DBS Equity Research: Wired Daily 27 Oct 2015

kiasutrader

Publish date: Tue, 27 Oct 2015, 11:25 AM

Hutchison Port Holdings Trust - Margins improve on higher ASPs. Maintain BUY for its prospective dividend yield of 7.9%.

3Q15 net profit for Hutchison Port Holdings Trust rose 7.3% y-o-y to HK$948.5m, mainly on higher tariffs and productivity improvements. Earnings are above our expectations, with better ASPs helping to improve margins.

Cost efficiencies and tariff increases are expected to drive revenue improvement beyond FY15. Maintain BUY for its prospective dividend yield of 7.9%. TP of US$0.63 (Prev US$0.62) is based on DCF.

Ezra reported higher than expected losses in 4QFY15 as both subsea division and OSV division disappoint. FY16/17 could continue to post losses, but this is more than priced in at current levels. Balance sheet has improved; Ezra should be able to tide over the crisis without further cash calls in FY16. Maintain BUY with TP of S$0.30.

3Q15 results for Raffles Medical came in below expectations. Net profit grew by a muted 1.2%, arising from higher operating expenses such as inventories used (+9.1%), contracted services (+9.3%), depreciation (+28.5%) and lease expenses (+32.3%). Foreign patient volume also dipped due to the softer macroeconomic environment, but this was mitigated by higher revenue intensities and local patient base. We maintain our HOLD recommendation for Raffles Medical with a new sum-of-parts based TP of S$4.34, taking into account the potential value of its Shanghai greenfield JV hospital. At current valuations of 35.7x/ 33.0x FY15F/16F PE, the counter has reflected its growth potential, in our view. We project growth over the next few years to be a tad slower than its historical average.

CapitaLand Retail China Trust (CRCT) has delivered another strong set of results with 3Q15 DPU rising 12.3% y-o-y to 2.64 Scts. In addition, during 3Q15, CRCT's malls continue to deliver healthy tenants sales (+12.7%) and positive rental reversions (+8.9%). CRCT has corrected c.14% since end-Jun-15 on the back of Chinese growth fears. We believe this is an overreaction. Trading at 0.9x book and offering an attractive FY15-17F DPU of 7.0-7.4% yield, we maintain our BUY recommendation and S$1.69 TP.

Frasers Commercial Trust (FCOT) reported 4Q15 DPU of 2.52Scts, up 14% y-o-y; in line. Contribution from 357 Collins Street is expected to drive earnings in FY16. At current price, FCOT offers investors a dividend yield of 7.1%. Maintain BUY, TP S$1.53 (Prev S$1.51).

Ascendas India Trust delivered another strong set of results with 2Q16 DPU up 8% y-o-y to 1.37 Scts. Though its long term outlook remains bright, we believe this has largely been priced in, given the trust trades at +1SD P/BV of 1.4x. We maintain our HOLD recommendation and S$0.90 TP.

The National Environment Agency (NEA) has signed a Wasteto-Energy Services Agreement (WESA) with a consortium comprising Hyflux and Mitsubishi Heavy Industries. The consortium will develop Singapore's sixth waste-to-energy (WTE) plant and will provide waste-to-energy services to NEA over a 25-year period from 2019 to 2044. The plant will be Singapore's largest. It will have a capacity to incinerate 3,600 tonnes of waste and generate 120MW of electricity per day. It will also be the most land-efficient, sitting on 4.8 hectares of land. Construction work is expected to commence in early 2016 and end in 2019.

ARA Asset Management announced that its subsidiary, ARA Korea, has successfully launched a new privately-held REIT. Named ARA ShinYoung Residential Development Real Estate Investment Company, it has a mandate to invest in residential assets in South Korea.

Pteris Global has secured contracts worth an aggregate of approximately S$64.2m from customers in the China and the USA. These contracts will be progressively delivered in FY2016. Together, the Group's year-to-date contract wins in FY2015 amounted to approximately S$110.1m.

Singapore's manufacturing output continued to contract for the eighth straight month in September. Industrial production dropped 4.8% y-o-y last month, below market's expectation, although the pace of decline eased from August's 7.1% fall. Apart from the biomedical manufacturing and chemicals clusters, all clusters posted a drop in production in September. In fact, excluding the volatile biomedical manufacturing cluster - which pulled the overall year-on-year figure up with a large 26.3% expansion - factory output would have fallen a greater 10.2%. The electronics cluster, which retains the largest weight of 33.4% on the index, stayed in contraction mode in September. Production shrank 8.6%, dragged down by a 12% decline in semiconductor output.

In US, Dow edged lower as energy shares dropped with oil prices and Apple retreated a day before its quarterly results. Investors were cautious ahead of the Federal Reserve's two day policy meeting, which begins on Tuesday. The market is looking for clues on the outlook for when the Fed may begin raising interest rates.

Source: DBS

HPH Trust USD (NS8U)Ezra (5DN)CapLand China T (AU8U)CapLand India T (CY6U)Hyflux (600)

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