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Investors’ Corner (A-REIT, Midas, Yanlord, F&N)
Investors' Corner | 14 September 2012
Related stocks:
By: Nicholas Tan
Articles (71) Profile

Ascendas REIT
Price – $2.34
Target – $2.28

Ascendas REIT (A-REIT) has been actively involved in capital recycling activities in a bid to optimise its portfolio yield. After the proposed sale of 1 property in June, it had on 24 August announced another divestment – Block 5006 Techplace II, for $38m. We estimate that the divestment proceeds will help to relieve its interest burden and may potentially add 0.01 cents to its FY14 DPU. For the remaining FY13, we opined A-REIT will deliver a stable set of performance, supported by full-year contributions from its past investments. However, we maintain a cautious outlook on its business/science park segment which represents 34% of its portfolio based on valuation. CBRE projects that for the rest of 2012, downward pressure on occupancy and rents will continue, with a 6% correction in rents expected for second half of 2012. On a positive note, we noticed that the current market rents are 16-35% higher and provides revenue upside for the areas due for renewal. Maintain HOLD with a revised fair value from $2.27 previously. – OCBC Investment (11 Sep)

Midas Holdings
Price – $0.385
Target – $0.435

Midas Holdings (Midas) continues to rake in more contract wins as it clinched 2 new contracts totalling Rmb123.4m for the supply of aluminium alloy tubings to 2 power industry players. Delivery of the contract is scheduled to take place between 2012 and 2013. This came on top of the recently announced intercity rail contract win of Rmb588m which its joint venture company Nanjing SR Puzhen Rail Transport (NPRT) secured. Year-to-date, NPRT has secured contract orders amounting to approximately Rmb3.2b and we believe that NPRT will contribute positively to Midas in FY13. We hold our view that Midas’ latest contract wins would allow the group to partly buffer the current standstill in high-speed passenger train car contracts and diversify its income streams beyond China’s railway sector. We maintain BUY but revised our fair value (previously $0.41) on the basis of improved sentiment in China’s railway sector, as the Chinese government recently approved 25 urban rail projects amounting to Rmb842.7b. – OCBC Investment (10 Sep)

Yanlord Land Group
Price – $1.16
Target – N/A

For the sixth consecutive month, Yanlord Land Group (Yanlord) contracted sales exceeded Rmb1b. Yanlord recorded Rmb1.3b of contracted sales in August 2012, bringing its total contracted sales for January to August to Rmb8.5b, or 71% of its contracted sales target for the year of Rmb12b. For Sep-12, we expect Suzhou and Nanjing projects to be the major sales contributors to the group’s revenue, with launches in Nanjing almost all sold and expected to generate more than Rmb250m of contracted sales. As the China property market transaction volume rebound, we expect Yanlord to benefit given the group’s focus in more prosperous municipalities and provincial capitals rather than in lower-tier cities. If Yanlord’s monthly contracted sales continues at this pace for the rest of 2012, the group would be able to exceed its full year sales target. Recommend OVERWEIGHT. – HSBC (10 Sep)

Fraser & Neave
Price – $8.23
Target – $9.86

Share price of Fraser & Neave (F&N) has ebbed to around $8.20 following the announcement of its proposed capital reduction plan. This represents a discount from the proposed price of $8.50 which F&N is offering to acquire one third of its issued shares. We hold the view that assuming shareholders approve the sale of Asia Pacific Breweries (APB) and the share buy-back plan, an arbitrage opportunity exist since post exercise, the EPS, DPS and real NAV will be enhanced which should help lift the share price above $8.50. However, 1 possible risk is that shareholders may reject the proposed sale of APB, which could pull back share price towards the $7.50 level as F&N will not get any valuation premium benefit from Heineken. Thai Beverage Public Co, which owns 29% of F&N may also impede on the transaction. Post sale and capital reduction, investor interest may wane as 80% of its earnings will come from property unless management is able to come up with strategies to increase non-property revenue. Maintain BUY. – Nomura (6 Sep)

Well trained in aspects of finance and business, Nicholas oversees the finance and manufacturing sectors at Shares Investment.

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Ascendas REIT  3.120 -0.01 -0.32%   
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
Midas Hldgs  -- -- --   
Business: Manufacturer of aluminium alloy extrusion products for China's rail transportation sector. [FY16 Turnover] Aluminium alloy (99.3%), polyethylene pipe (0.7%).

Insight: Jan-18, Co announced that its JV company, CRRC Nan... Read More
Yanlord Land Group  1.220 -0.020 -1.61%   
Business: A real estate developer. [FY18 Turnover] Property development (95.2%), others (2.7%), property investment & hotel operations (2.1%).

Insight: May-19, 1Q19 revenue were halved to Rmb3.6b due to... Read More
Fraser & Neave  1.720 -0.010 -0.58%   
Business: [FY18 Turnover] Dairies (60%), beverages (25.4%), printing & publishing (14.6%).

Insight: Apr-19, 1H19 revenue inched 1.9% to $931.8m underp... Read More

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