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Investors’ Corner (Cache Logistics Trust, China Minzhong Food Corp, Singapore Press Hldgs, Genting Singapore PLC)
Investors' Corner | 13 January 2012
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By: Andy Chor
Articles (7) Profile

Cache Logistics Trust
Price – $0.98
Target – $1.14

We project Cache Logistics Trust would rake up 10.8% and 6.4% year-on-year (y-o-y) growth in gross revenue and distribution per unit respectively for 4Q11 results as rental income is bolstered by recent acquisitions. This represents a yield of 8.4% as compared to the industry average of 7.4%. Next, while the Singapore economy is expected to slow down, the effects will be limited as it had prior master lease arrangements with Sponsor CWT and C&P Holdings. Its weighted average lease to expiry was at 4.9 years as at 30 Sep-11, better than its peers’ median of 3.5 years. Furthermore, its leases usually encompass locked-in annual rental hike of 1.5-2% and a triple-net lease structure for the contracted lease term, limiting downside risk and ensuring potential for organic growth. Together with recent government initiatives on industrial space, we expect better stability in end-user demand and industrial property prices, as well as opportunities for asset injection. Maintain BUY. – OCBC Investment (10 Jan)

China Minzhong Food Corporation
Price – $0.875
Target – $1.47

China Minzhong (CMZ) has commenced operations at its New Industrial Park processing facilities in Putian City, Fujian Province, tripling its processing capacity. Backed by a healthy orderbook, the new plant is expected to reach full utilisation within three years. In addition, the plant is expected to lift its 2H12 performance, especially since it coincides with the peak season. China has announced the lifting of the value-added tax on the distribution of vegetables. While this development will lower the cost of sales for wholesale retailers, it will not have any direct impact on upstream players like CMZ. However, it does signal a shift in policy to one which encourages supply growth. Despite global economic uncertainty, CMZ experienced continued demand in vegetables and expects total export orderbook in FY12 to surpass that in the previous year. In addition, CMZ’s ability and flexibility to switch between various processing methods will enable the group to cater to different demands pertaining to different regions at a short notice. We maintain our BUY rating. – Kim Eng (10 Jan)

Singapore Press Holdings
Price – $3.70
Target – $3.88

Singapore Press Holdings (SPH), the country’s dominant media company, posted 1Q12 earnings of $97.5m, down 4.7% y-o-y, in line with consensus. SPH’s revenue increased by 4.2% y-o-y driven mainly by the Property segment (up 27.2% y-o-y), which saw Clementi Mall’s first ‘full quarter’ contribution of $9m. Additionally, Paragon, the Property segment’s largest contributor, posted $37.9m, up 2.6% on the back of higher rental rates. Going forward, we don’t see any catalyst for upside earnings surprises especially with income from the Property segment being stable. Moreover, with Singapore’s projection of an economic slowdown in 2012, SPH’s core Newspaper and Magazine business is likely to see further decline in both revenue and profits. With SPH’s track record of cutting dividends during times of general economic slowdown, we maintain our HOLD rating. – RBS (10 Jan)

Genting Singapore
Price – $1.57
Target – $1.98

Observing from a recent visit, delays are expected in the development of Hotel Aquarius and the installation of 2,500 slot machines. Amidst efforts to have the slot machines operationally ready, Genting Singapore (GENS) had rescheduled the opening of the hotel to coincide with the Lunar New Year to tap into the surge in crowds. GENS remains hopefully that junkets will be legalised in 2012 and is making preliminary operational preparation. This entails being compliant with the tightening of casino promotion and advertising regulations. In addition, GENS plans to collaborate with surrounding hotels to cross-sell their products in bid to address the high utilization of its hotel inventory. Longer term, GENS hopes to bid for potential sites for hotel construction. Despite the slight delay in the opening of Hotel Aquarius and the slot machines, earnings forecast is unchanged and will be monitored for additional delays. As new capacity should help drive earnings increases in 2012, we maintain our BUY call. – Bank of America-Merrill Lynch (9 Jan)

Cache Logistics Trust  0.735 +0.010 +1.38%   
Business: Principally invest in income-producing real estate used for logistics purposes in Asia-Pacific, as well as real estate-related assets.

Insight: Jan-19,FY18 gross revenue and NPI rose 8.6% and 4.... Read More
Singapore Press Hldgs  2.080 -- --   
Business: Co is S'pore's main newspaper & magazines publisher that also has investment in properties. [FY18 Turnover] Media (66.7%), property (24.7%), others (8.6%).

Insight: Apr-19, 1H19 operating revenue fell 3% to $477.6m ... Read More
Genting Singapore  0.905 +0.010 +1.12%   
Business: Develops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY18 Turnover] Gaming (66.1%), non-gaming (33.8%), others & invs (0.1%).

Insight: May-19, 1Q19, despite Co's non-gaming business reg... Read More

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