Towards Financial Freedom
DBS Equity Research: Wired Daily 13 Nov 2015
3Q15 earnings of Rp200bn for Bumitama Agriwere ahead of expectations on annualised basis, as translation forex losses were capitalised. But underlying earnings ex translation forex losses were weaker than expected. FY15F/16F earnings adjusted +39%/-11%; TP lowered to S$0.86/share (based on DCF). Rating cut to HOLD on expectations of flattish earnings outlook due to anticipated impact of this year's dry weather on FY16F FFB yields.
Wilmar's 3Q15 core earnings of US$359m was slightly ahead. Continued strong crushing margin boosted Oilseeds & Grains pretax against weaker-than-expected Sugar and Palm & Lauric segments. Drop in China equity market resulted in US$61.8m mark-to-market losses in investment securities in 3Q15. FY15F earnings adjusted by -3%; DCF-based TP unchanged at S$3.70. BUY rating reiterated.
Croesus Retail Trust's 1Q16 DPU came in at 2.08 Scts (before adjustment for the impact of the rights issue) which was flat y-o-y. Underlying net property income in JPY terms rose 10.7% y-o-y to JPY1,232m on the back of (1) the One's Mall acquisition, and (2) increased contribution from Mallage Shobu post the tenant renewal exercise. Nevertheless, this was offset by higher shares on issue following the share placement to fund the purchase of One's Mall and impact of weaker JPY. We maintain our HOLD recommendation with a revised TP of S$0.86 (Prev S$0.92).
3Q15 operational performance for OUE Commercial REIT remains on track. Net property income and revenues rose steadily by 5.7% and 4.7% y-o-y respectively. Rental reversions remain healthy for its OUE Bayfront (+23.5% YTD) and Lippo Plaza (+10.7% YTD) but we expect it to moderate, given increased competition for space. We maintain our HOLD call with TP of S$0.67.
UOL's3Q15 results in line. Operating outlook remains challenging, but portfolio of fringe offices, niche positioning of retail portfolio are expected to weather the uncertainty well. Maintain BUY, TP S$8.47.
Vard Holdings reported higher-than-expected net loss of NOK486m in 3Q15 amid industry downturn and operational challenges. Steep provisions made for cost overruns on LPG carrier projects at the Brazilian yards; turnaround in Brazil seems to be much further out than estimated. Vard is looking at strategic review of business including potentially lower exposure to Brazil. Maintain FULLY VALUED with lower TP of S$0.27 (Prev S$0.38).
Overseas Education's 3Q15 results below expectations. 3Q total revenue eased 6% y-o-y to S$23.5m, attributed to the drop in student enrolment. Net profit fell 67% to $1.8m, hit by higher depreciation and finance costs incurred, partly offset by the absence of school lease rental after the move to the new campus. 9M15 profit formed 67% of our full year forecast. Maintain HOLD, TP cut to S$0.71 (Prev S$ 0.84), after imputing lower enrolment and higher costs.
3Q15 earnings of S$6m (-29% y-o-y) for Pan-United Corporation were below our estimate of S$8.7m. Revenue of S$209m (+7% y-o-y) was in line with our expectations, but lower than expected Basic Building Resources (BBR, or Ready Mixed Concrete RMC business) margins led to the earnings disappointment. We cut earnings FY15-17F by 12-15% after factoring lower margins. Maintain HOLD, TP lowered to S$0.61 (Prev S$0.68).
Strong 10M15 sales momentum for Yanlord Land Group continued in Nov; full-year sales may reach Rmb25-26bn. Management is looking to raise ASP further for upcoming new launches, and seeking to replenish land through JV. Maintain BUY, TP S$1.35.
We have a BUY recommendation on CapitaLand Mall Trust, with TP of S$2.05. We believe that expectations of weak reversions given retail headwinds have already been priced into the stock. In addition, the Trust's earnings will be further bolstered by the recent acquisition of Bedok Mall, which we estimate will be 1-2% DPU accretive for FY16-17F.
Civmecannounced the award of two new contracts to the combined value of around A$20m, marking their official entry into the defence sector while further developing their presence on the East Coast.
Silverlake Axis has secured contracts from two Vietnamese Banks to assist them in their IT transformation.
In property news, a 99-year leasehold, 0.84-hectare site next to Redhill MRT Station along Alexandra View drew 10 bids at a state tender, in line with what the market had earlier expected. The highest bid by Tang Skyline was S$376.9m or about S$850.81 psf ppr. This was on the lower end of consultants' earlier forecast of a winning bid in the range of S$800 psf ppr to S$1,050 psf ppr.
The residential leasing market remained in a soft patch in October, with rents and transaction volumes for both private homes and HDB flats still on the slide. Flash estimates from SRX Property show that rents of non-landed private residential units slipped 0.4% in October from the preceding month, while HDB rents slipped 0.5%. The declines were steeper than the 0.3% and 0.1% respective falls in September.
Source: DBS
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