By Carey Wong
Mon, 26 Jul 2010, 08:37:15 SGT

Market Pulse: FCT, SIAE and MLT (26 Jul 2010)

FOCUS

Frasers Centrepoint Trust: 3Q10 in line; CP enhancement a go

Summary: Frasers Centrepoint Trust (FCT) reported S$30.7m in 3QFY10 revenue, up 44.7% YoY and 8.6% QoQ. FCT will distribute 2.07 S cents for the quarter, up 6.7% YoY and 0.5% QoQ, despite dilution from the 2Q10 placement. The results were in line with our estimates, with DPU just 0.7% shy of our 2.08 S cents estimate. The manager has embarked on its asset enhancement initiative for CP. FCT guided that it expects passing rent at Causeway Point to rise from S$10.70 currently to S$12.20 post-AEI, an increase of 14%. We have refined our assumptions based on FCT’s guidance on post-AEI rents. We also reduce our DPU estimates for FY10 and FY11 by 2.8% and 8.4% to 8.1 S cents and 7.8 S cents respectively to reflect near-term disruption to DPU from asset works. Our fair value drops marginally from S$1.50 previously to S$1.49, but we see long-term value as the CP enhancement is likely to maximize returns from FCT’s portfolio, both by refreshing the mall and optimizing income. Maintain BUY with 13% estimated total return. (Meenal Kumar)


SIA Engineering: Gaining from aviation industry recovery

Summary: SIA Engineering Company’s (SIAEC) 1QFY11 results were within market and our expectations. Revenue came in at S$288.3m (+18.1% YoY, +5.8% QoQ), forming 26.1% of our FY11 revenue forecast (26.3% of consensus), while PATMI hit S$70.8m (+57.0% YoY, -4.2% QoQ), representing 28.2% of our earnings projection (27.4% of consensus). With the recovery of the aviation industry in sight, management guided that SIAEC is likely to benefit from increased maintenance, repair and overhaul (MRO) business amid growth of traffic at Changi Airport and higher utilization of aircrafts by its customers. In addition, its JVs have started to recover, albeit at a more gradual pace. As the quarterly results were consistent with our expectations, we are holding our FY11 forecasts and SOTP fair value estimate of S$3.85. While we are positive on SIAEC’s strong financial performance and business prospects, we believe that upside is limited at current price level. As such, we maintain our HOLD rating on SIAEC. (Kevin Tan)


Mapletree Logistics Trust: 2Q DPU of 1.50 S cents

Summary: Mapletree Logistics Trust (MLT) reported 2Q10 results last night. Gross revenue of S$52m was flat YoY and up a marginal 1.1% QoQ. Net property income of S$45.8m inched up 0.3% YoY and 0.1% QoQ. Unitholders will receive a payout of 1.5 S cents, up 1.4% YoY and flat QoQ. As at 30 Jun, MLT recorded portfolio occupancy of 97%, down from 98% three months ago. This was due to higher vacancies in Singapore (occupancy -100 basis points), Hong Kong (-300 bps) and Malaysia (-500 bps). To date, the manager has successfully renewed and replaced 42% of the leases due for renewal in 2010; approximately 10% of the portfolio gross revenue is due for renewal in 2H10. MLT noted that “while the economic environment has shown signs of improvement, market sentiments remain cautious in the geographies in which [it] operates.” MLT said it would “continue to focus on optimizing yield from its portfolio and evaluating opportunities for yield accretive acquisitions.” As MLT’s unit price of S$0.88 has exceeded our S$0.84 fair value estimate, we place our BUY rating and fair value UNDER REVIEW pending the analyst briefing later this morning. (Meenal Kumar)


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


NEWS HEADLINES

- Singaporean households experienced a 2.7% YoY rise in CPI in Jun compared to 3.2% in May.

- The SGX expects stock trading volumes to rise by about 10% if a proposal to do away with the lunch-time break is implemented.

- Raffles Medical Group reported a 20.3% YoY rise in net profit to S$10.6m in 2Q10.

- Ascendas India Trust reported DPU of 1.66 S cents in 1Q11, down 19% YoY.

- Top Global posted net loss of S$7.4m in 1H10 compared to net profit of S$45k in 1H09.

- Investors in two delayed projects on Jurong Island expect to go to the financial markets next month to obtain project funding.

- MAS has set up a S$30b currency-swap arrangement with the People’s Bank of China to promote trade and investment between the two countries.

- According to InsightAsia, consumers in Singapore remain among the most optimistic in the region despite a drop in consumer confidence in 2Q10.

- Jiutian Chemical Group has appointed a new non-executive director – Su Jing – who is current also the head of corporate finance with Henan Coal and Chemical Industry Group (HNCCIG) in China.