DBS Equity Research: Wired Daily 22 Jan 2016

kiasutrader

Publish date: Fri, 22 Jan 2016, 10:49 AM

Keppel Corp - FY15 results in line; Sete Brasil provisions push O&M into the red

Keppel Corpreported S$404.8m net profit in 4Q15, bringing FY15 bottomline to S$1.5bn, largely in line with our expectations but 7% ahead of consensus. O&M posted net loss of S$61m in 4Q15, the first quarterly loss since Keppel O&M was established in 2001. Provisions for Sete Brasil projects were offset by stellar property earnings and revaluation gains. 22 Scts final DPS was declared, bringing total FY15 DPS to 34 Scts. Dividend payout ratio was cut from 50% to 40%. Keppel made provisions of S$230m for the Sete Brasil projects in 4Q15, after accessing the construction progress, payments received, receivables from Sete Brasil and payables to vendors etc. Outlook for O&M challenging, orderbook dwindled to S$9bn as of end-2015, from S$12.5bn a year ago given sluggish order wins of S$1.8bn in 2015. The worst is over for Infrastructure segment with the delivery of all EPC contracts. The logistic and data centre assets are among the bright spots. Management remains optimistic on the property markets in China and Vietnam. We are reviewing our forecasts and target price but likely to maintain our HOLD call on Keppel.

Frasers Centrepoint Trust(FCT) records high quarterly DPU at 2.87Scts, (+4.4% y-o-y), which was in line with our expectations. The Manager aims to maintain DPU despite disruptions by Northpoint's assets enhancement initiative (AEI). FCT's gearing is still below 30% and is one of the lowest in the S-REIT universe. Maintain BUY, TP S$2.04. FCT remains one of our top picks in the retail sector due to its assets' near-monopoly positioning in the north.

4Q15 results for Soilbuild Business Space REIT in line, boosted by acquisitions. 4Q15 DPU of 1.614 Scts (+1.8% yo-y) on top of a 17.1% rise in distributable income, is mainly due to the increased share base from the placement back in 1Q15. For FY15, SBREIT delivered a total DPU of 6.487 Scts (vs our estimate of 6.4 Scts). We have moderated our rental reversions (from 0% to -2%) and occupancy assumptions (99% revised down to 98%), to account for weaker operational outlook. TP is adjusted to S$0.84 (vs S$0.88 previously as a result). Maintain BUY.

CapitaLand Mall Trust (CMT) announced this morning that distribution per unit (DPU) for FY 2015 was 11.25 cents, a 3.8% increase y-o-y. DPU for 4Q 2015 was 2.88 cents, an increase of 0.7% over the 2.86 cents for 4Q 2014. The distribution yield is 5.83% based on current price. For FY 2015, tenants' sales per square foot and shopper traffic increased 5.3% and 4.9% respectively year-on-year. Portfolio occupancy remained high, registering 97.6% as at 31 Dec 15.

SATShas entered into a 50:50 JV with DFASS Singapore to provide inflight, retail and mail order sales of duty free products. The JV will be named DFASS SATS Pte Ltd. DFASS will transfer certain assets including merchandise inventories and point-of-sale devices while SATS will inject S$11.4m into the 50:50 JV. The JV allows SATS to extend its operations from flight catering and ground handling into travel retail. The investment of S$11.4m is small in our view, compared to >S$300m net cash it has on its balance sheet. No change to our earnings, recommendation and TP on this development since majority of SATS business still lies in ground handling and inflight catering.

Olam International announced the repurchase of a principal amount of US$10.3m of its US$500m principal amount of 6% convertible bonds due 2016. Following this, the aggregate outstanding principal amount of the bonds is US$44.3m.

Sunpower Group has secured a RMB95m build-operatetransfer (BOT) centralised steam project in Lianshui Economic Development Zone, Jiangsu province, China.

US stocks rose led by energy shares as oil price rose and the ECB signaled the potential for more stimulus measures amid uncertain prospects for global growth. ECB President Mario Draghi said that downside risks to the euro-area economy have increased since the year began and the central bank may need to bolster its stimulus programs as soon as March amid rising concerns about the recovery. The bank kept interest rates unchanged. Eyes will be on the FOMC meeting next week and the accompanying FED statement.

Source: DBS

Keppel Corp (BN4)Frasers Cpt Tr (J69U)CapLand IntCom T (C38U)SATS (S58)Olam Intl (O32)Sunpower (5GD)

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