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Investors’ Corner
Investors' Corner | 22 April 2010
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By: Jasmine Toh
Articles (6) Profile


Price – $1.13 Target – $1.00

K-REIT reported 1Q10 DPU of 1.33cents, up 13% YoY. Despite higher revenue and NPI, DPU was down because 50% of the management fees was paid in cash as compared to 100% in units in FY09. Portfolio occupancy stands at 96% as at Mar-10. Excluding the AU property, occupancy was 95.5%, a 50 bps improvement from previous quarter. Its SG portfolio average rental was $8.30 psf as at Mar-10. Given the strong GDP growth in 1Q10, we think rentals could bottom ahead of our expectations. However, any rental growth in the short term remains unlikely, in our view. Key changes made: i) raise our occupancy and rental assumptions for the SG properties, ii) assume 50% of management fees will be paid in cash going forward, iii) lower interest costs due to partial repayment of $230m in from proceeds from rights issue. Maintain SELL. – Citigroup (19 Apr)

Ascendas REIT

Price – $1.98 Target – $2.24

AREIT reported 4Q FY10 DPU of 2.73cts bringing FY10 DPU to 13.1cts, 3-4% below our consensus’ 13.5-13.7cts due mainly to one-off upfront fees for new credit facilities that were fully expensed for tax purposes. FY10 revenue and NPI were in line at $414m and $320m. Operationally, occupancy moderated to 95.7% from 97.8% a year ago, rent reversions are still positive while new take-up rates QoQ have started to show increases for business parks, hi-tech and light industrial, signaling a bottom. Going forward, we expect some negative rent reversions in FY12-13 due to higher expiring rents. AREIT is trading at attractive 6.7-6.8% DPU yields, and is leveraged to the recovering global trade sector. We expect income to remain stable with potential upside from its development capabilities and capacity to acquire. Maintain OUTPERFORM. – Credit Suisse (20 Apr)

Overseas Chinese Banking Corporation

Price – $9.16 Target – $12.00

OCBC emerged from the credit crisis showing the least earnings volatility and best containment of asset quality pressure among local bank peers. We believe the US$1.5b acquisition price for ING Asia Private Bank (Now Bank of Singapore) is fair, marking an opportunistic entry into the fast-growing Asian private banking space. We like the solid organic growth outlook and see scope for margin gain from BOS-OCBC integration synergies. The US$35.5b offer by Prudential for AIA’s Asian life insurance unit brings to light the intrinsic value of OCBC’s under-appreciated GE life insurance subsidiary. Underpinned by superb operating metrics and rising synergies with OCBC’s bank operations, we believe the market is undervaluing GE. Maintain BUY. – Nomura (20 Apr)

Yangzijiang Shipbuilding

Price – $1.49 Target – $1.60

Yangzijiang Shipbuilding (YZJ) will place 83.6m new ordinary shares at an issue price of $1.295/share to a Middle East investor, raising proceeds of about $108m which will be used to acquire PPL Holdings from Baker Tech in a joint bid. PPL Shipyard has 6 rigs that are undergoing construction. We estimate that there is about US$300m of revenue left to be recognized. Historically, PPL Shipyard has been focused on the construction of jack-ups, though it has built semi-subs before. As the jack-up market is expected to remain weak compared to deepwater units, PPL Shipyard must be able to divert its spare capacity to the construction of semi-subs and other deepwater units for a promising future. If YZJ successfully obtains control of PPL, this would strengthen the group’s capabilities in the design and construction of offshore drilling rigs. In our view, this does not come cheap, especially since PPL is focused on jackups. Maintain HOLD. – OCBC (20 Apr)

Keppel REIT  1.260 -0.010 -0.79%   
Business: Real Estate Invs Trust. Invs in a portfolio of quality real estate and real estate related assets.

Insight: Apr-19, 1Q19 property income inched up marginally ... Read More
Ascendas REIT  3.020 +0.01 +0.33%   
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
Oversea-Chinese Banking Corp  11.260 -0.02 -0.18%   
Business: [FY18 Turnover] Global corporate/investment banking (35%), global consumer/private banking (34.8%), OCBC Wing Hang (11.5%), insurance (11%), global treasury & mkts (7.7%).

Insight: May-19, 1Q19 total income rose 14.7% driven by str... Read More
Yangzijiang Shipbuilding (Hldgs)  1.510 -0.010 -0.66%   
Business: Co is one of the largest non-state owned shipbuilders in China. [FY18 Turnover] Shipbuilding (58.1%), trading (32.8%), investments (6.7%), others (2.4%).

Insight: Apr-19, 1Q19 revenue jumped 26.8% to Rmb6.3b due t... Read More

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