Industrial REITs - Challenges ahead given significant
supply outlook. Pick MINT for superior growth profile;
Cache for high yields
The Industrial REITs sector performed better than expected in
2013, as demand growth kept up with supply completions.
As a result, rental and capital values inched up, albeit at a
more moderate rate of 5-7%. Looking ahead, we see outlook
turning modest, owing to a significant supply pipeline of
51.8m sq ft (+12% supply expansion) of industrial space
currently under construction/planning, which is projected to
be completed over 4Q2013-2015. However, we expect rental
reversions to remain positive, buffered by low expiring rent
levels while retention rates are expected to remain high. As
such, we believe that earnings risk is minimal and forecast
industrial REITs to deliver FY13F-15F DPU growth of c.3%.
We pick Mapletree Industrial Trust (TP: S$1.44) for superior
growth profile and Cache (TP: S$1.33) for high yields of close
to 8.2%-8.5%.
Yoma Strategic Holdings has entered into a proposed joint
venture with Sumitomo Corporation, a leading general
trading house in Japan, to distribute and service Hino brand
trucks and buses in Myanmar. Yoma’s involvement in this
joint venture will serve to further broaden the company’s
burgeoning automotive interests in Myanmar.
Pacific Radiance will be pressing forward with its growth
strategy, moving ahead with plans to expand and upgrade its
offshore fleet by adding two high-specification platform
supply vessels (PSVs) to its newbuild programme. The latest
pair of vessels are due to be delivered in 4Q 2015. This latest
order brings the Group’s newbuild programme to 19 vessels
in all.
CapitaMall Trust has issued S$100m 3.15% fixed rate notes
due 18 December 2020. The proceeds will be used to
refinance existing borrowings, to finance/refinance the
investments held by CMT, to finance any capital expenditure
and asset enhancement works and for the general corporate
and working capital purposes.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,168.0 292.7 1.8
S&P 1,810.7 29.7 1.7
NASDAQ 4,070.1 46.4 1.2
Regional Indices
ST Index 3,061.8 (5.8) (0.2)
ST Small Cap 527.2 1.8 0.3
Hang Seng 23,143.8 74.6 0.3
HSCEI 10,961.5 67.3 0.6
HSCCI 4,554.7 14.5 0.3
KLCI 1,847.5 (3.4) (0.2)
SET 1,349.9 12.7 0.9
JCI 4,196.3 13.9 0.3
PCOMP 5,961.6 32.6 0.5
KOSPI 1,992.4 17.7 0.9
TWSE 8,349.0 (3.9) (0.0)
Nikkei 15,587.8 309.2 2.0
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 564
Total Daily Vol (m shrs) 3,121
12m ST Index High 3,454
12m ST Index Low 3,004
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
18 Dec
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.640 0.82
Keppel Corp Buy 10.560 12.90
OCBC Buy 9.830 12.40
Yangzijiang Buy 1.175 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
18 Dec
Target Price
($)
Ezion Holdings Buy 2.280 3.30
China Merchants Buy 0.920 1.20
CSE Global Buy 1.020 1.11
Nam Cheong Buy 0.290 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Mermaid Maritime has been awarded a subsea construction
support services contract with a major engineering,
procurement, construction, installation and commissioning
(EPCIC) contractor in Thailand serving a major international
upstream oil and gas operator. This is the ninth consecutive
year Mermaid has been awarded this work. 2014 campaign
has estimated contract value of US$32m and comes with
options for up to two additional campaign years.
Rex International has signed an agreement to acquire the
remaining 25% stake in Jasmin Oil and Gas from
independent third parties. Jasmin holds 100% of the South
Erin Block licence in Trinidad & Tobago.
ST Engineering’s Land Systems arm, ST Kinetics has set up a
specialty vehicles subsidiary in Brazil and acquires
manufacturing assets worth about S$9.2m to launch its
manufacturing presence. This will provide ST Kinetics with
direct access to opportunities driven by Brazil’s economic
growth and the government’s commitment to improve the
country’s infrastructure.
China Print Power Group is proposing to place up to 41.8m
new shares at HK$2.60 per placing share. The estimated net
proceeds from the Placing will be approximately
HK$106.4m, and is intended to be used for potential
acquisition activities as identified by the Group and as for
general working capital purposes.
The Singapore government will cut land sales under the
weight of supply. For H1 2014, MND will launch through
confirmed list eight sites that can generate 4,630 private
homes. The 4,630 private homes that can be generated
from the confirmed list sites slated for launch by the
government in H1 next year is not only down 22.3% from
the current H2 2013 slate but is also the lowest half-yearly
quantum since H1 2010, when the figure was 2,925 units.
Business sentiment among Asia's top companies dropped
sharply in the fourth quarter, extending last quarter's
declines, with global economic uncertainty and rising costs
weighing on the region's firms. The Thomson
Reuters/Insead Asia Business Sentiment Index fell to 62 in
the fourth quarter from 66 in the third quarter of 2013, the
lowest reading since the third quarter of 2012.
The FED will trim its monthly bond purchases by USD10bil
to USD$75bil starting January 2014. The Fed’s purchases
will be divided between USD40bil in Treasuries and
USD35bil in mortgage bonds. Stocks rallied, sending
benchmark indexes to all-time highs because the Fed
coupled its decision to taper with a stronger commitment to
maintaining an accommodative policy. The tapering steps
going forward will be data dependent. The Fed added its
benchmark interest rate is likely to stay low “well past the
time that the unemployment rate declines below 6.5%,
especially if projected inflation continues to run below” the
Fed’s 2% goal
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