DBS Equity Research: Wired Daily 28 April 2015

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Publish date: Tue, 28 Apr 2015, 04:10 PM

Frasers Centerpoint Limited - Recycling capital through sale of prime property in Australia for AUD$224m. Maintain BUY, TP raised to S$2.36

Sembcorp Marine - 1Q15 results below on lower ship repair revenue and forex loss. Maintain HOLD, TP revised to S$2.77

Frasers Centerpoint Limited(FCL) has announced the proposed sale of 357 Collins Street in Melbourne for a consideration of AUD$224m to its managed REIT, Frasers Commercial Trust (FCOT). This is a prime property located in downtown Melbourne ( 95.5% occupancy rate) and was part of the c.A$1.2bn commercial portfolio when the group acquired Australand. The purchase price approximates the book value of the property as of Sept'14. Post sale, FCL will derive recurring income through higher management fees as Manager of FCOT.

FCL will also acquire the development rights and 80-year remaining leasehold interest for a 16k sqm GFA site which is zoned for hotel development at China Square Central (CSC). The plan is for an integrated development at the site with a new c.300 hotel wing. Maintain BUY, TP raised to S$2.36 (Prev S$ 2.02).

Sembcorp Marinereported 1Q15 results below on lower ship repair revenue and forex loss. We have trimmed FY15/16 PATMI by c.4% each. YTD order flow has been slow, with only S$56m of firm contracts, representing a mere 3% of our full year assumption of S$2bn. Potential deferments could pose further downside risk to earnings forecast. Maintain HOLD, TP revised to S$2.77 (Prev S$ 2.89).

1Q15 net profit for Raffles Medical marginally below expectations on higher staff costs. RMG has also announced new medical centre at Shaw Centre, with operations commencing in Jun FY15. Expansion plans are in progress, but outlook muted in the near term. Maintain HOLD, TP S$3.96.

Yangzijiang Shipbuildingsaid it plans to delist its Taiwan Depository Receipts (TDRs) on the Taiwan Stock Exchange (TSE), partly due to low liquidity.

Cordlife Group announced that China Cord Blood Corporation (CCBC) had received a non-binding proposal letter from Golden Meditech to acquire all of the outstanding shares of CCBC not already owned for US$6.40 per ordinary share in cash. Golden Meditech also intends to acquire all of the 7% senior convertible notes of CCBC. Cordlife Group has 9.13% stake in CCBC. It is also the holder of a 7% senior convertible note due 3 October 2017 issued by CCBC.

CSE Global announced that its Americas region has secured new contracts worth US$33.8m (approximately S$45.3m) in 1Q 2015. These new orders involve projects ranging from instrumentation and electrical design, fabrication and construction, engineering and integration of subsea control systems and equipments, chemical injection control systems, flow measurement and control systems, as well as the provision of customised enterprise systems. These projects are expected to contribute positively to CSE's financial performance for FY15 and beyond.

QAF, known for its Gardenia and Bonjour brands of bread, said that it was evaluating options to restructure Gardenia Bakeries (KL) Sdn Bhd (GBKL), a 70%-owned Malaysian subsidiary that contributes a significant amount of revenue and profit. The move appears to have been sparked by a Malaysian government agency asking about its compliance with a former national policy on foreign equity ownership.

US stocks fell as declines in biotechnology companies overshadowed a rally in commodities stocks. The 2-day FOMC meeting starts tonight. Investors await more hints on the timing of interest-rate increases. None of the 43 economists in a Bloomberg poll expects the FED to lift interest rates this week. Of the S&P 500 members that have already released results this season, 77% beat profit projections and 49% topped sales estimates, this according to Bloomberg. Apple shares edged higher in after-hours trade after the company forecast sales in the current period that will exceed analysts' estimates.

Source: DBS

Frasers Property (TQ5)Sembcorp Marine (S51)YZJ Shipbldg CNY (SO7)Cordlife (P8A)CSE Global (544)QAF (Q01)

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