Towards Financial Freedom
DBS Equity Research: Wired Daily 23 Sep 2014
Far East Hospitality Trust - Co-invests with sponsor in new Sentosa hotel development. Maintain HOLD, TP S$0.88.
Far East Hospitality Trust (FEHT) has entered into a joint venture with Far East Organization Centre (FEOC), a member of its sponsor Far East Organization, to participate in the development of a new S$443.8m hotel project located on Sentosa. FEHT will hold a 30% stake in the 850-room project with its c.S$133.1m equity contribution to be fully funded with debt. Upon completion of the project in 2018, FEHT will increase its exposure to 3,311 rooms (+34.5%). It will also have rights to acquire the remaining 70% in the project. Upon completion of the project, we project 3%/8% uplifts to our FY18/19F DPU. However, maintain our DCF based target price at S$0.88 as we impute higher long term capex assumptions. While we are positive on this development, its impact is likely to be felt only in the medium term. We see re-rating opportunities capped by expected soft operating performance in 3Q/4Q14. As such, we maintain HOLD on FEHT.
Keppel Land has divested its 80% stake in BG Junction - a strata-titled retail development in Indonesia's Surabaya, for about 400 billion rupiah (S$42.8m). The sale is expected to yield an after-tax profit of about S$12.5m for KepLand. The transaction is expected to be completed by the end of this year.
The Business Times understands that CapitaLandrecently sought a six-month extension on the launch of its 900-unit high rise condominium in Malaysia's Iskandar. This is the first phase of a S$3.2bn Danga Bay project, which spans some 28 ha on a man-made island. Under the original plan, the project would comprise some 6,000 high-rise and landed homes, anchored by a central waterfront hub with a marina, shopping mall, food and beverage outlets, serviced residences, offices and recreational facilities.
Vallianz Holdings has entered into a conditional sales and purchase agreement (SPA) to acquire a shipyard facility in Batam, Indonesia for S$19.8m to establish its own marine base. The consideration will be satisfied by issue of approximately 143.3m new shares at S$0.138 per share, representing a 24% premium to the last volume weighted average share price. The Group expects to reap cost savings from its marine base as it continues expanding its vessel fleet.
Trek 2000 International has entered into discussions with potential partners on collaboration opportunities regarding joint technologies development and commercialisation. Discussions are preliminary at this stage.
Tritech Group has been awarded a S$13.8m consultancy contract by the Land Transport Authority (LTA). The commencement date of the contract is 22 September 2014 and the Qualified Person (Supervision) QP(S) services are expected to be completed on 30 December 2020.
Wee Hur was awarded a S$157.7m public housing building works project from the Housing & Development Board (HDB). The construction order book strengthens to an estimated S$404.9m. Revenue from this new project will flow in from FY2014 to FY2017. The Group will continue to tender for more public housing projects.
The Singapore bond market has recorded strong growth this year, with Singapore-domiciled firms issuing US$19.7bn worth of bonds so far in 2014, an increase of 22.6% from the first nine months of 2013 and the highest nine-month haul since the record US$27.7 bn raised in 2012. According to preliminary data from Thomson Reuters, the third quarter alone this year has seen US$7.9 bn raised, which is 23% more than 2014's second quarter and 60.3% higher than the same period last year. Meanwhile, the Singapore-dollar bond market also posted decent growth, reaching S$18.9bn so far in 2014, 39% more than 2013 and the highest since S$25.7 bn was raised in 2012.
The owners of Citimac Industrial Complex have hit the en bloc trail, with a minimum price of S$550m, which works out to S$1,350 psf of potential gross floor area for the freehold site. The unit land price figure is inclusive of an estimated development charge (DC) of S$109m payable to the state. Located a stone's throw from Tai Seng MRT Station, the 139,789 sq ft site can be redeveloped into a new project with 489,261 sq ft maximum gross floor area (GFA). The site is zoned for Business 1-White use, with a 3.5 maximum gross plot ratio.
U.S. stocks fell, as sales of existing homes in August unexpectedly dropped 1.8% m-o-m (consensus +1%). On charts, the risk of a pullback in US equities has also risen. This morning the preliminary HSBC China manufacturing PMI for September will be released. Consensus expects a 'borderline' reading of 50. China's Finance Minister said his government won't make any major policy adjustments in response to changes in individual economic indicators, even as he said growth faces downward pressure. His comments quelled speculation that weaker economic data will spur further stimulus, which led to a profit taking in the Shanghai Composite yesterday.
Source: DBS
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