DBS Equity Research: Wired Daily 11 June 2015

kiasutrader

Publish date: Fri, 12 Jun 2015, 10:56 AM

Plantation Companies - Continued yield recovery in May15. Top picks: Bumitama Agri and Wilmar

End-May15 palm oil stockpile in Malaysia ticked up to 2.24m MT - slightly ahead of our estimates The stronger-thanexpected 37% m-o-m jump in exports to 1.61m MT was overwhelmed by 7% rise in output to 1.81m MT. Jun15 output forecast is expected to ease to 1.55m MT, exports to ease to 1.49m MT. Lower forecast Jun15 inventory should support prices in the near-term. We continue to recommend Bumitama Agri and Wilmaras our top picks for the sector. They should outperform peers and the market, given earnings growth despite lower CPO price expectations, thanks to strong output growth and favourable processing margins.

Petra Foods has announced that it is ceasing its distribution business in Singapore and will novate its agency brands portfolio to Auric Pacific Group Limited. However, Petra will continue to focus on its objective of growing its own brands, but this will be done through appointing Auric Pacific as the distributor in Singapore. Singapore is a relatively small market. And we understand that its distribution business has been unprofitable, due to the relatively small scale. The net impact on the bottomline should be marginally, given the larger contribution from Indonesia.

iFAST Corporation had entered into an agreement to acquire the entire share capital of Winfield Securities Limited. The total purchase consideration is estimated to be approximately HK$14.7m, to be financed through IPO proceeds. The proposed acquisition is subject to approval from the Securities & Futures Commission of Hong Kong. Winfield Securities is principally engaged in securities trading and brokerage in Hong Kong. It is licensed to carry Type 1 (Dealing in Securities) regulated activity under the Securities and Futures Ordinance (CAP571 of the Laws of Hong Kong) and is a Stock Exchange of Hong Kong Limited Participant and Hong Kong Securities Clearing Company (HKSCC) Participant. The proposed acquisition will allow iFAST to conduct securities brokerage services in Hong Kong and expand the range of investment products available on its investment platform.

Starburst Holdings has received letters of intent (LOI) with a total contract value of approximately S$16.1m for firearm shooting range projects in the Middle East. Under the LOI, Starburst will design, supply and install ballistic protection works for firearm shooting training facilities in the Middle East. Work on these projects is scheduled to commence in the third quarter of 2015 with completion expected by December 2016. The award of these contracts will be a much needed boost to Starburst as YTD, contract win has been slow, both in Middle East and Southeast Asia.

Otto Marine had entered into a long term bareboat charter contract worth US$27m to charter one unit of 238-men Work Maintenance Vessel to an offshore vessels operator in the South East Asia region. The vessel is expected to be delivered for charter in 3Q2015.

Global Logistic Properties said it has not entered into any binding contracts, after reports that it was in early talks to buy more than 200 warehouses, valued at about US$4.5 bn, in the United States.

OUEhas entered into an agreement with OUE Commercial Real Estate Investment Trust (OUE C-REIT) for the sale and transfer of its shareholding interest in OUB Centre Limited (OUBC). OUBC is the registered owner of One Raffles Place and owns 81.54% of the beneficial interest in One Raffles Place. The sale consideration is between S$1.0 to S$1.1 bn. One Raffles Place is a prominent, integrated commercial and retail development comprising two Grade-A office buildings, One Raffles Place Tower 1 and Tower 2, as well as the recently refurbished One Raffles Place Shopping Mall. The injection of its shareholding interest in One Raffles Place to OUE C-REIT will enable the Company to unlock capital while continuing to enjoy rental income and potential capital value upside through its significant unitholding interest in OUE CREIT.

Tigerair operating statistics May 2015. For the month of May, the airline operations in Singapore recorded 8.7% y-o-y decline in traffic to 804.5m revenue passenger-kilometres (RPK), while capacity decreased by 6.7% to 969m available seat-kilometres (ASK). Consequently, y-o-y passenger load factor decreased by 1.8 percentage points to 83%. The number of passengers carried fell by 8.7% y-o-y to about 432,000. For the 12 months, passenger load factor was 3.5 percentage points higher at 81.9%. The number of passengers carried declined by 2.9% to 5.1m. US and European stocks rebounded from recent selloffs amid optimism Greece will reach a deal with creditors. Gains in oil and gold prices lifted commodities producers. Optimism that the standoff over Greece will reach a favorable resolution got a boost after the European Central Bank raised the level of emergency cash available to the country's banks by €2.3bil, this according to Bloomberg. German Chancellor Angela Merkel told reporters Wednesday her goal is "to keep Greece in the euro area". Meanwhile, US crude stockpiles capped their longest stretch of weekly declines since August, damping concern over the global supply glut.

Source: DBS

Bumitama Agri (P8Z)Wilmar Intl (F34)Delfi (P34)IFAST (AIY)OUE Com Reit (TS0U)

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