Towards Financial Freedom
DBS Equity Research: Wired Daily 11 Feb 2016
Today's Focus
Plantation Companies - CPO prices under review with upside bias. Top pick: Wilmar
Malaysian Jan16 palm oil output of 1.130m MT was in line with expectations. But stronger-than-expected net exports had lowered inventory faster. Malaysian palm oil stockpile is expected to remain range-bound throughout the year. Our analyst is reviewing his CY16F-17F CPO price estimates, currently RM2,340/MT for 16F and RM2,450/MT for 17F, with upside bias. We continue to prefer Wilmar as our pick for the sector.
Perennial Real Estate Holdings' 18-month FYE Dec-15 recorded a net profit of S$79m vs S$15m in 18-month FYE Dec-14. The increase was due to one-off items, mainly from fair value gains of S$116m and forex gains of S$6.4m. Singapore and China remain as its two largest markets. The execution of China projects is on track. The launch of TripleOne Somerset strata office sales is expected to catalyse stock. We have a BUY recommendation, with TP of S$1.32 pegged to a 40% discount to our RNAV estimate of S$2.20. The stock is currently trading at a 59% discount to RNAV, which in our view would have priced in most uncertainties regarding the group's ambitious plans to grow in China.
The acquisition of two malls in Japan gave a lift to distributions for Croesus Retail Trust in its second quarter. Distribution per unit (DPU) for the three months ended Dec 31, 2015, was 1.79 Singapore cents, up 5.3% from a restated 1.7 Singapore cents the previous year. Net property income for Q2 2016 climbed 14.1% to 1.37 bn yen on the back of a 24.7% expansion in gross revenue to 2.43 bn yen from the previous year.
Frasers Property Australia, the Australian division of Frasers Centrepoint Limited, has acquired a site located half way between Brisbane and the Gold Coast. The 135 hectare site, with an end value of $270m, is expected to provide for 1,350 detached housing lots. The Bahrs Scrub project is set to launch to the public in Spring 2016.
KS Energy is expected to report a net loss for 4Q15 and a significant decline in the net result for FY15 compared to the previous year, on the back of challenging operating environment and weak market demand.
The deadline for a proposed takeover of Biosensors International Group has been extended to April 10 so that shareholder approval can be obtained. The private equity arm of Citic Group Corp, which is a substantial shareholder of Biosensors, is offering to buy up all of Biosensors' shares that it does not own.
US equity indices gave up earlier session gains to end mixed as concerns about the economy outweighed comments by FED Chair Janet Yellen that financial turbulence could delay the pace of rate hikes but not halt or reverse it. Financial conditions have become less supportive of growth and further rate hikes will be gradual, Yellen said before the House Financial Services Committee. Consensus continues view the possibility that the FED may not even raise rates once this year. According to CME FedWatch, there is only a 19% chance that the FED funds rate will end the year at 0.75% (from the current 0.5%).
Plantation Companies - CPO prices under review with upside bias. Top pick: Wilmar
Malaysian Jan16 palm oil output of 1.130m MT was in line with expectations. But stronger-than-expected net exports had lowered inventory faster. Malaysian palm oil stockpile is expected to remain range-bound throughout the year. Our analyst is reviewing his CY16F-17F CPO price estimates, currently RM2,340/MT for 16F and RM2,450/MT for 17F, with upside bias. We continue to prefer Wilmar as our pick for the sector.
Perennial Real Estate Holdings' 18-month FYE Dec-15 recorded a net profit of S$79m vs S$15m in 18-month FYE Dec-14. The increase was due to one-off items, mainly from fair value gains of S$116m and forex gains of S$6.4m. Singapore and China remain as its two largest markets. The execution of China projects is on track. The launch of TripleOne Somerset strata office sales is expected to catalyse stock. We have a BUY recommendation, with TP of S$1.32 pegged to a 40% discount to our RNAV estimate of S$2.20. The stock is currently trading at a 59% discount to RNAV, which in our view would have priced in most uncertainties regarding the group's ambitious plans to grow in China.
The acquisition of two malls in Japan gave a lift to distributions for Croesus Retail Trust in its second quarter. Distribution per unit (DPU) for the three months ended Dec 31, 2015, was 1.79 Singapore cents, up 5.3% from a restated 1.7 Singapore cents the previous year. Net property income for Q2 2016 climbed 14.1% to 1.37 bn yen on the back of a 24.7% expansion in gross revenue to 2.43 bn yen from the previous year.
Frasers Property Australia, the Australian division of Frasers Centrepoint Limited, has acquired a site located half way between Brisbane and the Gold Coast. The 135 hectare site, with an end value of $270m, is expected to provide for 1,350 detached housing lots. The Bahrs Scrub project is set to launch to the public in Spring 2016.
KS Energy is expected to report a net loss for 4Q15 and a significant decline in the net result for FY15 compared to the previous year, on the back of challenging operating environment and weak market demand.
The deadline for a proposed takeover of Biosensors International Group has been extended to April 10 so that shareholder approval can be obtained. The private equity arm of Citic Group Corp, which is a substantial shareholder of Biosensors, is offering to buy up all of Biosensors' shares that it does not own.
US equity indices gave up earlier session gains to end mixed as concerns about the economy outweighed comments by FED Chair Janet Yellen that financial turbulence could delay the pace of rate hikes but not halt or reverse it. Financial conditions have become less supportive of growth and further rate hikes will be gradual, Yellen said before the House Financial Services Committee. Consensus continues view the possibility that the FED may not even raise rates once this year. According to CME FedWatch, there is only a 19% chance that the FED funds rate will end the year at 0.75% (from the current 0.5%).
Source: DBS
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