported by strong performance of Paragon Mall. We see minimal risks for Clementi Mall as most of the expiring leases have been renewed. Maintain HOLD, TP S$0.97. At the current price, the stock offers a dividend yield of 5.4%-5.5%.

Ezra's core net profit for 1Q-FY14 came in at about US$4.0m, excluding some US$2.4m in one-off gains on dilution of interest in associate. This is lower than our assumptions, but maintains a return to profitability that Ezra achieved in 4QFY13. Revenue was up 22% to US$339.8m, mainly driven by the subsea division EMAS AMC. Offshore chartering division EMAS Marine recorded about 90% fleet utilisation, but performance and margins were affected by higher vessel maintenance costs and mobilisation/ demobilisation charges. Hence, overall gross margins of 15% are lower than the 18% recorded in 1Q-FY13 and 4Q-FY13. Orderbook still stands at over US$2bn, including about US$1.25bn for subsea division, about half of which will be delivered in FY14. The Group continues to evaluate strategic options for subsea division EMAS AMC to unlock value for shareholders. Recommendation and TP under review pending further updates from management later today.

Indonesian Parliament is deliberating revision to Plantations Law No. 18/2004. The proposals include, among others, (1) limit foreign ownership in plantations to 30%, and (2) require the development of downstream businesses. It is unclear whether the bill can be passed and supporting government regulations can be issued before Parliamentary elections in Apr14. Indonesian subsidiaries of SGX and Bursa-listed planters may be affected if the bill is passed.

SingHaiyi Group announced that it will participate in the acquisition of TripleOne Somerset by taking a 20%-stake, worth S$66m, in a consortium, consisting of Boustead Singapore and several other investors, to purchase the property for S$970m. The 17-storey property comprises two office towers with two floors of retail space and total gross floor area of about 766,550 square feet, and is situated adjacent to the Somerset Mass Rapid Transit Station. The transaction marks SingHaiyi's first investment in commercial property in Singapore.

Units of OUE Commercial Real Estate Investment Trust (OUE C-Reit) are said to have been priced at 80 cents each, representing a dividend yield of 6.8% for its $400m initial public offering. To comprise an initial portfolio of OUE Bayfront in Singapore and the Lippo Plaza in Shanghai, OUE C-Reit is the second Reit in six months to be spun off from OUE Ltd, which listed OUE Hospitality Trust (OUE H-Trust) last July.

Figures released by the Building and Construction Authority (BCA) forecast construction demand this year at between $31 bn and $38 bn. Last year, construction demand hit a record $35.8 bn, preliminary estimates showed. While construction will contribute positively to economic growth in 2014, its impact is likely to be moderated. According to BCA's estimates, the public sector is expected to contribute close to 60% (equivalent to $19 bn to $22 bn) of the industry's total demand in the coming year, compared with $14.8 bn last year. The private sector on the other hand is expected to take a back seat in driving construction demand because of current market volatility, said the BCA.

China's inflation rate fell to a seven-month low in December on the back of easing food prices, reducing the odds of monetary tightening. The consumer price index (CPI) eased to 2.5% in December from 3% the previous month. This was well below the 3.5% target set by the government and a touch lower than consensus forecast of 2.7%. Meanwhile, the producer price index (PPI) - a measure of the cost of goods as they leave the factory - fell 1.4% in December from a year earlier, the 22nd consecutive drop.

U.S. stocks were little changed as retailers slumped and investors await tonight's official jobs report for clues to whether the Federal Reserve will accelerate the pace of stimulus cuts. Employment figures released thus far this week coming from the ADP employment change, Challenger job cuts and initial jobless claims have all pointed towards a better-than-expected set of figures tonight. Consensus expects December non-farm payrolls to register 197k while the unemployment rate stays at 7%.

Source: DBSV