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Investors’ Corner (GLP, StarHub, Super Group, ARA, MapletreeInd, Wilmar)
Investors' Corner | 01 July 2011
Related stocks:
CC3
F34
By: Daxx Chong
Articles (58) Profile

Global Logistic Properties
Price – $1.98
Target – $2.71
GLP has signed a strategic partnership with Unicharm. GLP’s initial project would be a Build-To-Suit (BTS) development in GLP Park Pujia in the Tianjin Xiqing Economic Development Area. Unicharm entered China in 1995 and is building a strong presence through its feminine care and baby care products. Unicharm plans to further expand the sales network into regional inland cities and we think GLP is well positioned to grow with the customer given its extensive footprint. The BTS positions GLP as Unicharm’s preferred partner for its subsequent projects and creates strong opportunities to deepen the relationship. Indeed, we think the potential is akin to GLP’s relationship with Yum! Brands. Yum! first approached GLP in 2005 for a cold-storage distribution centre in Shanghai. The project was delivered successfully, following which Yum! commissioned similar facilities in Guangzhou, Hangzhou and Qingdao as it business expanded. Maintain BUY. UBS Investment (28 Jun)

StarHub
Price – $2.75
Target – $2.69
StarHub’s move to raise pay TV price points will be its first since FY07 when it raised basic subscriptions by $4 and doubled its sports package fee from $8 to $15 with the addition of costly English Premiere League content then. Given StarHub’s still exclusive hold on key content outside of ESPN/EPL (which has since moved to SingTel), we do believe the market will have limited price elasticity with migration to IPTV service still limited by its relatively weaker non-sports content. With the absence of any further expensive exclusive content addition, we think this should translate to revenue and EPS accretion. Compared to domestic peers, StarHub still offers the most expensive valuation and the weakest forward earnings CAGR on our estimates. Yields however remain firm at 7%, providing downside protection. Maintain HOLD. – Citigroup (28 Jun)

Super Group
Price – $1.44
Target – $1.78
We expect a positive impact on margins in 3Q11, similar to 1Q11 which benefited from two months of higher prices. According to management, sales volume following the first hike has not been affected, and based on our observations, Super’s price for its key 3-in-1 coffeemix still remains 10-15% below key competitor Nestle. The recent plasticiser food contamination scandal in Taiwan is raising quality awareness further among food product manufacturers, not just in Taiwan but also regionally. Due partly to this and Super’s own sales efforts to customers outside China and Taiwan (eg, Indonesia), its non-dairy creamer line in Wuxi has been fully utilized in the past few months. Super recently sold its 8.9% stake in provisions supplier PSC Corporation for $24m. Although it will recognise a loss of $0.8m in 2Q11 from this, we believe this move is a sign of its back-to-basics focus. Maintain BUY. – Kim Eng (28 Jun)

ARA Asset Management
Price – $1.54
Target – $1.90
The investment period of ARA’s Asia Dragon Fund I (ADF I) will end in 2012. ARA could look at divesting the fund’s assets from 2013. If all assets under ADF I are divested in 2013, we estimate, that ARA would gain incremental revenue of $65m, which would boost our 2013 profit estimate by 47%. Also, ARA’s private funds have recently made mall acquisitions in Malaysia. We believe this could lead to the listing of a retail REIT in Malaysia with a potential AUM of RM1.0b to 1.5b ($400m to 600m). We expect total AUM to reach $20b by end-2012 (without the listing of any new REIT). Medium-term growth catalysts are: i) raising US$1.1b of committed capital for ADF II; and ii) acquisitions and impending asset revaluations by existing REITs. Reiterate ADD. – IIFL Securities (27 Jun)

MapleTree Industrial Trust
Price – $1.17
Target – $1.30
The expiry of rental caps on non-business park space from 30 June and short lease expiry profile should enable MIT to capitalize on the reversionary upside and close the rental gap with market. This should help drive three-year DPU CAGR of 5.5%. Downside risk to occupancy is manageable given its historically high retention rate (85.9% in 4Q11) and declining pool of low-cost alternatives. There is a high chance MIT succeeds in acquiring one of the two tranches of JTC’s flatted factories currently being divested, valued at $600-650m in total, with the outcome expected to be announced by 3Q. While initial DPU accretion is modest, the under-rented nature of the portfolio (without rental caps) should provide robust near-term reversionary growth. We also see opportunities to extract further value through asset enhancement initiatives and selected developments, particularly for centrally-located properties. Initiate BUY. – Deutsche Bank (27 Jun)

Wilmar International
Price – $5.30
Target – $6.80
The Chinese Premier Wen commented that the government has been successful in taming inflation and that he expects inflation to thread downwards soon. We believe this is good news for companies suffering from selling price caps on consumer pack edible oils, such as Wilmar, China Foods, China Agri and China Corn Oil. Note that in 1Q11 when soft commodity prices were at their highest and price caps prevailed, Wilmar still managed to record a profit of US$37m in its consumer packaging business. The consumer pack business accounts for about 17% of Wilmar’s EBITDA. Based on our sensitivity analysis, a 10% increase in edible oil margin raises net profit by 1%. While this is insignificant, it removes a negativity that has plagued sentiment since 4Q10. Maintain BUY. – BNP Paribas (27 Jun)

With a long-standing interest in economics and finance, Daxx is the Senior Research Editor of Shares Investment.

Please click here for more information about this author.

StarHub  1.520 -- --   
Business: [FY18 Turnover] Mobile (34.9%), sale of equipment (22.4%), enterprise fixed (21.6%), pay TV (13.2%), broadband (7.9%).

Insight: May-19, 1Q19 total revenue rose 6% to $596.8m attr... Read More
Mapletree Industrial Trust  2.100 +0.01 +0.48%   
Business: A REIT that invest in industrial ppties in S'pore.

Insight: Apr-19, FY19 revenue rose 3.5% mainly due to reven... Read More
Wilmar Int'l  3.400 -0.02 -0.58%   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: Feb-19, FY18 revenue inched up 2.1% to US$44.5b dr... Read More


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