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Investors’ Corner (Sembcorp Industries, Parkson Retail Asia, Yangzijiang Shipbuilding Holdings, Saizen REIT)
Investors' Corner | 30 August 2013
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Saizen REIT
Price – $0.184
Target – $0.195
Saizen REIT’s gross revenue and net property income increased by 9.7% and 13.6% respectively in FY13, largely supported by its acquisitions of 7 properties. We believe FY14 will witness the full‐year contribution from these properties. To provide greater visibility on its distributions, Saizen has also entered into hedging transactions. However, we project Saizen’s 1H14 distribution per unit (DPU) at $0.0063, 4.5% lower than 1H13 DPU due to an 8.2% increase in the hedged rate although we expect its DPU to grow 2.8% y-o-y in yen terms. Sitting on a cash pile of ¥6b and unencumbered properties valued at ¥2b, Saizen could engage in immediately yield‐accretive acquisitions. We are currently pencilling in ¥2.3b of acquisitions at a 6% net property income yield. In our opinion, Saizen’s current yield of 7%, approximately 430 basis points over the risk‐free rate, does not yet sufficiently compensate investors for the inherent macro, forex and interest rate risks. Hence, maintain HOLD. – AmFraser Securities (26 Aug

Yangzijiang Shipbuilding Holdings
Price – $0.935
Target – $0.99
With an increase in demand of Chinese firms seeking older very large gas carriers, according to Platts, and the lack of it within China, there may be a potential market for China to develop its own fleet for long-distance trips to save costs. Notably, Yangzijiang Shipbuilding Holdings’ (YZJ) Xinfu yard has plans to build large vessels and has an annual production capacity of up to 10 very large gas carriers. While it seems that YZJ could clinch such potential orders, the group’s capabilities remain primarily in containerships and bulk carriers. Hence, it is still too early to tell. Separately, YZJ’s CEO expects more than half of the country’s yards to be closed down, and of the remainder, only 20% are likely to be profitable. Should YZJ be one of the few large yards left standing, it would be in a stronger position than before. Hence, maintain HOLD. – OCBC Investment Research (23 Aug)

Parkson Retail Asia
Price – $1.40
Target – $1.28
Parkson Retail Asia’s (PRA) 4Q13 recurring profit $3.4m was below consensus’ $13m estimate. Revenue was relatively unchanged at $103m, mainly due to weak same-store-sales growth in Malaysia. Excluding a $2.5m foreign exchange gain a year ago, recurring net margin fell to 3.3%. We cut our FY14 profit estimates by 49% to $41m and project earnings to grow by 33% to $55m in FY15. The estimates are 33% and 26% below consensus forecast respectively. In addition, we expect earnings to contract by 27% y-o-y to $8.5m in 1Q14, before recovering 12% to $15m in 2Q14, its traditional peak period. To better reflect PRA’s cash-generative characteristics, we switch to a discounted cash flow valuation, deriving a lower target price of $1.28 (from $1.77). Maintain NEUTRAL. – DMG & Partners Research (22 Aug)

Sembcorp Industries
Price – $4.92
Target – $5.95
Sembcorp Industries’ (SCI) joint venture in Oman, Sembcorp Salalah will be launching an initial public offerings (IPO) on the Muscat Securities Market on 28 Aug-13. 2 positive outcomes are expected from the Salalah IPO – extraordinary gain and valuation lift. We estimate SCI to recognise a gain of about $105m, comprising a $35m from disposal of the 20% stake and $70m from fair-value gain. Despite a potential earnings loss of $5m from the dilution, we think it is minimal to the group as SCI still hold 40% stake given that Salalah is a core asset in the utilities business. At $5.17 per share, the IPO is priced at about 16 times FY13 P/E, based on an estimated EPS of $0.31. This could re-rate SCI’s utilities stub calculation of about 7 times FY13 P/E. We believe its overseas utilities assets will continue to be its key growth drivers. Maintain OUTPERFORM. – CIMB Securities (21 Aug)

Yangzijiang Shipbuilding (Hldgs)  1.050 -0.030 -2.78%   
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
Parkson Retail Asia  0.023 +0.001 +4.55%   
Business: Engaged in the mgt & ops of department stores in SEA. [FY18 Geographical] M'sia (72.9%), Indonesia (16.2%), Vietnam (10.3%), Myanmar (0.3%), others (0.3%).

Insight: May-19, 9M19 revenue inched down 1.1% to $304.4m a... Read More
Sembcorp Industries  2.180 -0.04 -1.80%   
Business: Primarily engaged in the production and supply of utilities services. [FY18 Turnover] Utilities (55.9%), marine (41.8%), others/corp (2.2%), urban development (0.1%).

Insight: May-19, 1Q19 revenue fell 10.1% to $2.5b due to lo... Read More

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