DBS Equity Research: Wired Daily 21 Jan 2016

kiasutrader

Publish date: Fri, 22 Jan 2016, 10:48 AM

SGX - 2Q16 results for SGX in line; 5cts DPS declared for the quarter. Upgrade to BUY on valuation basis; TP remains at S$7.80.

2Q16 results for SGX in line. 5cts DPS was declared for the quarter. 1H earnings account for 49% of our FY16 earnings. Securities revenue down 10%; continued growth from Derivatives. Though outlook for both Securities and Derivatives market remains challenging, we upgrade to BUY on valuation basis. TP remains at S$7.80. On a forward PE and P/B basis, SGX is currently trading at below -2SD level, which is very attractive. Relative to peers like Bursa Malaysia and HKEX, SGX is also trading at lower PE multiples. Dividend yield is attractive at 4.7% for FY16F.

1Q16 DPU of 2.51 Scts (+2% y-o-y) for Frasers Commercial Trust in line. Results were boosted by full quarter contribution from the acquisition of 357 Collins Street in Melbourne. Supply headwinds were mitigated by underrented properties. Maintain BUY, TP S$1.53. At current levels, FCOT trades at a 22% discount to NAV per share of S$1.53 with a FY16F yield of 8.3%.

Otto Marine has entered into an agreement with a worldrenowned port operator, to become the latter's preferred offshore and marine service provider. The agreement created potential to further lift the utilization of the Group's fleet and the revenue.

Rex International Holdinghas been offered participation in five exploration & production licences in the 2015 Norwegian Licensing Round. The licences are located within Lime Norway's core areas close to infrastructure with reputed operators and participating interest ranging from 20 to 50%.

SATS' aviation operating data for 3Q and 9M FY2015-16. Operating metrics improved across the board, for the third quarter of FY2015-16. The increases in unit services, flights handled, and passengers handled were driven by growth in both full-service and low cost carriers, as well as the full effect of the resumption of services for all Jetstar-branded airlines. For the nine months ended 31 December 2015, all operating metrics also recorded broad-based growth.

A consortium consisting of Charisma Energy, Sunseap International and Indian partner, Rising Sun Energy is awarded the tender to develop a 140 MegaWatt (MW) solar photovoltaic farm in the state of Rajasthan, India. The commercial operation date of this project is expected to be in 2nd quarter of 2017.

Singapore Tourism Board released the latest November 2015 statistics which indicates that the Singapore hospitality market continues to struggle on the back of a 6-7% increase in new room supply. Overall RevPAR for Nov15 dropped 5.1% y-o-y to S$207, taking 11M15 industry RevPAR to S$210 (-5.2% y-o-y). The main driver for the decline in RevPAR was the 4% drop in ADR to S$243 while occupancy only saw a 0.7% dip to 85.3%. Weakness was seen across all sub-segments (Economy: -4.9%, Mid-Tier: -6.0%, Upscale: -4.6%) with the exception of Luxury (+1.8%). The weak hotel performance was in spite of tourist arrivals jumping 4.3% yo-y to 1.2m. The bounce in November was largely attributed to visitors from China (+20% y-o-y) and India (+21.5%), partially offset by declines from Indonesia (-8.7%). 11M15 tourist arrivals up 0.4% y-o-y following a recovery in visitors since May. The weakness in RevPAR and recovery in tourist arrivals was in line with our expectations, and the Singapore hospitality market is on track to hit our estimate of a 5% fall in RevPAR and total visitor arrivals of c.15m in 2015. Going forward into 2016, we expect the recovery in China arrivals to continue and combined with the boost from an increased

number of large conferences, should translate to a 3% bounce in overall tourist arrivals. Nevertheless, on the back of 6-7% increase in new room supply, we expect overall RevPAR to dip 4%.

Foreigners including the Chinese have cut their purchases of Singapore private homes to the lowest since the global financial crisis, leaving the market to depend on local buyers at a time when domestic interest rates are on the rise. Foreigners, including permanent residents, bought 499 homes in the fourth quarter of 2015, according to data compiled by consultancy DTZ. That accounted for about 16% of total transactions versus more than 30% in the third quarter of 2011 just before an additional stamp duty was imposed to cool the market.

US stocks fell, led by the energy sector as oil price continued its decline and concerns about the health of the global economy remained much in focus. Still, major indices bounced off session lows with the Dow paring a more than 500pt decline to end about 250pts down at 15766, after approaching last August's low of 15370.

Source: DBS

SGX (S68)Rex Intl (5WH)SATS (S58)Charisma Energy (5QT)

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