OCBC Report 21 Jan 14

KEY IDEA M1: Declares S$0.07 special dividend M1 Ltd saw FY13 revenue fall 6.4% to S$1007.9m, and was 3.8% below our forecast, while net profit climbed 9.4% to S$160.2m, or 3.5% above our forecast. M1 declared a final dividend of S$0.071 per share and a special dividend of S$0.071, bringing the total full year dividend to S$0.21 per share. This translates into a payout ratio of 121% of its earnings, versus its official minimum payout ratio of 80%. Going forward, management believes that it can continue to achieve moderate earnings growth (within the single-digit range), where it remains largely positive about the mobile business; but slightly more guarded about the fixed services segment. Factoring in the latest developments, we opt to pare our FY14 revenue forecast by 8% but increase our earnings estimate by 2%. Our DCF-based fair value will also improve from S$3.17 to S$3.30 as we roll forward to FY14. As we are unlikely to see a repeat of such a hefty special dividend this year, we maintain our HOLD rating. (Carey Wong) MORE REPORTS First REIT: Ends FY13 with 7.52 S cents DPU First REIT (FREIT) reported FY13 gross revenue and DPU growth of 44.5% and 14.3% (excluding exceptional gains distribution of 0.68 S cents in FY12) to S$83.3m and 7.52 S cents, and closely matched our revenue and DPU forecast of S$83.2m and 7.54 S cents, respectively. Looking ahead, we believe FREIT’s key priority in any lease terms negotiation for new acquisitions would be to maintain its base rental denomination in SGD to minimise its FX risk. We trim our FY14 and FY15 DPU forecasts marginally by 1.5%, on lower revenue and higher finance costs assumptions. But as we roll forward our valuations, our DDM-derived fair value estimate inches up from S$1.18 to S$1.19. Maintain BUY on FREIT as FY14F distribution yield remains attractive at 7.9%. (Wong Teck Ching Andy) Mapletree Logistics Trust: Strong but priced in Mapletree Logistics Trust (MLT) reported 3QFY14 DPU of 1.84 S cents, up 7.0% YoY. This brings the 9MFY14 DPU to 5.46 S cents, meeting 75.2%/76.9% of our/consensus full-year projections. Going forward, management reiterated that active lease and asset management will be a key priority in light of the supply of warehouse space in 2014 and impending conversion of more single-user assets into multi-tenancies (which may result in occupancy dip). MLT also confirmed our view that competition for acquisition of logistic assets is becoming increasingly intense. Nevertheless, given that MLT’s recent initiatives are like to contribute positively to MLT’s income, we believe MLT’s performance will remain robust in FY15. Maintain HOLDwith unchanged fair value of S$1.06. (Kevin Tan)

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NEWS HEADLINES - US stock and bond markets were closed for Martin Luther King Jr. Day on Mon. - Local business confidence is wilting in 1Q14, although it remains in the positive range, going by the latest Business Optimism Index compiled by the Singapore Commercial Credit Bureau. - K-Green Trust has maintained its 2H13 DPU at 4.69 S cents, bringing its FY13 DPU to 7.82 S cents, unchanged from FY12. - Keppel REIT posted a 4Q13 DPU of 1.97 S cents, unchanged from a year ago. - Jardine Strategic Holdings Ltd has agreed to invest US$731m to buy a 20% stake in Hong Kong-listed Zhongsheng Group Holdings Ltd. - Xinjiang mining exploration firm Mineriver, in which JES International is buying a 30% stake, sought to dispel questions over the claim that it had 4.2b tonnes of resources in its mine. - Ley Choon Group Holdings secured a S$7m contract from the Public Utilities Board through its subsidiary Chin Kuan Engineering and Contractors.