OCBC Report 17 Feb 14

KEY IDEA UOB: Exceeded expectations UOB posted 4Q13 net earnings of S$773m, ahead of market estimate of S$656m, giving FY13 earnings of S$3008m. As with its peers, it saw an improvement in Net Interest Margin (NIM) on a QoQ basis, up from 1.71% in 3Q13 to 1.74% in 4Q13. Management declared a final dividend of 50 cents and a special dividend of 5 cents, giving full year dividend payout of 75 cents. Management has guided for high single-digit loans growth in FY14 and expects margin to stay flat for the year. For its fee income, management is expecting to maintain the growth momentum this year, or double-digit growth this year. We have raised FY14 net earnings from S$2981m to S$3135m. However, as market sentiment is still cautious for the near to medium term, we believe that valuations are likely to remain capped. We are cutting our fair value estimate from S$22.97 to S$20.94. We downgrade UOB to HOLDand will be buyers below S$19.70. (Carmen Lee) MORE REPORTS Goodpack Limited: On track with new accounts Goodpack’s revenue and PATMI for 2QFY14 met our expectations by increasing 9.8% YoY to US$50.9m and 12.0% to US$12.5m respectively. 1HFY14 revenue at US$103.0m forms 99.9% and 49.1% of our 1HFY14 and FY14 forecasts respectively. Correspondingly, 1HFY14 PATMI at US$26.4m forms 100.4% and 49.0% of our 1HFY14 and FY14 forecasts. We maintain our previous investment thesis that new accounts and segments will drive growth as Goodpack acquired a new synthetic rubber client in China and also three new auto parts clients to start off with trials. We maintain our BUY call with a DCF-based fair value of S$2.17. (Yap Kim Leng) Roxy-Pacific Holdings: A good harvest in FY13 Roxy announced 4Q13 PATMI of S$44.8m, up 91% YoY mostly due to profit contributions from WIS@Changi, which achieved TOP over the quarter, and progressive recognition at seven other property development projects. Full year FY13 PATMI cumulates to S$92.2m, which increased 58%. This is 18% above our FY13 forecast, but only due to faster-than-anticipated progress recognition over 4Q13. While management execution remains strong, we deem it appropriate to raise our RNAV discount marginally from 25% to 30% to a level closer in line with listed peers and to reflect weaker fundamentals in its core business space. This brings our fair value estimate down to S$0.61 (from S$0.65 previously) and our rating down to a HOLD. A final cash dividend of 1.297 S-cents per share is proposed.  (Eli Lee) Lippo Malls Indonesia Retail Trust: 4Q13 a miss LMIRT’s 4Q13 results were significantly below ours and the street’s expectations. FY13 DPU of 3.25 S cents formed only ~93% of ours and the street’s prior estimate. LMIRT reported 4Q13 gross rental income of S$33.9m, down 4.0% YoY, chiefly due to FX movements. Finance expenses jumped by 37.5% YoY to S$9.0m due to the S$150m note issued last Oct and the S$75m note issued in Nov 2012. The S$147.5m loan facility with all-in-cost of 6.77% p.a. that was set to mature in Jun 2014 was repaid in Jan. 4Q13 other losses was S$1.0m, versus S$0.2m a year ago, chiefly due to a realised loss on FX of S$1.4m. LMIRT’s NAV has fallen from S$0.4528 at end-Sep 2013 to S$0.4115 at end-Dec 2013. Adjusting our assumptions, including raising our cost of equity assumption from 10.1% to 10.6%, we reduce our FV from S$0.45 to S$0.39. Maintain HOLD.(Sarah Ong)

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NEWS HEADLINES - US stocks ended the week with the best gains this year, sending the Nasdaq Composite to the highest level since Jul 2000. - Business sentiment has finally turned a corner, with optimistic companies outnumbering pessimistic ones for the first time in more than two years, according to the latest BT-UniSIM Business Climate Survey report. - Singapore retail sales fell 5.5% YoY in Dec 2013, as sales of motor vehicles slumped, although retail sales were up from the previous month. - AIMS AMP Capital Industrial REIT has announced a 7 for 40 underwritten and renounceable rights issuance to fund its future growth opportunities. - Higher costs hit China Minzhong, which reported a 6.4% drop in net profit to 201.9m yuan (S$41.9m) for its 2QFY14. - Croesus Retail Trust posted a DPU of 2.02 S cents for 2QFY14, 1.8% higher than its IPO forecast of 1.98 S cents.