DBS Equity Research: Wired Daily 23 Oct 2014

kiasutrader

Publish date: Thu, 23 Oct 2014, 06:00 PM

Keppel Corp - 3Q14 results in line, propped up by divestment gains. Reiterate BUY; TP S$11.10.

Singapore Exchange - Challenging outlook; earnings cut by 11-15% over FY15-16F. Maintain HOLD; target price trimmed to S$6.95

3Q14 results for Keppel Corp in line; O&M operating margin notched up 0.2ppt q-o-q to 14.9%.Property income was aided by gain from divestment of Equity Plaza. Keppel Corp is well positioned to tap prospects in protected markets with niche products. Reiterate BUY; TP S$11.10.

Singapore Exchange's 1QFY15 earnings were inline, led by derivatives. Base dividend of 4 Scts was declared, as expected. We cut our earnings forecasts by 11-15% over FY15-16F to account for a persistently challenging outlook, particularly in the securities market. As 2QFY15 is typically a seasonally slower quarter, we expect a weak quarter ahead. Maintain HOLD; target price trimmed to S$6.95 (PrevS$7.05).

4Q14 DPU for Frasers Commercial Trust up 6% to 2.21Scts asn Alexandra Technopark (ATP) exceeds our expectations. Full-year contribution from ATP should power FY15 growth despite AUD exchange rate uncertainties. We have also factored in lower interest expenses, as well as adjusted our target price to S$1.53 from S$1.42. As a result, we have raised our DPU estimates for FY15 and FY16 by 23% and 16% respectively. At its current price, FCOT offers investors a FY15-16 dividend yield of 7.2-7.3%. Maintain BUY.

2Q15 DPU of 2.6 Scts for Mapletree Industrial Trust was 5.3% higher y-o-y. The strong 2Q15 results were supported by steady occupancies and positive rental reversions. At its current price, MINT offers investors a dividend yield of 7.1-7.2%, an attractive level given its strong credit backing and quality name. We maintain our BUY call and target price of S$1.53. Mapletree Logistics Trust reported 2Q15 DPU of 1.88Scts (+3% y-o-y). MLT is backed by stability from long leases, with WALE of 4.6 years by NLA and only 47% of leases expiring in FY17/18 and beyond. Multiple growth drivers are in place to augment a steady FY15-17F CAGR of 3%. Maintain BUY and target price of S$1.25.

CapitaLand's The Ascott has inked several agreements with Quest Serviced Apartments in Australia to increase its exposure Down Under. Under one of the agreements, Ascott's real estate investment trust, Ascott Residence Trust (Ascott Reit) will acquire three operating serviced residences in Greater Sydney from Quest for A$83.0 (about S$93m). These are Ascott Reit's maiden acquisitions in New South Wales. Quest is the largest serviced apartment provider, with 112 properties in Australia.

ST Engineering's aerospace arm, ST Aerospace, secured contracts worth S$450m in the third quarter, it said in an update. These cover airframe, component and engine maintenance, freighter conversion, cabin modification, engine wash and pilot training. Among the contract wins is a steady stream of heavy checks and interior modification projects for narrow and wide-body aircraft belonging to international airline customers. These will take place in the aerospace sector's facilities in Shanghai and in the US.

Communication Design has entered into a sale and purchase agreement for the acquisition of the entire issued and paid-up share capital of Richwood Asia I Investments and One Room Mansion, both own lands and buildings, for an aggregate consideration of S$31.0m. The Company intends to diversify into the new business of (a) property development activities and (b) holding of Property Related Assets as long term investment.

China's third-quarter economic growth ground to its slowest pace in five years as the country continues to struggle with a downturn in the property sector, overcapacity and weak export demand. The economy grew 7.3% in the third quarter, the National Bureau of Statistics said - down from 7.5% in the previous three months and its slowest pace since the global economic crisis in 2009. Many factors were behind the slower expansion. Domestically, a continued slump in the property sector - which accounts for about half of GDP - as well as overcapacity were hard trends to reverse. Also weighing on growth were Beijing's crackdown on corruption and sluggish demand in Europe, China's main trading partner.

Dow fell 153pts, retreating from recent sessions of big gains. A slide in the price of oil dragged down energy stocks, despite earlier hopes that the European Central Bank would add to its stimulus program as well as news that US inflation remained low last month. Consumer prices rose 1.7% in the year to date through September, below the 2% target set by the Federal Reserve.

Source: DBS

Keppel Corp (BN4)SGX (S68)Mapletree Ind Tr (ME8U)ST Engineering (S63)Imperium Crown (5HT)

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