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Investors’ Corner
Investors' Corner | 28 January 2011
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By: Gerald Teo
Articles (40) Profile

Keppel Land
Price – $4.57
Target – $5.00

KepLand’s 4Q10 results were below our estimates, due to lower-than-forecasted domestic residential sales. Dividend of $0.18 per share (FY09: $0.08) was declared. Management expects volumes here to moderate after government’s tightening measures, similar to our view. We expect KepLand to actively redeploy capital to fund acquisitions of domestic assets due to its largely high-end landbank and more opportunities via Government Land Sales Program. While we like its office exposure, we think mid-cap landlords offer better value. Domestic residential sales should moderate after the recent anti-speculative measures, though prices will remain stable according to management. KepLand’s upcoming township launches in China should continue to do well, due to government’s support and less sensitivity to tightening measures. Maintain NEUTRAL. DMG & Partners (24 Jan)

Suntec REIT
Price – $1.58
Target – $1.69

Suntec recorded distribution income of $44.9m (4Q10), -2.8% q-o-q and –6% y-o-y, dragged down by slightly lower contributions from both the retail and office properties. Marina Bay Financial Centre (MBFC) 1 contributed a maiden $2.5m. Distribution per unit of 2.316 cts in 4Q10 (FY10: 9.859 cts) was 20% lower y-o-y due to a recent placement exercise to partially fund the acquisition of MBFC1. The group took in a $116.8m revaluation surplus, which lifted book NAV to $1.78. Looking ahead, the group will continue to benefit from the rising office market. It has proactively renewed approximately 275,630 sq ft of leases expiring in FY11 and has a remaining 164,066 sq ft (6.8%) of office space (excluding IDA’s 90,000 sq ft), and another 276,105 sq ft of retail area to be renewed this year. We believe potential further upside can be realized as the group executes on its organic growth or acquisition strategies. Maintain BUY. – DBS Vickers (24 Jan)

First REIT
Price – $0.765
Target – $0.82

First REIT (FREIT) reported its 4Q10 results which were within expectations. We opine that FREIT’s two new Indonesian hospital acquisitions in Dec 2010 will drive its earnings momentum moving forward, underpinned by the expanding healthcare market in Indonesia. We predict that FREIT’s gross revenue and distributable income will jump by 80.6% and 88% to $54.66m and $40.12m respectively in FY11 as contributions from the two hospitals kicks in. We believe that FREIT’s current valuations are still compelling, boosted by its attractive yield (estimated yield of 8.3% in FY11F). Future growth will be supported by its stable master lease terms, which has downside revenue protection and built-in step-up rental features. We continue to like FREIT’s strong sponsor support as well as management’s execution capabilities. Maintain BUY. – OCBC Investment (25 Jan)

UMS Holdings
Price – $0.59
Target – $1.05

UMS announced a strong set of 2010 results that not only exceeded our expectations, but has also set a new record high. UMS has a well articulated and convincing strategy that we believe sets it apart from its peers. Upfront, we like the company’s comprehensive growth strategy that is already showing results: strong order indications and more systems integration projects from key customer Applied Materials (AM); increased outsourcing from AM, which is gradually shifting semiconductor equipment from the US to Singapore; leverage on first-tier supplier status to enter the Korean market. UMS is currently exploring potential M&A targets to jump start its Korean business. The company intends to fund future acquisitions via its Korean Depository Receipts listing proceeds. Maintain INCREASE EXPOSURE. – SIAS Research (25 Jan)

Suntec REIT  1.910 -0.020 -1.04%   
Business: Real Estate Invs Trust. Ppties incl Suntec Office Towers, Suntec City Mall & Park Mall. [FY18 Turnover] Office (46.8%), Retail (34%), Others (Ad space, car park income , convention & exhibits) (19.2%).

Insight: Jan-19, FY18 gross revenue rose 2.6% to $363.5m du... Read More
First REIT  1.070 -0.020 -1.83%   
Business: Co is a healthcare real estate investment trust. [FY18 Geographical] Indonesia (96%), Singapore (3.4%), Korea (0.6%).

Insight: Apr-19, 1Q19 gross revenue was slightly down by 0.... Read More
UMS Hldgs  0.625 -0.010 -1.57%   
Business: Co offers high precision front-end semiconductor components, and electromechanical assembly and final testing services [FY18 Geographical] Singapore (54.9%), Taiwan (20.9%), US (19.1%), Malaysia (3.5%), Others (1.6%).

Insight: Feb-19, FY18 revenue fell 21.3% to $127.9m due to ... Read More

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