DBS Equity Research: Wired Daily 22 Apr 2016

kiasutrader

Publish date: Fri, 22 Apr 2016, 10:35 AM

STI - 2965 cap ahead of next week's FOMC meeting

Frasers Commercial Trust - 2Q16 results in line; offers attractive yield of 7.6%. Maintain BUY, TP revised down to S$1.47

In Singapore, the blue chips STI stayed below the 2965 level thus far this week. We keep this level as the near-term cap ahead of the FOMC meeting next week. While the FED is expected to keep rates unchanged, investors will be listening closely to the FED comments, seeking hints as to when the next hike will be and how fast rates will rise. This will affect the direction of the USDSGD and funds flow into or away from this region. Our technical view is that the decline in the USDSGD from a high of 1.444 since January looks rather matured and should bottom out at or slightly above 1.32. The week-to-date low for the USDSGD was 1.335.

Frasers Commercial Trust's (FCOT) 2Q16 DPU improved due to contribution from 357 Collins St, in line with our forecast.

Only 6.4% of gross rental income will be due in 2H16, thanks to proactive lease management. FY17 will be a crucial year as 22% of top line will expire. We revised TP down to S$1.47 (Prev S$1.53) as a result of lower earnings forecasts for Alexandra Technopark and Central Park. Maintain BUY call. FCOT offers an attractive yield of >7.6%, which is compelling given limited downside risks, in our view.

1Q16 results for Suntec REIT in line. Distributable income came in 7.2% y-o-y to S$60.0m (boosted by S$4m in capital distribution), translating into a DPU of 2.371 Scts (24% of full-year forecast). Potential downside to rental reversions at phase 1 of Suntec City Mall. Contribution from 177 Pacific highway is expected to drive medium-term earnings. Maintain HOLD, TP S$1.58.

IHH Healthcare (IHH) announced that its 60%-owned subsidiary, Acibadem has signed definitive agreements to acquire a Bulgarian-based hospital, Tokuda Hospital Sofia and to merge with City Clinic. Total transaction cost at EUR76m (MYR333m). Post the M&A, Acibadem will own four hospitals with 750 beds and four medical centres. This will bring Acibadem's total number of beds to more than 3,500 across 22 hospitals. This is in line with Acibadem's plans to expand its operations into Central Eastern Europe and the Balkan Region. We do not envisage any significant impact in the near term. We maintain our HOLD recommendation and TP of RM6.33/S$2.09.

Wee Hur wins a S$82.2m contract to build a five-storey warehouse for Mapletree Logistics Trust. Construction works to commence in May 2016 and is expected to end in September 2017. This newly-acquired contract strengthens the Group's order book to an estimated S$345.9m. Revenue from new project will flow in from FY2016 to FY2017.

Longcheer Holdings announced that it has been approached by interested parties in connection with a potential acquisition of an associated company within the group. Discussions are preliminary.

US stocks fell amid disappointing results from companies such as Alphabet Inc., Microsoft Corp. and Visa Inc. The ECB refrained from further easing at its policy meeting, as policy makers struggle to convince investors that recent unprecedented stimulus will jump start growth in the region after years of failing to do so. Oil and commodity prices fell as the USD rebounded.

Source: DBS

Suntec Reit (T82U)IHH (Q0F)Wee Hur (E3B)

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