Asia Pacific Equity Research | Singapore
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World Indices
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Hang Seng
Nikkei
Morning Call
13 Jan 2015
SPH REIT: Stable performance
SPH REIT reported its 1QFY15 results which were in-line
with our expectations. Revenue inched up 1.8% YoY to
S$50.6m on the back of higher rental income. Distribution
to unitholders and DPU grew 2.9% and 2.3% to S$33.5m
and 1.33 S cents, respectively, with the latter constituting
24.4% of our full-year projection. Overall rental reversions
of 12.4% were achieved for its portfolio in 1QFY15, driven
largely by Paragon (+12.5%). Asset enhancement
initiatives at Paragon will create additional space and
provide incremental rental income to SPH REIT upon
completion. Looking ahead, headwinds facing the retail
sector will continue to pose challenges to the operating
landscape. Nevertheless, average prime retail rents in
Orchard Road still managed to increase marginally by 1%
on a YoY and QoQ basis to S$34.55 psf pm in 4QCY14,
according to CBRE. We maintain our HOLD rating and
S$0.99 fair value estimate on SPH REIT, as we believe its
current valuations look fully priced
More reports:
- Lian Beng: Boost from sale of hotel development
Market Statistics (SG)
STI 52-week range
2,953
3,388
No. of gainers
No. of losers
195
278
No. of unchanged
170
3-mth S$ SIBOR
3-mth US$ SIBOR
Crude futures (US$)
 Cheung Woh Technologies' 3Q15 revenue rose 51.2% YoY to
S$24.4m and net profit increased 178.5% YoY to S$4.3m
due to higher sales of its components.
 Qian Hu Corporation's FY14 net profit was up 29.8% YoY to
S$0.4m, due to stable contributions from Dragon Fish sales
in China and export of accessories.
Economic Statistics
S$/US$
Yen/US$
News Headlines
1.3
118.4
0.0
0.0
0.6
0.2
0.0
0.0
46.1
-2.3
Research Team
(65) 6531 9800
e-mail: [email protected]
 DeClout Limited acquires OSINet International for
~S$14.2m, enabling its subsidiary to hold the required
licence for end-to-end cloud services provision.
 Universal Resource and Services proposed the acquisition of
a 57.64% stake in HongKong New Wing Energy
Development for US$49.99m.
 Singapore eDevelopment will acquire a 197-acre planned
unit development in Frederick County, US for US$15.65m. It
has secured pre-sales commitment for 89% of the project's
GDV.
 A subsidiary of Technics Oil & Gas accepted a LOI for the
proposed sales and leaseback of its property in Loyang at a
cash consideration of S$100m.
 Global Logistic Properties leases 20,000 sqm to Suning
Commerce, one of China's largest retailers and e-commerce
companies in Southern China.
Sources: MasNet, Bloomberg, Business Times, Straits Times and other media
Please refer to important disclosures at the back of this document.
MCI (P) 006/06/2014
OCBC Investment Research
Market Pulse
13 Jan 2015
SPH REIT: Stable performance
Lian Beng: Boost from sale of hotel
development
 1QFY15 DPU grew 2.3% YoY
 Positive rental reversion of 12.4%
 Valuations not cheap
Lian Beng announced 1HFY15 PATMI of
S$35.5m, up 105.2% YoY mostly due to its
share of results of associates and joint
ventures improving from a loss of S$9.6m in
1HFY14 to a profit of S$21.5m in 1HFY15, as
the group divested its stake in the hotel
development at Middle Road and recognized
profits from its stakes in residential property
projects at Newest, KAP Residences and The
Midtown. We judge these results to be within
expectations and 1HFY15 PATMI now
constitutes 54.6% of our full year forecast. In
terms of the topline, 1HFY15 revenues also
increased 26.1% YoY to S$367.6m with
increased contributions from the construction
segment and worker’s dormitory business,
partially offset by a decrease in revenues
from the group’s ready-mixed concrete
segment. An interim dividend of 0.1 S-cents
has been proposed. Maintain HOLD with an
unchanged fair value estimate of S$0.65.
(Eli Lee)
1QFY15 results came in within our
expectations
SPH REIT reported its 1QFY15 results which
were in-line with our expectations. Revenue
inched up 1.8% YoY to S$50.6m on the back
of higher rental income. This formed 24.6%
of our FY15 forecast. Distribution to
unitholders and DPU grew 2.9% and 2.3% to
S$33.5m and 1.33 S cents, respectively, with
the latter constituting 24.4% of our full-year
projection.
Healthy rental reversions achieved
Both SPH REIT’s Paragon and The Clementi
Mall remained fully leased. Overall rental
reversions of 12.4% was achieved for its
portfolio in 1QFY15, driven largely by
Paragon (+12.5%) and marginally by The
Clementi Mall (+2.3%), although the latter
had only one lease renewal during the
quarter. In terms of asset enhancement
initiatives, the chiller decanting project at
Paragon will create an additional 5,000 sq ft
of NLA when it is completed by FY16.
Tenancies for the new space have already
been committed and are expected to
contribute an incremental rental income of
close to S$1m per annum. Management is
also carrying out planning works to create
another NLA of 5,000 sq ft at Paragon. This
would be phased in from FY16.
.
Maintain HOLD
Looking ahead, headwinds facing the retail
sector will continue to pose challenges to the
operating landscape. Nevertheless, average
prime retail rents in Orchard Road still
managed to increase marginally by 1% on a
YoY and QoQ basis to S$34.55 psf pm in
4QCY14, according to CBRE. This highlights
the attractiveness and value of assets which
are strategically located in good catchment
areas. We maintain our HOLD rating and
S$0.99 fair value estimate on SPH REIT, as
we believe its current valuations look fully
priced. The stock is trading at FY15F P/B of
1.1x and distribution yield of 5.2%, versus its
retail peers’ forward P/B of 1.0x and
distribution yield of 6.1%. (Wong Teck
Ching Andy)
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OCBC Investment Research
Market Pulse
13 Jan 2015
Calendar of key events
12-Jan-15
13-Jan-15
14-Jan-15
15-Jan-15
16-Jan-15
SPH REIT 1QFY15
SG 4Q GDP
US Dec Retail Sales
First REIT 4Q14
SG Dec NODX
SPH 1Q15
US Dec CPI
US Dec Ind Production
19-Jan-15
20-Jan-15
21-Jan-15
22-Jan-15
23-Jan-15
M1 4Q14
MIT 3QFY15
SGX 2QFY15 Results
KepCorp 4Q14
Tigerair 3QFY15
MLT 3Q15
Mapletree Industrial Trust
3Q15
Mapletree Commercial Trust
3Q15
Sabana REIT 4Q14
CapitaMall 4Q14
K-REIT 4Q14
Kep T&T 4Q14
KepLand 4Q14
Ascott Residence 4Q14
SG Dec CPI
Soilbuild REIT 4Q14
Ascendas 3QFY15
Fortune REIT 4Q14
FCOT 1QFY15
Kep Infra Trust 4Q14
Suntec REIT 4Q14
26-Jan-15
27-Jan-15
SG Dec Ind Production
MGCCT 3QFY15
28-Jan-15
Cache Logistics 4Q14
SMRT 3QFY15
SG Dec Money Supply
US Jan FOMC Rate Decision
SG Dec Bank Loans and
Advances
SG 4Q Unemployment rate
US Dec New Home Sales
US 4Q GDP
03-Feb-15
04-Feb-15
US Jan ISM Mfg
SIAEC 3QFY15
US Jan ISM Non Mfg
Composite
05-Feb-15
06-Feb-15
SIA 3QFY15
Cn Jan Mfg PMI
US Jan Chg in Nonfarm
Payrolls
CN Jan Non Mfg PMI
US Jan Unemployment Rate
10-Feb-15
11-Feb-15
12-Feb-15
13-Feb-15
CN Jan New Yuan Loans
ComfortDelgro 4QFY14
Wilmar 4Q14
SG Dec Retail Rate
US Jan Retail Sales
Notes:
30-Jan-15
US Dec Durable goods
orders
02-Feb-15
09-Feb-15
29-Jan-15
Sourced from Bloomberg
All US Tech results dates have been adjusted to Singapore dates.
US Initial jobless claims are released every Friday.
MBA mortgage applications are released every Wednesday.
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OCBC Investment Research
Market Pulse
13 Jan 2015
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Co.Reg.no.: 198301152E
Carmen Lee
Head of Research
For OCBC Investment Research Pte Ltd
Published by OCBC Investment Research Pte Ltd
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