DJ MARKET TALK: Singapore's STI May Stall; 3000-3100 Band Likely
 

0056 GMT [Dow Jones] Singapore's STI may stall after tapping its year-to-date high Wednesday, with players likely in wait-and-see mode before the ECB meeting later as the FOMC outcome disappointed QE-enthusiasts. "After the Fed failed to announce any further asset-purchasing to boost its sluggish economy, pressure mounts on the ECB later today to continue central banks' largesse," says Justin Harper, market strategist at IG Markets Singapore, in a note. The STI ended Wednesday up 0.5% at 3051.08; 3000 likely offers support, while 3100 is the next resistance. Among stocks likely in focus, OCBC (O39.SG) reported 2Q12 net profit rose 12% on-year to S$648 million, topping expectations. Fraser Neave (F99.SG) is halted a day ahead of the deadline to accept Heineken's (HEIA.AE) bid for its Asia Pacific Breweries (A46.SG) stake APB is also halted. ComfortDelGro (C52.SG) acquired bus assets in Australia for A$53 million. Hi-P (H17.SG) reported a 2Q12 net loss of S$2.1 million vs a year-earlier S$11.2 million profit. Cosco's (F83.SG) 2Q12 net profit fell 13% on-year to S$27.6 million
 
 
 

DJ UPDATE: Oversea-Chinese Banking Corp 2nd-Quarter Net up 12% on Year; Beats View
 

 Cerebos: Proposed Voluntary Delisting At S$6.60 For Each Offer Share.

Daily Review, 02 August 2012 Page 1 of 4

SGX-ST Member, SGX-DT (CNCM)

Daily Review

02 August 2012

LIM & TAN SECURITIES PTE LTD

20 CECIL STREET

#09-00 EQUITY PLAZA

SINGAPORE 049705

TEL: 65330595 FAX: 65332368

www.limtan.com.sg

RCB Reg No. 197301030W

RESULTS BRIEFS

 PARKWAY LIFE ($1.995, up 3.5) has declared

DPU of 5.04 cents for Q2 ended Jun ’12, up 6.7%

from a year ago. On an annualized basis, or 10.08

cents, yield is 5.05%. The healthcare reit remains

attractive.

 OCBC ($9.58, up 3) reported profit of $648 mln for

Q2,12% up y-o-y and down 18% from preceding

quarter. Excluding Great Eastern, the respective

numbers would be +22% and minus 4%. The likely

disappointment is in the significantly lower interest

margin : 1.77% vs 1.87% a year ago, and 1.86% three

months ago. We prefer DBS and UOB.

Daily Review, 02 August 2012 Page 2 of 4

SGX-ST Member, SGX-DT (CNCM)

F & N / AP BREW

S$8.15-FRNM.SI / S$49.50-APBS.SI

 Both companies have asked for Trading Halt, pending

release of announcement. Deadline for a decision on

Heineken’s $50 a share offer for F&N’s 40% stake in

APB is tomorrow Aug 3rd.

Daily Review, 02 August 2012 Page 3 of 4

SGX-ST Member, SGX-DT (CNCM)

CEREBOS

S$5.38-CERE.SI

 Suntory of Japan which already owns 82.58% of

Cerebos, has proposed a Voluntary Delisting of the

company (must be approved by at least 75% votes /

not objected by 10%), with an exit offer of $6.60 a

share for the remaining 17.42% of the company.

 The offer values Cerebos at $2094.51 mln,

representing 20.4x latest 12 months earnings.

(For Q2, Cerebos made $22.7 mln profit, up 40% y-oy).

 There is no reason not to expect Suntory to succeed

with its proposal.

COMMENTS

1. Suntory’s move reinforces the view that strength of

the yen and enormous cash resources of large Japan

Inc will continue to see more of overseas acquisitions

by Japanese companies.

2. Interest will likely move quickly to other candidates.

Isetan ($4.57. up 10) comes to mind in a heartbeaT.

Interestingly, the stock has already surged some 40%

in barely 2 weeks, rising from $3.30 to $4.57

yesterday. Isetan’s NAV at end Mar ’12 is $4.88 a

share. Historic PE is 16X. (Note, like most retailers,

profit has been declining: Q1 ’12 saw a 14% drop.)

Daily Review, 02 August 2012 Page 4 of 4

SGX-ST Member, SGX-DT (CNCM)

 As expected, Bernanke did not announce QE3 at

the close of the latest FOMC meeting. US stocks

closed moderately lower, as focus shifts to a more

US

important event: today’s (July 2nd) ECB meeting.

Will Draghi get the support of the Bundesbank?

Daily Review, 02 August 2012 Page 5 of 4

SGX-ST Member, SGX-DT (CNCM)

 As warned by management on 16 July ’12, excluding

the $2mln one-time charge for closure of their Mexico

subsidiary, 2Q ’12 operating performance would have

been at break-even level, reflecting the faster than

expected decline in business from their largest

customer Research In Motion and cost pressures.

 In preparation for the ramp up in business from

Apple, Amazon and Nike in 2H 2012, property

plant and equipment increased $86mln (36% yoy) and

$40mln (14% qoq) to $329mln.

 Hi-P is targeting to spend another $94mln in 2H 2012

to further expand production capacity to meet

customer’s demands. With cash of $287mln, Hi-P

would have no problem funding it internally.

HI-P

S$0.735-HIPS.SI

 Looking ahead into 2H 2012, we are expecting a strong

rebound in bottom-line performance for Hi-P to

$60mln, a turnaround from 1H 2012’s loss of

$581,000 and 2H2011’s profit of $16mln,

underpinned by maiden contributions from Apple’s

new product launch as well as Amazon and Nike.

 Full year 2012 profit would be 33% higher at $60mln

giving a still reasonable forward PE of 11x.

 We maintain BUY.

Daily Review, 02 August 2012 Page 6 of 4

SGX-ST Member, SGX-DT (CNCM)

ELEC & ELTEK

S$2.59-ELEC.SI

 E&E’s 2Q ’12 profit fell a disappointing 4% yoy to

US$11.6mln, pulling 1H 2012 profit down 39% to

US$17.3mln, below consensus expectations of a

flattish performance. And this is despite having

received US$3.3mln in insurance claims for the floods

in Thailand last year.

 Looking ahead, management said that the current

market conditions in the electronics sector remains

unfavourable and they are inclined to believe that

these uncertainties will likely persist for a while.

Despite this, 3Q ’12 is expected to remain profitable.

 In line with the 39% decline in interim profit, interim

dividend was also reduced by 40% to 9 US cents a

share. Including last year’s 12 US cents final dividend,

yield would be 8%.

 Since our last avoid recommendation in Nov ’11, the

stock has declined 11% and its 8% yield should provide

support.

 Upgrade to Neutral.

APB Overtures

F&N’s soft-drinks unit includes bottled water, juice drinks, sports drinks, mixers and iced teas, according to its website. F&N also produces pasteurized milk, yogurt, and juices through its dairy business. Coca-Cola is more interested in the soft-drinks operations than dairy, said these people.
F&N’s stakes in food and beverage businesses with operations in Malaysia, Vietnam and Thailand have a market value of about S$2.7 billion ($2.2 billion), according to estimates by Nomura Holdings Inc.
The Singapore-based property development, publishing and food and beverages company fell 0.4 percent to S$8.15 at the close of trading in the city yesterday, giving it a market value of about S$11.6 billion. Coca Cola gained 0.3 percent to $81.01 in New Yorking trading Aug. 1, while Kirin, which already owns 15 percent of F&N, rose 0.3 percent to 895 yen at the close in Tokyo yesterday.
F&N also owns 40 percent of Asia Pacific Breweries Ltd. (APB), a joint venture with Heineken NV (HEIA) in Asia. Heineken, the world’s third-biggest brewer, last month offered as much as S$7.5 billion to acquire a majority stake in APB, and has given F&N until Aug. 3 to respond.
The Dutch brewer’s July 20 bid came two days after Thai Beverage Pcl (THBEV), the brewer of Chang Thai Beer, struck a deal to buy a 22 percent stake in F&N. At the same time, a company affiliated with ThaiBev’s billionaire owner Charoen Sirivadhanabhakdi purchased almost 9 percent of APB.
To contact the reporters on this story: Cathy Chan in Hong Kong at [email protected]; Jeffrey McCracken in New York at [email protected]; Duane D. Stanford in Atlanta at [email protected]


 

Today’s Focus

 Hi-P - Upgrade to BUY with higher TP of S$0.91; buy

ahead of new phone launches

U.S. stocks fell moderately as the outcome of the FOMC

meeting offered nothing new for investors hoping to hear a

more definitive sign of further monetary easing. Attention

remains on the outcome of the ECB policy meeting and

expectations are high after President Mario Draghi said the

ECB will do whatever it takes to preserve the Euro. If the ECB

disappoints, financial markets could react again.

STI’s rise above 3025 this week is within our expectation and

we maintain our view that even as this level gets taken out;

the index would soon have to face a stronger resistance

around 3100. A pullback looks ever more likely with even inch

that the index claws higher. Blue chip stocks that had led the

STI rally becomes more vulnerable to profit taking as the index

inches higher.

OCBC’s 2Q12 net profit came in at S$648m (-22% q-o-q;

+12% y-o-y). Results were 5% above consensus (S$616m) but

slightly below our analyst’s forecast (-3%, S$670m). Key

disappointment was net interest margin (NIM) which fell by

9bps q-o-q; 10bps y-o-y. Loan growth recovered at 3% q-o-q,

14% y-o-y largely from housing loans and construction. Noninterest

income fell due to lower insurance contribution. Nonperforming

loan (NPL) ratio improved to 0.9% (1Q12: 1.0%)

while loan loss coverage improved to 125% (1Q12: 106%).

Maintain Buy with TP raised to S$11.00 (from S$10.50) after

rolling forward valuation window to FY13.

Hi-P reported weak Q2 dragged by low margin mix but second

half is expected to see magnificent rebound. Ramp up could

start as early as Jul/Aug, driven by new smartphones and

tablets for customers such as Apple, Amazon and RIM. Our

analyst has adjusted FY12/13F earnings by -4%/14%. Upgrade

to Buy with higher TP of S$0.91 (Prev S$0.86). At current

valuations, Hi-P is cheaper than the average for its peers.

2Q12 results for CapitaLand were within expectations, lifted

by higher operating performance and portfolio and revaluation

gains. Our analyst expects a better 2H as more residential

project contributions kick in, with Singapore residential

continuing to drive profits. Maintain Buy, TP $3.42, (Prev S$

3.39). ROE will likely trend up from next year after declining in

the past couple of years as new projects bear fruit.

US Indices Last Close Pts Chg % Chg

Dow Jones  12,971.1 (37.6) (0.3)

S&P  1,375.3 (4.0) (0.3)

NASDAQ  2,920.2 (19.3) (0.7)

Regional Indices

ST Index  3,051.1 14.7 0.5

ST Small Cap  457.7 0.4 0.1

Hang Seng  19,820.4 23.6 0.1

HSCEI  9,762.4 88.1 0.9

HSCCI  3,878.0 30.0 0.8

KLCI  1,632.5 0.9 0.1

SET  1,201.1 1.8 0.2

JCI  4,130.5 (11.9) (0.3)

PCOMP  5,298.7 (8.9) (0.2)

KOSPI  1,879.9 (2.1) (0.1)

TWSE  7,268.0 (2.5) (0.0)

Nikkei  8,641.9 (53.2) (0.6)

STI Index Performance

Singapore

1,000

2,000

3,000

4,000

2006 2007 2008 2009 2010 2011 2012

100-Day MA

Index

STI

Total Market cap (US$bn) 552

Total Daily Vol (m shrs) 1,472

12m ST Index High 3,215

12m ST Index Low 2,529

Source: Bloomberg

Stock Picks – Large Cap

Rec’n Price ($)

1/8

Target Price

($)

SembCorp Industries Buy 5.330 6.00

SembCorp Marine Buy 4.910 5.85

SingTel Take profit 3.540 3.29

City Development Take profit 11.690 10.85

UOB Take profit 20.000 19.50

Stock Picks – Small Cap

Rec’n Price ($)

1/8

Target Price

($)

STX OSV Holdings Buy 1.575 2.00

Ezion Holdings Buy 0.945 1.35

Bumitama Agri Buy 1.090 1.35

Nam Cheong Buy 0.179 0.24

Source: Bloomberg, DBS Vickers

Singapore

Wired Daily

Page 2

2Q12 net earnings for Cosco Corp in line; gross margins

lifted by better ship-repair and conversion margins and

writeback of provisions. No turnaround for shipbuilding

orders till 2014 while offshore space is competitive.

Margins from shipbuilding will be under pressure as it

continues to deliver on low margin contracts secured in

2010, eroding efficiency gains. While offshore demand is

strong, keen competition and the absence of a solid track

record will lead to low margin contracts and projects

secured on balloon payments. This will stretch its balance

sheet. Maintain Fully Valued and S$0.88 TP.

Japan's Suntory group is taking Cerebos Pacific private

with an offer to buy all outstanding shares for about

$365m. The offer price of $6.60 per share for the

17.42% stake it does not already own represents a

premium of 22.7% to the last traded price of $5.38 on

Monday. The offer is at an implied EV/Ebitda (FY 2011)

multiple of approximately 10.6 times.

Koon Holdings intends to buy four properties in Malaysia

belonging to two controlling shareholders and their

family members. The $17m consideration will be funded

by a proposed three-for-five rights share issue. Koon

plans to develop the four properties in Johor Baru for sale

as commercial units. Koon has proposed the nonrenounceable,

non-underwritten rights issue to raise at

least $17.7m, and up to $18.4m, for the property

purchase. The issue involves the sale of up to 98.5m new

shares at 19 cents each, vs its last traded price of 20

cents.

Tiong Woon is expected to report a loss for the full year

ended 30 June 2012, largely due to foreign exchange loss

and provision for doubtful debts.

Asia Fashion Holdings is expected to report a significant

loss for 2Q12 as a result of significantly lower revenue

and gross margin. The reason was mainly attributable to

the decline of sales and average selling prices due to

weakened demand in fabrics from its existing customers.

Singapore’s July PMI failed to buck the regional trend of

contracting PMIs for a third month. July's PMI dipped 0.6

point to 49.8, as new domestic orders fell and new orders

from abroad grew slower. Its electronics index fell a larger

1.2 points, after above-50 readings throughout the first

half of the year. Growth in the electronics sector was

derailed due to contractions in new orders, output and

employment readings.

Elsewhere in the region, China's official PMI for July

weakened to an eight-month low of 50.1 while the HSBC

gauge, which captures more SME activity, still indicated

shrinking industrial activity with a reading of 49.3. Major

Asian exporters such as Japan, Taiwan and South Korea

also reported PMIs showing deeper contractions. Japan's

fell to a 15-month low of 47.9, South Korea's fell to an

eight-month low of 47.2 and Taiwan's fell to a sevenmonth

low of 47.5. India stayed above the 50-point

threshold in expansion zone but its PMI of 52.9 was an

eight-month low and severe power cuts this week cast a

shadow on the economy.

Our economist has lowered Singapore’s full-year GDP

growth for this year to 3.0%, from 3.5% and lowered

2013 forecast to 4.3% from 5.0%. Inflation remains

high, one of the highest in Asia, with full year average

inflation estimated at 4.5%.

Singapore

Wired Daily

Page 3

Share Buy-Back

Company D.O.T . Buy /Sell No.of shares S$/shr

Ho Bee Investment Limited 30-Jul-12 Share Buy-Back 400,000 1.2200

Ho Bee Investment Limited 27-Jul-12 Share Buy-Back 300,000 1.2167

Ho Bee Investment Limited 26-Jul-12 Share Buy-Back 394,000 1.2150

AEM Holdings Ltd 25-Jul-12 Share Buy-Back 2,500,000 0.0850

HG Metal Manufacturing Ltd 25-Jul-12 Share Buy-Back 20,000 0.0820

Ho Bee Investment Limited 25-Jul-12 Share Buy-Back 426,000 1.2138

Ho Bee Investment Limited 24-Jul-12 Share Buy-Back 563,000 1.2094

San Teh Limited 24-Jul-12 Share Buy -Back 242,000 0.2900

CNA Group Ltd 23-Jul-12 Share Buy-Back 25,000 0.1076

HG Metal Manufacturing Ltd 23-Jul-12 Share Buy-Back 1,071,000 0.0829

Ho Bee Investment Limited 23-Jul-12 Share Buy-Back 450,000 1.2094

KSH Holdings Limited 20-Jul-12 Share Buy-Back 488,000 0.2450

Viking Offshore and Marine 20-J ul-12 Share Buy-Back 40,000 0.1080

Hyflux Ltd 19-Jul-12 Share Buy-Back 240,000 1.4104

Pan-United Corporation Ltd 19-Jul-12 Share Buy-Back 105,000 0.5831

Wee Hur Holdings Ltd 19-Jul-12 Share Buy-Back 260,000 0.2800

Hyflux Ltd 18-Jul-12 Share Buy-Back 661,000 1.4137

Pan-United Corporation Ltd 18-Jul-12 Share Buy-Back 164,000 0.5792

Overseas-Chinese Banking Corp 17-J ul-12 Share Buy-Back 200,000 9.2700

Wee Hur Holdings Ltd 17-Jul-12 Share Buy-Back 625,000 0.2800

SGX Masnet

Singapore

Wired Daily

Page 5

Announced Dividends and Capital Issues: 2 Aug 2012 – 22 Nov 2012 (by Ex-Date)

Source: SGX

Company Type Particulars Ex Date Paid/ Payable

ASCOTT RESIDENCE TRUST DIVIDEND 010112 - 300612 SGD 0.00361 TAX EXEMPT 02-Aug-12 29-Aug-12

ASCOTT RESIDENCE TRUST DIVIDEND 010112 - 300612 SGD 0.01206 LESS TAX 02-Aug-12 29-Aug-12

ASCOTT RESIDENCE TRUST DIVIDEND 010112 - 300612 SGD 0.0295 02-Aug-12 29-Aug-12

BOUSTEAD SINGAPORE LIMITED DIVIDEND SGD 0.03 ONE-TIER TAX 02-Aug-12 21-Aug-12

CDL HOSPITALITY TRUSTS DIVIDEND 010112 - 300612 SGD 0.0517 LESS TAX 02-Aug-12 29-Aug-12

CDL HOSPITALITY TRUSTS DIVIDEND 010112 - 300612 SGD 0.0053 TAX EXEMPT 02-Aug-12 29-Aug-12

TAT HONG HOLDINGS LTD DIVIDEND SGD 0.015 ONE-TIER TAX 02-Aug-12 22-Aug-12

TOTAL ACCESS COMM PUB CO LTD DIVIDEND THB 2.27 LESS TAX 02-Aug-12 22-Aug-12

TRITECH GROUP LIMITED DIVIDEND SGD 0.0025 ONE-TIER TAX 02-Aug-12 28-Aug-12

GLOBAL YELLOW PAGES LIMITED DIVIDEND SGD 0.002 ONE-TIER TAX 03-Aug-12 28-Aug-12

KING WAN CORPORATION LIMITED DIVIDEND SGD 0.01 ONE-TIER TAX 03-Aug-12 17-Aug-12

METRO HOLDINGS LIMITED DIVIDEND SGD 0.02 ONE-TIER TAX 03-Aug-12 17-Aug-12

METRO HOLDINGS LIMITED DIVIDEND SGD 0.04 ONE-TIER TAX 03-Aug-12 17-Aug-12

PAN HONG PROPERTY GROUP LTD DIVIDEND SGD 0.01 03-Aug-12 30-Aug-12

UNITED ENVIROTECH LTD DIVIDEND SGD 0.003 ONE-TIER TAX 03-Aug-12 17-Aug-12

SINGTEL DIVIDEND SGD 0.09 ONE-TIER TAX 06-Aug-12 24-Aug-12

WILLAS-ARRAY ELEC (HLDGS) LTD DIVIDEND HKD 0.06088 06-Aug-12 21-Aug-12

WILLAS-ARRAY ELEC (HLDGS) LTD DIVIDEND HKD 0.01826 06-Aug-12 21-Aug-12

ZAGRO ASIA LIMITED OFFER OFFER OF 32 FOR 100 @ SGD 0.15 06-Aug-12

HIAP SENG ENGINEERING LTD DIVIDEND SGD 0.005 ONE-TIER TAX 07-Aug-12 28-Aug-12

POWERMATIC DATA SYSTEMS LTD DIVIDEND SGD 0.01 ONE-TIER TAX 07-Aug-12 27-Aug-12

ROYAL DUTCH SHELL A ADR 10 DIVIDEND USD 0.731 07-Aug-12 20-Sep-12

SHENG SIONG GROUP LTD DIVIDEND SGD 0.01 ONE-TIER TAX 07-Aug-12 22-Aug-12

GP BATTERIES INT LTD DIVIDEND SGD 0.015 ONE-TIER TAX 08-Aug-12 28-Aug-12

JARDINE CYCLE & CARRIAGE LTD DIVIDEND USD 0.18 ONE-TIER TAX 10-Aug-12 24-Sep-12

FISCHER TECH LTD DIVIDEND SGD 0.006 ONE-TIER TAX 13-Aug-12 30-Aug-12

METAL COMPONENT ENGG LTD RIGHTS 1RS1W FOR 1SH OFFER OF 1 FOR 1 @ SGD 0.01 13-Aug-12

RAFFLES MEDICAL GROUP LTD DIVIDEND SGD 0.01 ONE-TIER TAX 13-Aug-12 31-Aug-12

SINGAPORE POST LIMITED DIVIDEND SGD 0.0125 ONE-TIER TAX 14-Aug-12 31-Aug-12

DAIRY FARM INT'L HOLDINGS LTD DIVIDEND USD 0.065 15-Aug-12 10-Oct-12

HONGKONG LAND HOLDINGS LIMITED DIVIDEND USD 0.06 15-Aug-12 10-Oct-12

JARDINE MATHESON HLDGS LTD DIVIDEND SCRIP OPTION USD 0.35 15-Aug-12 10-Oct-12

JARDINE STRATEGIC HLDGS LTD DIVIDEND SCRIP OPTION USD 0.07 15-Aug-12 10-Oct-12

MANDARIN ORIENTAL INTL LTD DIVIDEND USD 0.02 15-Aug-12 10-Oct-12

SWING MEDIA TECHNOLOGY GRP LTD DIVIDEND SCRIPDIVSCHEME SGD 0.002 15-Aug-12 05-Oct-12

TRANSIT-MIXED CONCRETE LTD DIVIDEND SGD 0.01 ONE-TIER TAX 17-Aug-12 07-Sep-12

CSC HOLDINGS LTD DIVIDEND SGD 0.0009 ONE-TIER TAX 23-Aug-12 07-Sep-12

NY01100F 160901 INTEREST 0.0375 23-Aug-12 03-Sep-12

NY03100A 180901 INTEREST 0.04 23-Aug-12 03-Sep-12

NY05100N 200901 INTEREST 0.0325 23-Aug-12 03-Sep-12

NY07100X 220901 INTEREST 0.03125 23-Aug-12 03-Sep-12

NY09100H 240901 INTEREST 0.03 23-Aug-12 03-Sep-12

NZ07100S 270301 INTEREST 0.035 23-Aug-12 03-Sep-12

NZ10100F 300901 INTEREST 0.02875 23-Aug-12 03-Sep-12

CAPITAMALLS ASIA LIMITED DIVIDEND SGD 0.01625 ONE-TIER TAX 29-Aug-12 13-Sep-12

OSIM INTERNATIONAL LTD DIVIDEND SGD 0.01 ONE-TIER TAX 29-Aug-12 12-Sep-12

OSIM INTERNATIONAL LTD DIVIDEND SGD 0.01 ONE-TIER TAX 29-Aug-12 12-Sep-12

SAKARI RESOURCES LIMITED DIVIDEND USD 0.02 TAX EXEMPT 30-Aug-12 13-Sep-12

CAPITARETAIL CHINA TRUST DIVIDEND 010112 - 300612 SGD 0.0482 05-Sep-12 26-Sep-12

POPULAR HOLDINGS LIMITED DIVIDEND SGD 0.008 ONE-TIER TAX 07-Sep-12 26-Sep-12

NOVO GROUP LTD. DIVIDEND SGD 0.01 ONE-TIER TAX 10-Sep-12 04-Oct-12

FRAGRANCE GROUP LIMITED BONUS OFFER OF 1 FOR 1 14-Sep-12

TOTAL ADR 10 DIVIDEND APPROXIMATE USD 0.587795 19-Sep-12 18-Oct-12

GP INDUSTRIES LIMITED DIVIDEND SGD 0.015 ONE-TIER TAX 20-Sep-12 04-Oct-12

N507101E 121001 INTEREST 0.025 20-Sep-12 01-Oct-12

N507101E 121001 ENTITL. REDEMPTION 100% 20-Sep-12 01-Oct-12

N508100V 130401 INTEREST 0.01625 20-Sep-12 01-Oct-12

N509100N 141001 INTEREST 0.01375 20-Sep-12 01-Oct-12

N511100W 160401 INTEREST 0.01125 20-Sep-12 01-Oct-12

N710100Z 170401 INTEREST 0.02375 20-Sep-12 01-Oct-12

NA12100N 420401 INTEREST 0.0275 20-Sep-12 01-Oct-12

SINGAPORE EXCHANGE LIMITED DIVIDEND SGD 0.15 TAX EXEMPT 26-Sep-12 12-Oct-12

LIAN BENG GROUP LTD DIVIDEND SGD 0.01 ONE-TIER TAX 03-Oct-12 19-Oct-12

LIAN BENG GROUP LTD DIVIDEND SGD 0.01 ONE-TIER TAX 03-Oct-12 19-Oct-12

K1 VENTURES LIMITED DIVIDEND SGD 0.005 ONE-TIER TAX 31-Oct-12 14-Nov-12

NX09100W 190601 INTEREST 0.025 22-Nov-12 03-Dec-12

NX11100X 210601 INTEREST 0.0225 22-Nov-12 03-Dec-12

S-REITS / BUSINESS TRUSTS

Quarterly Update / Recommendations

 The sector has continued to do well, including the

ones we have favored, in a record low interest rate

environment globally.

 Our top 4 picks have been CitySpring (utilities biz

trust), Fraser Centrepoint (retail), Mapletree

Commercial (mixed) and Parkway Life

(healthcare).

 With concerns (during the financial crisis ) over

refinancing long receded, even the lower quality

reits have participated in the strong performance.

 As has Fortune Reit, which is traded in HK$. The

HK-based reit is back to its 2007 high, except that

the exchange rate of HK$6.216 today compares with

HK$5.11 in Jun ‘07. HK$5.35 translated to S$1.05

equivalent then, vs S$0.86 today.

 Cache (industrial), MCT, Mapletree Industrial,

which listed less than 2 years ago, have scaled new

heights. And so has PLife, no doubt benefitting from

the strong interest in the IPO of IHH, which is its

largest shareholder with a 35.8% stake.

 It would be difficult for CapitaMalls Trust (retail),

Singapore’s first reit, to do the same (as in scaling

new heights), with its 2007 high still substantially

above current levels. CMT is also the lowest-yielding

reit, a reflection of its winning attributes.

 With expectation of the Federal Reserve lengthening

the period of exceptionally low rates into 2015 (from

2014), we continue to advocate a balanced portfolio

of reits / biz trusts.

 We recently added CMT to our preferred list on the

back of likely DPU increase as its asset enhancement

initiatives (eg Bugis +, Atrium ) start to bear fruit.

 We would also add Ascott Residence (hospitality),

now that it has decided on the fate of the Somerset

Grand Cairnhill. (ART is to i. sell this to

CapitaLand for $359 mln; ii. buy it back when

redeveloped with a hotel license in Q3 ’2017 for $405

mln; and iii. buy Ascott Raffles Place for $220 mln.)

 Please refer to the accompanying tables, showing

current yields (based on the latest DPU and annualized),

price-to-NAV, gross gearing (total borrowings relative

to total assets).

 Note (a) shipping trusts are excluded from the table;

(b) results from Cityspring and PLife are not yet

released).

Exhibit 1: S-REITS: Price Performance

30.07.12 % From 2012 Range 2010 - 2011 Range 2007 2009

Company Price 2012 High High Low High Low High Low

($) (%) ($) ($) ($) ($) ($) ($)

Office

CCT 1.345 -2.9 1.385 1.05 1.56 0.96 2.3698 0.4398

K-Reit 1.115 -2.2 1.14 0.84 1.3363 0.805 2.6096 0.3967

Retail

CMT 1.945 -1.0 1.965 1.705 2.15 1.64 3.5259 0.98

Frasers Centrepoint 1.805 -1.6 1.835 1.425 1.58 1.26 1.89 0.56

Mixed

Mapletree Commercial 1.09 0.0 1.09 0.855 0.90 0.795 - -

Starhill Global 0.725 0.0 0.725 0.57 0.66 0.52 1.0013 0.3012

Suntec 1.425 -2.7 1.465 1.095 1.63 1.065 2.10 0.495

Hospitality

Ascott 1.225 0.0 1.225 0.985 1.3782 0.93 2.1219 0.347

CDL Hospitality 2.07 -0.5 2.08 1.58 2.24 1.355 2.66 0.425

Industrial

Ascendas Reit 2.23 -1.3 2.26 1.855 2.29 1.82 3.2579 1.06

Cache Logistics 1.14 -0.4 1.145 0.965 1.01 0.88 - -

Cambridge 0.595 -0.8 0.60 0.48 0.5564 0.4235 0.9652 0.2117

Mapletree Logistics 1.005 -1.0 1.015 0.855 0.995 0.7558 1.4719 0.3232

Mapletree Industrial 1.31 -0.4 1.315 1.055 1.215 0.9212 - -

Infrastructure

CitySpring 0.415 0.0 0.415 0.335 0.6189 0.31 1.2252 0.3722

K-Green Trust 0.975 -4.4 1.02 0.91 1.16 0.855 - -

Healthcare

ParkwayLife 1.99 -2.0 2.03 1.72 1.95 1.25 1.28 0.685

Non-Singapore

CapitaRetail China Trust 1.45 0.0 1.45 1.13 1.33 1.07 3.24 0.595

Fortune (HK$) 5.33 -0.4 5.35 3.75 4.18 2.96 5.348 1.6692