DBS Equity Research: Wired Daily 30 Jan 2015

kiasutrader

Publish date: Fri, 30 Jan 2015, 02:35 PM

Tiger Airways - Capacity discipline to boost load factors and yields, leading to sustained earnings recovery. Upgrade to BUY with S$0.39 TP.

SMRT - Riding high; 3Q15 results in line. Maintain BUY and TP S$1.90.

CapitaRetail China Trust - Long term optimism priced in; downgrade to HOLD, TP lowered to S$1.64

We expect Tiger Airways' total fleet to stand pat at 24 aircraft through to 4Q16, and add one more aircraft only in FY17 (+5.2%), and this capacity tightness should help yields and load factors firm up. Also, with jet fuel currently at less than US$65 per barrel, and with increasingly less hedging losses, Tigerair's jet fuel bill should be substantially lower. Lower fuel costs should kick in more significantly from this quarter onwards. We project Tigerair to post an operating profit of S$57m in FY16 compared to a loss of S$33m in FY15, growing by 35% y-o-y to S$77m in FY17. At the bottom line, we project Tigerair to post its first net profit in five years, of S$44m in FY16 and growing to S$61m in FY17, compared to a loss of nearly S$250m for FY15. Upgrade to BUY with S$0.39 (Prev S$0.31) target price.

3Q15 results for SMRT in line; net profit up by 59% y-o-y. Fare business segments turned in profits vs losses last year, as expected. Recently announced fare increase to provide support while sustained low oil price could provide further tailwind for operating results. The Government Bus Contracting tender for the first package ("Bulim package") closed on 19 Jan'15, should not pose much downside risks. Maintain BUY and target price of S$1.90.

CapitaRetail China Trust(CRCT) reported 4Q14 DPU of 2.48 Scts (+13% y-o-y), below expectations. The underperformance was mainly due to weaker than expected contribution from Grand Canyon and Minzhongleyuan malls. We cut FY15-17F DPU by 5-10% but still expect DPU growth on the back of positive rental reversions. While we remain positive on the long term prospects for CRCT, we believe this has largely been priced in Downgrade to HOLD, TP lowered to S$1.64 (Prev S$ 1.70).

Mapletree Greater China Commercial Trust (MAGIC) reported 3Q15 DPU of 1.606 Scts (+10% y-o-y), in line. MAGIC continued to deliver with 21% rental reversions at Festival Walk (retail) and high occupancy (99.4% overall portfolio occupancy). Outlook remains bright on the back of still healthy tenant sales and tailwind from weaker SGD. Maintain BUY, target price raised to S$1.12 (Prev S$ 1.04).

Midas Holdings' Sino-foreign joint venture company, Nanjing SR Puzhen Rail Transport Co (NPRT), has secured a RMB1.73 bn (S$374.7m) metro train contract with a consortium partner. The contract was awarded by Shanghai Rail Transit Line 13 Development Co for the Shanghai Metro Line 13 Phases 2 and 3, with delivery scheduled between 2016 and 2017.

Hi-Pis expected to report lower revenue in 4Q2014 as compared to 4Q2013, but higher revenue in 4Q2014 as compared to 3Q2014. It has previously guided higher revenue in 4Q2014 as compared to 4Q2013. The variance in 4Q2014 was mainly due to demand drop from certain customers and lower than forecasted yields on certain new products during the production ramp-up. Despite the lower revenue, the Group is profitable in 4Q2014 as previously guided.

Hiap Hoe is proposing a spin-off of its property business in Australia, which is held under Meteorite (Australia) Pte Ltd, a wholly-owned subsidiary of the Company, to be listed on the Catalist board of the Singapore Exchange Securities Trading Limited (the "SGX-ST").

In a year when the aviation industry faced strong headwinds, Changi Airport saw a milestone 54.1 million passengers for 2014, although growth was a modest 0.7% y-o-y, while flight movements dipped 0.7% to 341,390 take-offs and landings. Meanwhile, cargo crept up marginally by 0.3% to 1.84 million tonnes, as higher imports and exports managed to offset lower transhipment volumes, airport operator Changi Airport Group (CAG) said. For the month of December, Changi handled 5.09 million passengers, down marginally, while landings and take-offs slid 3.9% to 29,710. Cargo handled inched up 1.4% to 158,600 tonnes.

US stocks as earnings boosted consumer and materials shares. Corporate earnings dominated the day. Dow Chemical Co. shares gained after earnings topped estimates while Amazon.com Inc. shares rallied in late trading after sales and profit beat forecasts. Google shares fell in aftermarket trading after 4Q profit and sales missed estimates. Qualcomm Inc. shares tumbled after lowering its sales forecast for FY15. Alibaba Group Holding Ltd shares also tumbled after reporting 3Q revenue that missed forecast.

Source: DBS

CapLand China T (AU8U)Mapletree NAC Tr (RW0U)Midas (5EN)Hiap Hoe (5JK)

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