DBS Equity Research: Wired Daily 30 April 2015

kiasutrader

Publish date: Thu, 30 Apr 2015, 04:05 PM

Soilbuild REIT - From strength to strength; maintain BUY, TP S$0.91

Soilbuild REIT (SBREIT) was the first S-REIT to conduct equity fund raising in 2015, raising S$90m at the top end of its indicative range of S$0.795-0.805. Demand appears strong, implied by the fairly tight 2.8% discount to volume weighted average price. Proceeds will be deployed to partly fund the acquisition of 72 Loyang Way (S$98.1m @ initial yield of 8.0%) which is expected to be marginally accretive to unitholders. Post-acquisition gearing is estimated to be c.35%. Following a strong set of 1Q15 results, SBREIT's outlook remains stable. Maintain BUY, TP S$0.91 (Prev S$ 0.92). TP is adjusted down due to higher unit issue than projected. We continue to like its attractive yields of 6.6-7.9%, with more upside coming from acquisitions when executed on in 2H15-2016.

OCBC's 1Q15 earnings came in at S$993m (+24% q-o-q; +12% y-o-y), above consensus/inline with ours. NIM however fell (-5bps q-o-q, -8bps y-o-y) mainly due to funding cost pressures. Loans were flat q-o-q but higher by 20% y-o-y (incorporation of OCBC-WHB). More updates to follow.

Ascendas India Trust's 4Q15 DPU up 7% y-o-y to 1.30 Scts, in line with expectations. We expect medium term uplift from recent development activities and acquisitions, and healthy rental reversions in Chennai near term. Maintain BUY, TP of S$0.96.

CDL Hospitality Trust's 1Q15 DPU fell 11% y-o-y to 2.44 Sct. This was in line with expectations. The weaker performance was attributed to lower NPI contribution from Singapore (-13%), New Zealand (-1%), Australia (-6%) and Maldives (-5%). This was partially offset by the maiden contribution from the two Japanese business hotels acquired in Dec14. CDREIT indicated in its outlook commentary that for the first 28 days of Apr15, RevPAR for its Singapore hotels were down 10% y-o-y. Going forward, while competition from new hotel supply (+5% y-o-y growth based on CDREIT's new guidance) is expected to remain intense, pressuring RevPAR, demand from the upcoming SEA Games in June may provide some temporary respite. With CDREIT's low gearing, it is in a position to pursue acquisitions to partially mitigate against any weakness in its current portfolio.

1Q15 revenue (S$48m) and NPI (S$39m) for YTL Starhill Global REIT were down 3% and 1% respectively. DPU rose 1.6% to 1.26Scts. Poor headline numbers was due to weaker contribution from overseas assets, largely on the back of adverse currency movements. Contribution from new acquisition should kick in from 2HCY15 onwards, and we expect DPU to grow by 3% and 10% respectively for FY15 and FY16. More updates post results briefing.

Pacific Century Regional Developments (PCRD), controlled by Hong Kong tycoon Li Ka-shing's younger son Richard Li, is veering closer to the delisting threshold on the Singapore Exchange (SGX) after months of steady share buybacks. Vehicles controlled by Mr Li held about 85.7% of the company as at Wednesday. Mr Richard Li, its executive chairman, also had 1.03%, which means that the stock's free float is down to about 13%.

Ying Li International Real Estate, on the other hand, has no intentions of delisting from Singapore so far, according to executive chairman Fang Ming, despite its peers in China trading at far richer valuations.

mm2 Asia has entered into a non-binding memorandum of understanding with Cathay Cineplexes Sdn Bhd (CCSB) for the acquisition of CCSB for RM40m. CCSB operates cinemas at two locations in Malaysia with a combined total of 30 screens:- 1) Cathay Cineplex Damansara, and 2) Cathay Cineplex City Square, Johor Bahru City Square. The proposed acquisition is in line with the Company's intention to diversify and expand into business opportunities in the value chain of film production. The Company believes this will complement its current and future businesses, strengthening its competitive advantage through the ownership of cinemas, as well as providing a source of recurring income to the Group.

IPS Securex Holdings has received a letter of intent (LOI) from a dealer for the supply of PepperBall Technologes brand of non-lethal countermeasure technology products worth US$ 54.75m to a government body in Southeast Asia over a period of two years commencing from the third quarter of 2015.

US stocks fell after data showed 1Q GDP barely grew and investors mulled over the timing for the first rate hike after the FED said part of the weakness was transitory. 1Q GDP grew just 0.2% y-o-y, against consensus expectations for 1%. Airline stocks fell amid a jump in oil prices as data showed a deceleration in the growth of U.S. crude stockpiles. The amount of crude oil in storage in the U.S. grew by 1.9mil barrels last week to 490.1mil barrels, this according to the US EIA. The increase was smaller than consensus expectations.

Source: DBS

OCBC Bank (O39)CapLand India T (CY6U)CDL HTrust (J85)Pacific Century (P15)Ying Li Intl (5DM)

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