Towards Financial Freedom

DBS Equity Research: Wired Daily 23 May 2016

kiasutrader
Publish date: Mon, 23 May 2016, 01:34 PM
kiasutrader
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Following Message

  • STI - 2700-2835 view unchanged, technical outlook for Asian currencies point to short-live respite for equities but be watchful of subsequent volatility
  • Global Logistic Properties - Trading at attractive levels
  • CapitaLand divests 50% interest in CapitaGreen to CCT for S$318.3m
  • SATS 4Q net profit slips 1.7% to S$50.7m
  • ARA turns substantial shareholder of Suntec REIT
  • NeraTel to sell payment unit for S$88m
  • Chasen issued profit warning



Market


STI - 2700-2835 view unchanged, technical outlook for Asian currencies point to short-live respite for equities but be watchful of subsequent volatility 


We keep our short-term view for the STI to range from 2700 to 2835 as rebound upside is capped by US rate hike concerns, June 23 BREXIT referendum, weak corporate earnings and a lacklustre economic outlook. The 2685 level is crucial. If the current correction continues beyond this level, the downtrend should extend further to 2600 before finding support. 


With the prospect of the next US rate hike at either the June or July FOMC meeting, investors should keep a close watch on Asian currencies given the close co-relation with equity markets. Technically, in the near-term, we see a respite for Asian equities as a regional currencies index (ADXY) finds near-term support against the USD. Beyond this, we are watchful of subsequent weakness in regional currencies, particularly the RMB that can spell more volatility for equities.



Stocks to Watch

Global Logistic Properties (GLP SP): BUY

Last Traded Price: S$1.85; Price Target: S$2.47 (Upside 34.1%) (Prev S$2.47)


Trading at attractive levels

• Core FY16 earnings increased 20% y-o-y, in line

• Management turns cautious and lowers development targets

• Looking to US and potentially Europe to grow AUM



News

CapitaLand divests 50% interest in CapitaGreen to CCT for S$318.3m

CapitaLand proposed to divest its 50% interest in CapitaGreen, a Grade A office tower, to CapitaLand Commercial Trust (CCT). The move is in line with CapitaLand's capital recycling strategy. Currently, CapitaLand Group owns 50% interest in CapitaGreen, CCT 40% and Mitsubishi Estate Asia Pte Ltd (MEA) 10%. The proposed divestment is based on CapitaGreen's agreed market value of S$1.6bn (S$2,276 psf), which is the average of two independent valuations. CapitaLand will be realising a gain of approximately S$196m, comprising S$8.5m from the divestment as well as cumulative revaluation gain of approximately S$187.5m recognised between 2013 and 2015.


SATS 4Q net profit slips 1.7% to S$50.7m

SATS announced this morning that net profit for 4Q16 slipped 1.7% to S$50.7m, as food solutions revenue declined. A final dividend of 10 Scts was declared, up from 9 Scts last year. SATS's profit for FY16 rose 12.7% to S$220.6m. Separately, SATS said that its Chairman of 13 years, Edmund Cheng Wai Ming, will step down in July.



Chasen issued profit warning

Chasen is expected to report a loss for 4Q16 and FY16 due to a one-off higher than usual provision for doubtful debts.



ARA turns substantial shareholder of Suntec REIT

ARA Asset Management, in the accumulation of units in Suntec REIT, has turned substantial shareholder with an interest of 5.02% as at 19 May 2016. As such, the deemed substantial stake held in Suntec REIT by the Tecity group of companies (which includes the stake held by The Straits Trading subsidiaries) has further increased to approximately 10.3%.



NeraTel to sell payment unit for S$88m

Nera Telecommunications has agreed to sell its payment solutions unit to French payments giant Ingenico Group for about S$88m. It said it expects net proceeds of about S$71.5m on the disposal.

Source: DBS
SATS (S58)Chasen (5NV)NeraTel (N01)
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