OCBC Report 21 Apr 14

KEY IDEA

CapitaCommercial Trust: Looks fairly valued here
1Q14 distributable income increased 7.6% to S$59.9m mostly due to stronger contributions from portfolio assets and lower interest expenses. 1Q figures were mostly within expectations and YTD distributable income now constitutes 25.6% of our full year forecast. We note that the Trust enjoyed higher revenues from all properties due to a mix of stronger occupancies and positive rental reversions, except for One George St which was impacted by the cessation of yield protection income. 1Q14 DPU of 1.94 S-cents translates to a 5.2% yield as at the last closing price of S$1.635. As our top pick in the REITs sector, CCT has outperformed significantly YTD, appreciating 12.8% versus the STI’s 2.7% movement over this period. We update our model for latest rental assumptions, and our fair value increases marginally to S$1.67 from S$1.61 previously. At this juncture, however, we believe CCT is almost fully valued; downgrade to HOLD on valuation grounds. (Eli Lee)
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NEWS HEADLINES

- US stocks ended the holiday-shortened week with solid gains, after four straight days of increases on the S&P 500 index and Nasdaq Composite.

- Singapore's non-oil domestic exports (NODX) fell 6.6% YoY in Mar after a 8.9% spike in Feb, dragged down by declines in electronics and non-electronics shipments.

- Two of Pteris Global's directors have indicated their support for a proposed reverse takeover.

- The manager of Cambridge Industrial Trust said on Thu that it had decided to reduce its performance fee calculation in favour of unitholders.

- The independent financial adviser to Olam International has declared Temasek's offer to be "fair and reasonable" for shareholders and warrant holders, but not so for those who own its convertible bonds.

- Linc Energy on Thu said the recent dispute with Queensland Government would not affect the company's finances or operations.

- The Singapore arm of GlobalFoundries is ramping up to expand its 300mm silicon wafer production capacity to wring out a third more chips compared to the older 200mm wafers.