DBS Equity Research: Wired Daily 5 Feb 2016

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Publish date: Fri, 05 Feb 2016, 05:18 PM

USD weakness underpin Asian equities as FED rate hike expectations fade away

ARA Asset Management - Strong end to FY2015. Attractive valuations, maintain BUY, TP: S$1.57

The USD weakened against major currencies as the expectation for FED rate hikes this year back paddled. Currently, consensus thinks the FED may not even hike rates this year, which is a drastic change from 3-4 rate hikes at the end of last year. The USDSGD fell below 1.40 (from 1.428) just 3 sessions back. The Dollar's decline is short-term positive for Asian equities, Singapore included. The funds outflow from Asia could pause or temporarily reverse on as short positions cover and bargain hunting activities emerge given the current attractive valuation of the Singapore market. Our view for 2500 inflexion point builds up further. A CNY rally could be taking shape right before your eyes.

ARA Asset Management saw a strong end to FY2015 as asset under management (AUM) reaches a new record at S$29.8m. 4Q15 net profit of S$25.6m was up 41% y-o-y, on the back of 7% growth in topline to S$46.2m. The main driver for the improved performance was higher REIT fees due to better operating income at Fortune REIT and Suntec REIT post asset enhancement. For the full year, ARA achieved FY15F net profit of S$78.1m (-11% y-o-y) which is 5% above our estimates. The group announced a final dividend of 2.7 Scts/share, bringing total dividends for the year to 5 Scts, in line with last year. Attractive valuations, maintain BUY, TP: S$1.57.

Global Logistic Properties'(GLP) 9M16 net profit of US$189m is ahead of our forecasts. For 3Q16, GLP reported a 26% rise in net profit to S$83m (US$184m, +64% including revaluation gains). The improved performance was mainly driven by the completion and stabilisation of development projects in China, management fee income from GLP US income Partners 1; offsetting the syndication of 60% of GLP Brazil Income Partners II portfolio in Oct-14 and sale of properties to its J-REIT. We maintain BUY on GLP with TP of S$2.47, pegged at a wider 30% discount to RNAV to reflect ongoing uncertainties in the operating environment.

Religare Health Trust (RHT) reported 3Q16 DPU of 1.91 Scts, +5% y-o-y; in line. Distribution payout reduced to 95% (100% previously) from FY2017 onwards. RHT proposed to dispose 51% economic interest in FHTL (owns Gurgaon and Shalimar Bagh Clinical Establisments). Management plans to distribute all of the estimated net proceeds of S$203m to its unit holders via a special distribution of S$0.254. We maintain our HOLD recommendation with TP of S$0.97. While we are positive on RHT's expansion plans and exposure to the growing demand for healthcare services in India, we believe these attractive attributes have largely been priced in.

4Q15 DPU for CapitaLand Retail China Trustcame in at 2.59 Scts (+4.4% y-o-y), taking FY15 to 10.60 Scts (+7.9% y-o-y), in line with our expectations. The improved performance was driven by 5.2% increase in NPI to S$35.3m, underpinned mainly by a stronger RMB versus SGD. We expect positive rental reversions despite headwinds from slowing Chinese economy. Maintain BUY, TP of S$1.69.

mm2 Asia acquires UnUsUaL Group for S$26m to become the biggest entertainment group in Singapore. This is a synergistic acquisition, which will further enhance mm2's position in Asia. Earnings for FY17F-18F adjusted up by 12%-13%. Maintain BUY, TP: S$1.05. We expect mm2 to grow at an EPS CAGR of 46% for FY15 to FY18F, underpinned by growth in local productions, expansion into the China market, and contribution from cinema operations and this newly acquired entertainment company, UnUsUal Group.

TSH Corporation is expected to report a net loss for FY2015 due mainly to fair value loss on its held for trading financial asset, loss from sale of property development projects, and lower revenue of the Consumer Electronic Products business.

SMJ International is expected to report a significantly lower FY15 net profit as compared to FY14.

Beng Kuang Marine expects to record a loss for 4Q2015 and FY2015. The loss is mainly attributable to the unforeseen main engine breakdown of one of the livestock vessels and an operating loss of a subsidiary in the Infrastructure Engineering Division.

Pteris Global has received a letter of acceptance from the Airport Authority Hong Kong (AAHK) for the supply and replacement of 75 units of aircraft loading bridges. This contract is scheduled to commence in February 2016 and is expected to be completed by 2018.

HDB resale prices fell 0.5% in January 2016, compared to the month before that. This marks the first decline in the monthly index in seven months, data released by SRX Property indicated. Year on year, HDB resale prices have fallen 1.3% from January 2015. Since the peak in April 2013, prices have fallen 11.1%. Resale volume fell slightly with some 1,286 HDB resale flats being sold in January. This is an 8.6% decrease from the 1,407 transacted units the month before.

Source: DBS

RHT HealthTrust (RF1U)CapLand China T (AU8U)HealthBank (40B)Beng Kuang (BEZ)

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