Frasers Centrepoint & Karin Tech (17 Jun 2010)

By Carmen Lee
Thu, 17 Jun 2010, 09:00:53 SGT

Market Pulse: Frasers Centrepoint & Karin Tech (17 Jun 2010)

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Frasers Centrepoint Trust: Suburban retail still compelling

Summary: The Singapore Department of Statistics reported earlier this week that April retail sales (seasonally adjusted, excluding motor vehicles) rose 1.5% MoM and 7.4% YoY. Meanwhile, the Ministry of Manpower said the unemployment rate fell from 2.3% in 4Q09 to 2.2% in 1Q10. With the strong employment numbers and the expected 7-9% GDP growth in 2010, the outlook is positive for retail sales this year. We believe the case for suburban retail is still sound – not only should a strong retail sales story support rents and take-up of retail space, but the bulk of expected new supply is in central areas. Frasers Centrepoint Trust (FCT) also has opportunities to create value for unitholders through acquisitions of pipeline assets and the possible asset enhancement of Causeway Point. Our earnings estimates are unchanged. Maintain BUY rating and S$1.50 fair value (17.5% total return). (Meenal Kumar)

Karin Technology: Likely beneficiary of electronics industry uptrend

Summary: Since our update on Karin Technology’s 1HFY10 results in Feb, we note that the global electronics industry has continued to show improvements, in line with our expectations and management’s guidance. While we acknowledge that its earnings may be impacted by unfavourable forex rates and higher operating costs (possibly from higher raw material and staff costs) as evidenced by a 5.9% rise in China’s producer prices for first five months of 2010, we believe the increase in expenses have been adequately factored into our projections. As such, we are maintaining our FY10 forecasts and S$0.28 fair value for Karin. With the current share price presenting an attractive 34.6% upside potential, we maintain our BUY rating on the stock. (Kevin Tan)

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NEWS HEADLINES

- The Securities Industry Council has given Fortis Healthcare a July 30 deadline to make clear whether it plans to launch a counter-bid for Parkway Holdings.

- A unit of Boustead will buy redeemable notes of Bio-Treat for S$42.7m.

- Navis Capital Partners, which has offered to take Eng Kong Holdings private, says it does not plan to revise its offer price unless a competing bid surfaces.

- KS Energy has secured a US$12m one-year extension for a land rig and a three-month contract for another rig.

- Yanlord Land Group and Ho Bee Investment have acquired six prime residential development sites through their JV company.

- Creative Technology has divested its entire interest in Wireless Audio IP BV for US$5.3m.

- Parkway Shenton, a unit of Parkway Holdings, has opened three new clinics.

- Sunmart Holdings has received in-principle approval from the SGX for the dual-listing on the Korea Exchange.

Please refer to the full report for more information and additional disclosures.

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