Sunday, March 23, 2014

OCBC Report

KEY IDEA
Ascott Residence Trust: Acquires rental housing in Fukuoka

ART announced last Friday that it has acquired a 389-unit rental housing property in Fukuoka for JPY6.3b (~S$78.4m) and with an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to increase FY13 distribution per unit by 2.1%. This is the second property agreement announced after ART’s rights issue in Dec 2013. In Feb, ART entered into a conditional agreement to acquire its first serviced residence in Dalian for RMB571m (~S$118.6m) with an EBITDA yield of 5.5%. On a pro forma basis, that accretive acquisition was expected to increase FY13 DPU by 1.5%. We assume that any remaining acquisition or acquisitions to be announced in 1H14 will total S$153m with a 5.5% EBITDA yield. Incorporating the Fukuoka and Dalian acquisitions, we maintain our FV of S$1.33 and BUY rating on ART. (Sarah Ong)


MORE REPORTS


Tiger Airways: LT fleet renewal and expansion

Tiger Airways Holdings (TR) has entered into an agreement with Airbus and Pratt & Whitney for the order of 37 fuel-efficient Airbus A320neo aircraft. The purchase agreement also gives Tigerair the option to increase its order by up to 13 additional aircraft and convert the A320neos into the larger A321neo model. Consequent to the agreement, the airline’s existing order of nine Airbus A320 aircraft, that were part of a larger 2007 order, will now be cancelled. These aircraft were originally scheduled for delivery in 2014 and 2015. The cancellation of the nine orders, together with the staggered delivery of the new A320neo aircraft over a period of eight years from 2018 to 2025, will better allow Tigerair to manage its capacity going forward and improve its cost efficiency. However, given the continued challenges TR faces in its core markets, we maintain our SELL rating and fair value of S$0.38 on TR. (Sarah Ong)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks reversed early gains and finished Fri lower but still recorded modest weekly gains.


- Announced M&A deals involving Asia-Pacific companies got off to a strong start this year, powered by a property deal in China and the purchase of a Korean brewer.


- Banks in Singapore and elsewhere are facing challenges against the backdrop of Basel III, which has made it expensive to own overseas units.

- DBS Group expects income growth from its SME segment to outpace last year's growth of over 10%, and is pushing for more income from emerging markets.


- Tritech Group has won a S$6.68m contract to provide engineering design services for the construction of Lentor Station on the Thomson Line MRT system.


- Hotel Royal Limited is looking to acquire Burasari Resort in Phuket, Thailand for about 1.3b baht (S$51m).

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