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Investors’ Corner
Investors' Corner | 08 January 2010
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By: Lai Wyai Kay
Articles (53) Profile

Tiong Woon Corp Hldg
Price – $0.64
Target – $0.73
Growth in the Singapore construction sector has started to decelerate, growing only 13% y-o-y in 3Q09. This downshift is expected to continue into 2010. The lack of sizeable projects in the Singapore oil and gas sector has resulted in a dip in crane utilisation rates across the industry. Tiong Woon’s FY10 revenue is expected to decline from FY09’s record level as a result of waning crane demand and as its fabrication and engineering division struggle with the lack of shipbuilding orders. Core net profit is also expected to ease, in line with the declining revenue and as its gross margin come under pressure amid the weakening environment. Our lowered earnings estimates is the main basis of our target price reduction. We apply a 10% discount to its mid-cycle multiple of 8x to reflect the deteriorating prospects of the company as its key markets show signs of weakness. Downgrade to NEUTRAL.
– CIMB-GK (4 Jan)
Boustead Singapore
Price – $0.79
Target – $1.00
Boustead Singapore kicked off 2010 with $68m energy-related contracts. The contracts involve provision of key process equipment for oil refineries, petrochemical plants and gas processing plants in Australia, Brazil, Saudi Arabia and the UK. Together with the $107m contract announced in December, Boustead’s current orderbook stands at >$500m. FYTD, the company has secured $273m of new orders, surpassing our $250m forecast. Our update with management suggests to us that the industrial property market could be at the cusp of a slow recovery, which could imply that Boustead can seal more contracts particularly in niche sectors such as aviation and high-tech manufacturing. In addition, we have also factored in an expected $26m gain (vs previous forecast of $13m) from the proposed sale of a building under construction and land at Ubi Ave 1 for a consideration of $200m. Upgrade to BUY.
– DBS Vickers (5 Jan)
CapitaMalls Asia
Price – $2.54
Target – $2.30
CapitaMalls Asia (CMA) operates a franchise with development and operational capabilities across five countries in Asia. Our price is based on an RNAV of $1.90/shr for CMA’s assets (both completed and under development). We also incorporate a $0.40/shr development premium derived from the value of a $3b potential future capex. Our valuation is aggressive, yet it still falls short of today’s share price. At current levels we view a “scarcity premium” argument as weak, given CMA is trading some 35% above RNAV. Listed REITs, CapitaMall Trust (CMT) and CapitaRetail China (CRCT), can replicate 65% of the RNAV make-up of CMA at a cheaper multiple: CMA (1.9x P/B); CRCT and CMT (1.2x P/B). With visible earnings, yield support and a wide valuations gap, we believe CMT and CRCT will outperform CMA over the next 12 months. Initiate with UNDERPERFORM.
– Merrill Lynch (5 Jan)
CitySpring Infrastructure Trust
Price – $0.595
Target – $0.68
The biggest news driver for CitySpring Infrastructure Trust in 2010 could very well be the release of details on the gas network conversion project. To recap, Singapore plans to convert the existing town gas network to natural gas, liberalizing the residential market. The conversion process, which may take five years, was intended to begin in 2010. The manager is currently in discussions with regulator, the Energy Market Authority. CitySpring is targeting a quarterly payout of 1.05 cents (flat q-o-q) for 2H10. This is equivalent to an annualized yield of 7.1% on the current price. While CitySpring has traded in a narrow band over the last few months, many other yield instruments, especially in the REIT space, have re-rated strongly. Several retail, hospitality and office REITs now trade at yields of sub-7%. CitySpring’s stable and defensible yield offers relative value, in our opinion. Maintain BUY.
– OCBC Investment (5 Jan)

Boustead Singapore  0.735 +0.005 +0.68%   
Business: A global infrastructure-related engineering services & geo-spatial technology firm. [FY18 Turnover] Real estate solutions (48.8%), geo-spatial technology (28.2%), energy-related engineering (23%).

Insight: Feb-19, 9M19 revenue surged 25% as contributions i... Read More
CapitaLand Mall Trust  2.620 +0.01 +0.38%   
Business: Co owns and invests in quality income-producing assets which are used, or predominantly used, for retail purposes primarily in Singapore.

Insight: Apr-19, 1Q19 gross revenue and NPI rose 10% and 11... Read More
Keppel Infrastructure Trust  0.525 +0.005 +0.96%   
Business: Co is the largest Singapore infrastructure-focused business trust, with a diversified portfolio of core infrastructure assets, spanning waste management, water and wastewater infrastructure, power generation, telecoms infrastructure.

Insight: Jul-19, 1H19 revenue jumped to $736.5m driven by t... Read More

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