DBS Equity Research: Wired Daily 1 Apr 2015

kiasutrader

Publish date: Wed, 01 Apr 2015, 02:17 PM

Croesus Retail Trust - Executing to plan; maintain BUY, TP S$1.00

Proposed standardisation of taxi fares milder than expected

Our analysts visited five malls in Croesus Retail Trust's portfolio in Tokyo, Japan. They were (a) One's Mall, acquired in September 2014, (b) Aeon Town Moriya, (c) Croesus Tachikawa (formerly NIS Wave 1), (d) Luz Omori, and (e) Mallage Shobu. The highlight of the visit was the Grand Renewal opening at Mallage Shobu, where leases amounting to c.25% of the Trust's by gross rental income was due for renewal. Looking ahead, sales growth at Mallage Shobu will be a key growth driver for the Trust. Maintain BUY, TP S$1.00. We like CRT for its exposure to the Japanese retail market. At current prices, CRT offers investors 8.2%-8.3% dividend yield, and 15% total return.

The Land Transport Authority (LTA) and Public Transport Council have announced that they will standardise parts of the taxi structure. According to the announcement, this is to prevent taxi fares from becoming even more complex for commuters in the future. The proposed requirements are expected to be implemented in 2H2015. The authorities are proposing a standardisation of all the fare components - unit fares, surcharges, booking fees and additional passenger fees, except for the flag down rates. Fares remain unregulated, and do not require PTC approval for changes. The proposed changes are not expected to have a significant impact on taxi operations. This is also milder than earlier expectations of full harmonisation of fares (ie across all taxi operators) and the purported removal of peak hour surcharges.

Mapletree Logistics Trustannounced that an agreement has been entered into with Nippon Express for an asset enhancement initiative (AEI) at Moriya Centre in Ibaraki, Japan. The planned AEI, to be undertaken by MLT at an estimated development cost of JPY1,409 million (approximately S$16.2m), is to cater for the business growth requirements of Nippon Express. The AEI works are scheduled to commence in April 2015 and complete by March 2016. Upon completion, Nippon Express will lease the new warehouse space with an annual rental escalation till December 2021. The AEI will be funded by debt. Following the completion of this AEI, MLT's aggregate leverage ratio will increase to approximately 35.0%. Returns for this is expected to be accretive albeit impact marginal for MLT at <1% impact to DPU given the small capex obligation. However, we see this as a proactive demonstration from management team in optimizing portfolio returns through executing on such "low-hanging" fruits available to the trust. HOLD call maintained, TP S$1.28.

COSCO Corporation has agreed, following the request from a ship owner, to reschedule the delivery dates of two jackup drilling rigs. The contracts for the drilling rigs were announced by the Company on 14 November 2013. The delivery dates for the drilling rigs will now take place in December 2016 and June 2017 respectively, nine months after their original delivery dates.

Global Logistic Properties has leased 190,000 sqm (2 million sq ft) to JD.com, one of the largest e-commerce companies in China. JD.com will utilize the facilities to optimize and expand its distribution network to meet increasing ecommerce demand across China. JD.com is one of GLP's largest customers by leased area.

ZICO Holdings proposed to acquire the entire equity interest of B.A.C.S. Private Limited for approximately S$8.6m, to be satisfied wholly by S$5.06m in cash and S$3.6m by way of the allotment and issue of 7.5m new shares. The cash consideration will be satisfied wholly using the proceeds from the initial public offering of the Company.

Standard & Poor's Ratings Services lowered its corporate credit rating on Yanlord Land Group to 'B+' from 'BB-'. The outlook is stable. Standard & Poor's also lowered the issue rating on the company's outstanding senior unsecured notes to 'B+' from 'BB-'. At the same time, it affirmed 'cnBB' longterm Greater China regional scale ratings on Yanlord and its notes. Standard & Poor's lowered its rating on Yanlord to reflect its expectation that the company's leverage and interest coverage are unlikely to materially improve in the next 12 months. It also expects Yanlord's margins to continue weakening over the next 12 months.

Matex International plans to buy Blackgold Holdings HongKong in a S$475m reverse takeover. If successful,

Metax will end up owning four underground thermal coal mines in Chongqing, China, which have a combined ore reserves (proved and probable) of 100.7 million tonnes.

China Kunda Technology Holdings proposed to place 57.8m new shares at an issue price of S$0.0106 per Placement Share. The Issue Price is equivalent to the last volume weighted average price. Net proceeds will be used for expansion in the Group's business.

In a move to enhance the way private home prices here are tracked, the Urban Redevelopment Authority (URA) said it has revised its index methodology and expanded its data coverage to capture all private home transactions. URA's revised method is able to distill fine differences across property units to allow like-for-like comparisons.

U.S. stocks declined amid a retreat among health-care and industrial companies. Alcoa Inc. unofficially kicks off the 1Q earnings season when it reports results on April 8. According to Bloomberg, analysts estimate first-quarter profits for S&P 500 companies will decline for the first time since 2009.

Source: DBS

COSCO SHP SG (F83)ZICO Hldgs (40W)Matex Intl (M15)ChinaKundaTech (GU5)Yanlord Land (Z25)

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