By Carey Wong
Wed, 26 May 2010, 08:47:14 SGT

Market Pulse: CapitaMall Trust and Singapore Semicon Sector (26 May 2010)

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CapitaMall Trust: Share price correction presents fresh buying opportunity
Summary: Last Friday, CapitaMall Trust (CMT) held the groundbreaking ceremony for the new retail mall on the site of the former Jurong Entertainment Centre. The new mall, named JCube, will have net lettable area of approximately 204,000 sq ft. Based on the enlarged NLA, we expect JCube to generate gross rental income of S$34.7m and net property income of S$23.9m when fully operational. With the upcoming projects in the area, we expect higher human traffic flow in the Jurong Lake District and JCube should benefit from this. Over the longer term, there is still a healthy pipeline of AEIs that CMT could undertake. AEIs at Tampines Mall and Funan DigitaLife Mall are likely to start once the development of JCube is completed. In light of the recent development, we raise our fair value from S$1.93 to S$1.95. Recent correction in CMT’s share price presents fresh buying opportunity for investors. With a projected total return of 13%, we are now upgrading CMT to BUY. (Foo Sze Ming)

Semiconductor Industry: Expect a banner year in 2010

Summary: Consistent with our view expressed in our sector report dated 9 Apr, both semiconductor companies under our coverage had recently turned in strong quarterly results, driven by healthy sales momentum and recovery in economic conditions. In addition, they have become markedly positive on their outlook, saying that they have been seeing a healthy level of customer orders and are expecting to further progress in their core segments in the coming quarters. Our checks on the recent 2010 global semiconductor revenue growth forecasts by various market watchers also showed that they expect the industry to achieve a remarkable growth this year. As such, we are maintaining our OVERWEIGHT view on the semiconductor industry. We also keep our BUY ratings on Avi-Tech (S$0.24 fair value) and Micro-Mechanics (S$0.57 fair value), as we see them as strong beneficiaries of the industry upswing. (Kevin Tan)


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


NEWS HEADLINES

- Sembcorp Industries has invested 10.4b rupee (S$319m) for a 49% stake in an Indian power plant joint venture.

- Visitor arrivals to Singapore jumped by 20.4% YoY to 938k in Apr.

- The first state land tender to close following the government announcement of bumper land sales for the second half has seen a record price for executive condominium land.

- KSH Holdings, which has posted a 28% rise in net profit to S$18m for FY10, is cautiously upbeat about its construction business.

- Food Empire Holdings said its subsidiary, Empire Instant Food, has agreed to buy a freehold property for S$13.9m.

- E3 Holdings and its subsidiary Englo Real Estate Development have sued two former directors of the companies to enforce certain indemnities granted by the duo to the plaintiffs.

- Japan Foods reported a 67.9% surge in net earnings to S$4.6m for FY10 as revenue jumped 30.4% to S$43.7m and cost of goods dropped 10.7% to S$9.7m.

- Z-Obee Holdings has joined hands with China's Shenzhen Jinzunzhe Technology to dial into the burgeoning mainland market for high-speed multimedia smart phones.

- The Hour Glass announced a record net profit of S$32.8m for FY10, more than double its S$12.8m net profit in the preceding year.

- More than 20 crafts and 85 people worked to clean up an estimated 2,500 tonnes of crude oil that spilled into the sea in the Singapore straits, following a vessel collision.

- Thailand's Criminal Court approved an arrest warrant for fugitive ex-leader Thaksin Shinawatra on terrorism charges.

- The National Wages Council yesterday urged companies to return to giving workers wage increases and bonuses.