By Carmen Lee
Thu, 24 Jun 2010, 08:14:14 SGT

Market Pulse: UOL & CitySpring (24 Jun 2010)

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UOL Group Ltd: Another new launch in the pipeline

Summary: After the successful launch of Waterbank at Dakota, UOL Group will soon be launching another new project – Terrene at Bukit Timah. In September 09, UOL acquired a 50% stake in this project after injecting S$15.6m into this project. About 52% of the units at Terrene are 1BR and 2BR with floor space ranging from 506 sq ft to 1,184 sq ft. Looking at the caveats that have been lodged this year, the average transacted prices of nearby projects ranged from S$693 psf to S$804 psf. With the increase in property prices and higher proportion of small size units, we reckon that UOL can achieve a higher ASP for this project. As such, we are now raising our ASP assumption to S$900 psf and this adds an additional S$0.01 per share to our RNAV. Our fair value has now been raised to S$5.38. With an upside potential of 41.1%, we maintain our BUY rating on UOL. (Foo Sze Ming)

CitySpring Infrastructure Trust: Updates on Basslink

Summary: The Tasmanian state government has launched an independent inquiry into the operations of state-owned energy companies Hydro Tasmania, Transend and Aurora Energy. Hydro Tasmania is CitySpring Infrastructure Trust (CitySpring)’s counterparty on the 25-year revenue agreement for the Basslink asset. Basslink also has an agreement with Aurora relating to its new telecoms business. We met up with CitySpring’s manager this week, who does not expect any impact to its contractual relationship with Hydro Tasmania, especially in light of Basslink’s strategic importance to the state. Meanwhile, discussions are ongoing with Singapore’s Energy Market Authority (EMA) regarding the conversion, and ensuing liberalization of the City Gas town gas network. The manager told us it was re-assured by the consistent and fair nature of EMA’s decisions so far as a regulator. Still, we believe the uncertain outcome (whether positive or negative) merits a higher risk premium in the absence of greater information. Maintain HOLD rating and our DDM-derived S$0.60 fair value [7.2% discount rate, 0% terminal growth]. (Meenal Kumar)

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

NEWS HEADLINES

- According to the BT, CapitaCommercial Trust could be close to selling Starhub Centre.

- Independent financial adviser Morgan Stanley said Khazanah Nasional’s S$1.18b partial offer for majority control in Parkway Holdings is reasonable but not compelling.

- CDL Hospitality Trusts has raised about S$196.4m in net proceeds from its private placement of new stapled securities.

- Multistar Holdings has entered into a proposed RTO to buy HealthTrends Specialist Pte Ltd and Subtle Senses Pte Ltd.

- Cal-Comp Electronics has made an exit offer to delist Avaplas Ltd at S$0.10 per share.

- EMS Energy has won a US$22.35m EPC contract from a shipyard to design and build a ship transfer system.

- Abterra has proposed a 25-into-1 share consolidation exercise.

- Mercator Lines has won a four-year contract to transport coal annually for a company in Sri Lanka.