Sunday, October 20, 2013

OCBC Report 21 Oct 13

CapitaCommercial Trust: Resilient to absence of OGS income support
Distributable income for 3Q13 increased 1.6% YoY to S$58.8m mostly due to lower interest expenses and the distribution of S$1.7m in tax-exempt income from Quill Capita Trust (QCT), which offset the loss of income support from One George St (OGS). Note that, going forward, CCT can still draw from S$10.9m of retained tax-exempt income from QCT, and also S$0.9m of retained taxable income from RCS Trust to be released in 4Q13. 9M13 distributable income cumulated to S$174.0m, up 2.2% YoY, which made up 75.9% of our FY13 forecast and is judged to be mostly within expectations. 3Q13 DPU is 2.04 S-cents which translates to a 5.7% distribution yield based on the last closing price of S$1.42. We expect CCT to benefit from an improving Grade A office market in FY14 as rental levels reach a turning point in an environment of resilient absorption and limited supply, with only CapitaGreen (~700k sq ft NLA) coming online in FY14 in the Core CBD sub-segment. Maintain BUY with an unchanged fair value estimate of S$1.61. (Eli Lee)

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Mapletree Logistics Trust: Delivering steady growth

Mapletree Logistics Trust (MLT) reported 2QFY14 DPU of 1.82 S cents, representing a 6.4% growth YoY. We deem the results to be in line with our expectations, as 1HFY14 DPU of 3.62 S cents have met 49.9% of our full-year DPU forecasts. While the global economic outlook remains murky, leasing demand at MLT’s logistics facilities has held firm. Going forward, MLT reiterated that it will continue to optimize the portfolio yield through repositioning, enhancement and redevelopment opportunities. We understand that the redevelopment of Mapletree Benoi Logistics is on track for completion in 3QFY14, and that MLT will be embarking on its next redevelopment project at 5B Toh Guan Road in early FY15. We make minor adjustments to our forecasts but lower our fair value marginally to S$1.11 (S$1.15 previously) on higher risk-free rate assumptions. Maintain HOLD. (Kevin Tan)


Ascott Residence Trust: Strata sale of units in Somerset Grand Fortune Garden

ART has announced that it has entered into a strata sale for the divestment of 81 units in Somerset Grand Fortune Garden, which is located in Chaoyang District, Beijing. The sale consideration for the Somerset Grand Fortune Garden units, when fully sold, is estimated to be RMB628.0m (approximately S$128.1m), as derived from the independent valuation. The amount of excess over book value of the Somerset Grand Fortune Garden units is approximately S$79.9m. It should be noted that the sale consideration for each Somerset Grand Fortune Garden unit will be negotiated on a willing-buyer and willing-seller basis. A third-party owner who owns a total of 100 units in Somerset Grand Fortune Garden had earlier commenced a separate strata sale of the 100 units, resulting in increasing difficulty for ART to continue operating the property. We maintain our FV of S$1.37 and BUY rating on ART. (Sarah Ong)

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NEWS HEADLINES


- US stocks rose on Fri, with the S&P 500 index continuing its record run and posting its best weekly gain since mid-July, as investors applauded quarterly results from Google Inc and Morgan Stanley.

- DBS Bank has successfully sold S$200m of five-year bonds securitised on a condominium project and based on progress payments, a first since 2008.

- Asiasons Capital, Blumont Group and LionGold Corp will have their trading curbs removed on Mon, two weeks after SGX declared them as designated stocks.

- UPP Holdings has terminated its proposed investment in the Myanmar project.

- DBS Group Holdings is among banks that have advanced in bidding for Societe-Generale's private banking assets in Asia, said three people with knowledge of the matter.

- Sembcorp Industries will be investing RMB932m (S$190m) to develop the first total water management plant to support a coal-to-diesel project in China.

- Singapore Airlines Cargo and Etihad Cargo have agreed to exchange capacity on services operated by both airlines from Abu Dhabi to London and Frankfurt.

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