DBS Equity Reserch: Wired Daily 12 June 2015

kiasutrader

Publish date: Fri, 12 Jun 2015, 03:35 PM

Bumitama is our upstream pick. Maintain BUY, TP: S$1.26

Bumitama is our upstream pick. Aggressive expansion in FY05-FY13 has kept Bumitama's tree-age profile younger (5.5 years) relative to peers. This is forecast to deliver 14% CAGR in FFB output over the next 3 years. Bumitama is prepared for El Nino. The majority of its estates are located in Central Kalimantan, where rainfall patterns have been normal, unlike Sabah and North Sumatra. Its balance sheet can withstand downcycle. Net gearing ratio is forecast to settle at 63% by the end of this year and 55% next. Maintain BUY, TP: S$ 1.26.

Lippo Malls Indonesia Retail Trust (LMIR Trust) has received a Committed Letter of Offer for a term loan facility of up to an aggregate amount of S$260m. The Committed Offer is for a facility with a tenor of 54 months and subject to documentation. The proceeds from the Facility are intended to be used for (i) the refinancing of existing bonds of LMIR Trust and its subsidiaries (including the S$200 million Unsecured bond due ear l y Jul y 2015) and (ii) working capital and general funding purposes.

Moody's maintained its Ba3 rating on Yanlord Land Group with stable outlook, citing the developer's adjusted sales execution to meet mass-market demand, an improving land bank distribution, and good access to debt and capital markets.

Otto Marinehas entered into a long-term bareboat charter contract worth US$27m. The vessel is currently under construction, and will be delivered to an offshore vessel operator in the South East Asia region in 3Q2015.

Raffles Education Corp's75% subsidiary Oriental University City Holdings (HK) is undertaking a A$5.2m (S$5.4m) investment in Australian real estate developer Axiom Properties.

Oceanus Group has entered into a Memorandum of Understanding (MOU) with BioValence Sdn. Bhd. in relation to the setting up of a joint venture company based in China for the distribution of shrimp in the PRC.

Albedohas bought a majority stake in a Taiwanese aesthetic medicine group which would serve as a springboard for its expansion into China's fast-growing healthcare market. Albedo will own 51% stake in China iMyth for approximately $18.9m. The payment will comprise $12m in cash and 550m shares at an issue price of $0.0125 a share.

The 2H15 Government lands sales (GLS) program saw an expected cut again. Total number of residential units across 17 confirmed and reserved sites is 7,825 units, which is a further 11% cut from the total number of units offered in 1H15. Only 4 sites is offered in the confirmed list which can yield 2,130 units, the lowest number of sites since the 2009 during the GFC. Most of the sites on the confirmed list offer are in the Fringe and Out of Central region. There is no site for hotel development. Within the residential space, the further cut in sites is possibly a sign that the authorities expect demand for sites to remain selective and lukewarm to land-banking given the slowdown in the residential market. The lack of new hotel site further reinforces our view of the current high supply completion schedule over 2015-2017 of 5% CAGR, or about 3,000 new rooms/annum, is likely to keep a dampener on room rates and hoteliers performance.

US stocks ended modestly higher as investors looked at an increase in May retail sales (+1.2% m-o-m) even as the IMF walked out of Greece's bailout talks after it accused Greece of failing to compromise over labour market and pension reforms. US 10-yr bond yield eased while crude oil rebounded.

Source: DBS

Bumitama Agri (P8Z)Lippo Malls Tr (D5IU)Yanlord Land (Z25)Raffles Edu (NR7)Oceanus (579)

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