ASEAN PropertyPulse - GLP – Brazil acq +ve; CDL tops SG land bank; Govt keeping eye on REITs; STB 2014 target; Zero COV
Written By Stock Fanatic on Friday, March 7, 2014 | 7.3.14
Singapore REITs - From rising rates to growth concerns: Prefer Office & select Retail nodes; initiate KREIT
CENT’s controlling shareholders have pared down their stake by 10% to 55.4% via a private placement of 80m shares at SGD0.57 each. LBG will be a strategic substantial shareholder (5%), while the remaining 42m shares will be taken up by private investors. This earnings-neutral move will benefit CENT, and we expect more tie-ups between the two companies for future projects.
Maintain BUY, with a TP of SGD0.82.
Without a notable recovery in Central office rents, there is limited upside for Hongkong Land in a rising interest rate environment. Meanwhile, share price has priced in a 20% fall in office capital values, which is sufficient for this year. Residential development profits are now making meaningful contributions to the bottom line but this new income stream does not justify a re-rating on the stock.
Maintain HOLD and target price at US$5.88. Enter at US$5.30.
■ Uninspiring 4Q results, earnings cut by 1.3%
■ Sectors in brighter spots – water treatment and plantations
■ Buy stocks with potential earnings upside – SIIC, Ezion, Bumitama, Centurion, Yangzijiang, Nam Cheong and Pacific Radiance
■ Stay in high dividend yield stocks–China Merchants, M1, ST Eng, Venture, Comfort Delgro
Overnight rally in US soy market could offer stronger upward momentum to palm oil in today’s trading session. We expect a bullish breakout at 2,870 resistance level today.
As shown in the daily chart above, Bursa Malaysia Crude Palm Oil Futures for May delivery is currently in a very bullish trending market as ADX is far away from 30. Overnight rally in US soy market could offer stronger upward momentum to palm oil in today’s trading session. We expect a bullish breakout at 2,870 resistance level today. However, we should also be wary of possible downward retracement to 2,786 Fibonacci retracement level due to profit taking activities. Phillip Futures offers trading in Bursa Malaysia Crude Palm Oil futures.
TFK’s contribution to SATS has been lacklustre since it was acquired in 2010, hampered by the 2011 Tohoku earthquake, rising Sino-Japanese tensions since 2012 and falling JPY.
■ Longer-term outlook is bright as well. Reiterate BUY on SATS with DCF-based TP of SGD3.47.
70% a hotel and 30% a retail mall, OUEHT is situated at the heart of Orchard Road and offers exposure to both Singapore tourism and retail. With c.70% of its FY14 revenue fixed from retail rent and fixed rent from a hotel master lease, OUEHT is, in our view, a more stable hospitality play than its peers. We expect organic growth to stem from potential uplift in room rates through the Sponsor-funded AEI on MOS and embedded retail rental step-up.
We initiate on OUEHT with an Add rating and a target price of S$0.96, based on DDM at a discount rate of 7.9%. Potential catalysts include surprises in tourist arrivals and stabilisation of the Rupiah.
GLP announced that it plans to buy 34 completed logistics properties in Brazil from BR Properties for US$1.4bn. The pricing looks reasonable for the portfolio that has attracted other buyers in the past. We understand that the vendor needs to reduce its high debt obligations. While we would have preferred for this deal to be in China, we believe that part of the Brazil assets will eventually be divested into private funds, with the ultimate goal of enlarging its AUM fee platform.
We believe that GLP’s China targets remain intact. We keep our FY14-16 EPS estimates due to the limited details on the deal. We maintain our Add rating and target price, still based on RNAV.
Lian Beng announced that it has acquired a 5.03% stake in Centurion Corp for SGD21.7m. As both companies are already in a joint venture (JV), this acquisition will strengthen their present ties and potentially give rise to more construction contracts. It will also give Lian Beng some exposure to the accommodation business outside Singapore.
Maintain BUY, with a TP of SGD0.70.
Technical BUY with +11.7% potential return
Last price: S$0.555
BUY with a target price of S$0.62 as the stock may continue its rebound after prices of the stock has attempted a Bollinger band squeeze breakout to the upside. The stock has also rebounded from its 200-day EMA, and closed above its 50-day EMA, attempting to negate its potential dead cross formation. Its MACD indicator appears to hook up near its centreline. Watch to see if the MACD indicator could trend up. Protective stops could be placed at S$0.52.