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Investors’ Corner
Investors' Corner | 22 January 2010
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By: Lai Wyai Kay
Articles (53) Profile

Price – $4.28
Target – $4.79

CapitaLand announced the proposed acquisition of Orient Overseas Development Limited (OODL) for US$2.2b. This acquisition will raise CAPL’s China exposure from 28% to 36% of total assets, and on track to its stated target of 45%. OODL’s property portfolio comprises GFA of 1.48m sqm with about 87% in Greater Shanghai. Our checks with our China property team suggests the land values are generally at fair value. The value proposition is its vast experience in the serviced apartments and retail business. Also, the residential projects are generally well-located and time-to-market is shorter. We estimate this deal will add 20 cents to our RNAV. Incorporating CapitaMalls Asia’s (CMA) latest share price into our RNAV will add another 30 cents per share. There is likelihood of a small special dividend from the listing proceeds of CMA 
in FY09 results. Maintain 
– Macquarie Research (18 Jan)

Ascendas REIT
Price – $2.02
Target – $2.02

9MFY10 DPU of 10.37 cts came in at the higher end of our expectations, at 80% of our full-year forecast. DPU for the quarter (3.27cts) shrank 19.3% y-o-y due to new units issued during its public and private equity issuance in Aug 09. Net property income of $81.4m was up 10% y-o-y. AREIT’s portfolio occupancy was stable at 96.5% (-0.3% pt q-o-q) as at end-Dec 09, with multitenanted buildings standing at 93.1% (-0.2% pt) and sale-and-leaseback buildings remaining fully occupied. AREIT’s rental renewals remained mostly positive (2.2-17.1%) except for Light Industrial (-3.1%) albeit at moderated rates of decrease. We do not expect big falls in the top line in the last quarter as AREIT has only 2.1% of gross revenue due for renewal for the rest of the year. Our DPU estimates and DDM-based target are intact; we anticipate negative rental reversions in the 
next financial year. Maintain UNDERPERFORM.
– CIMB-GK (19 Jan)

CapitaCommercial Trust
Price – $1.17
Target – $1.39

According to media reports, CCT is in negotiations to divest Robinson Point (Grade B) to a US property fund manager for $200m ($1,500psf). The price is in line with book value of $195m but 18% ahead of our $1,275psf estimate. Assuming the sale proceeds are used to pare down debt, we estimate that gearing could drop 2ppt to 29%. We estimate the price implies a cap rate of 3.74% (assuming signing rents of $6psfppm), implying the sale is mildly accretive to CCT. This divestment is not a surprise as Robinson Point contributes about 3.7% of net property income and is not a core asset within CCT’s portfolio. We expect more office transactions in the next few months, providing additional positive catalysts for office REITs. Our DCF-price target is based on 2.6% risk free rate, 5% market risk premium, 1x beta, explicit DPU in 2009-13 and 2.5% terminal growth. Unchanged at BUY.
– UBS Investment (19 Jan)

Singapore Exchange
Price – $8.36
Target – $10.00

1H core profit $171m was 38% of FY10E ($452.5m) estimates (consensus $398m; 1Q: $94m). 2Q equities turnover fell 19% q-o-q to $85b on lower average daily turnover ($1.36b, 1Q: $1.73b), while derivatives fell 7% q-o-q to $31m due to weaker structured warrants turnover (2Q: $1.7b, 1Q: $2.7b, -37% q-o-q). 2Q reported net profit $71.8m included non-recurring CEO transition cost of $6.3m. In line with the new base dividend policy 15 cents from FY10 onwards (FY09: 14 cents). We forecast a 90% payout ratio for FY10. New CEO Magnus Bocker provided some broad views regarding the business outlook for SGX, identifying five broad businesses, namely securities, derivatives, issuer services, market data and member services. He also added that SGX will continue to retain the Asian Gateway strategy and will make the necessary technology investments to strengthen its competitive edge. BUY.
– Citigroup (19 Jan)

CapitaLand  3.510 -0.03 -0.85%   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More
Ascendas REIT  3.110 +0.04 +1.30%   
Business: Co invests in the real estate markets of Singapore and Australia.

Insight: Apr-19, FY19 gross revenue and NPI inched up 2.8% ... Read More
CapitaLand Commercial Trust  2.130 -- --   
Business: Co is a real estate investment trust in the office space.

Insight: Apr-19, 1Q19 gross revenue and NPI rose 3.5% and 3... Read More
Singapore Exchange  8.480 +0.01 +0.12%   
Business: [FY18 Turnover] Equities & fixed income (48.2%), derivatives (40.2%), mkt data & connectivity (11.6%).

Insight: Jan-19, 1H19 operating revenue increased 5.7% to $... Read More

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