DBS Report

Today’s Focus
 Mapletree Industrial Trust – Secured new Build-to-Suit
(BTS) facility. Maintain BUY, target price raised to
S$1.50
The FED’s hawkish statement last week with regards to the
timing and pace of the eventual interest rate hike speaks of
the central bank’s confidence on the US economy. This
coupled with expectations of the Eurozone pulling out from
recession this year should rekindle optimism of a global
recovery. Still, Asian indices are likely to underperform the US
on concerns about China’s bad loans and the influence of a
slowdown in the Chinese economy.
Goodpack is one stock we highlighted as a global recovery
proxy at the start of the year that has done well on news of a
potential takeover. An uptick in recovery optimism should
also underpin the SMC proxies in the O&M sector. Our picks
are Ezion, Kim Heng, Pacific Radiance, Nam Cheong, Vard
and Rex. But sentiment towards interest rate sensitive sectors
such as SREITs and property should be affected with the FED
turning more hawkish.
Our stated STI near-term support range from 3000-3050
stayed unchallenged last week despite the index’s
choppiness. We stick to our ‘bargain hunt on dip’ stance in
the short term, underpinned by possible bargain hunting of
blue chips ahead of their trading “ex dividend”. We look to
stay with this view until the next seasonal trend to “sell in
May and go away” comes.
Data releases this week include 1) Singapore’s February
industrial production (consensus +13.7% y-o-y) and CPI
(consensus +0.8% y-o-y) 2) HSBC China manufacturing PMI
(consensus 48.7) and 3) US consumer confidence (consensus
78.6) and new home sales (-4.9% m-o-m)
Mapletree Industrial Trust (MINT) announced that they have
secured to develop a new Build-to-Suit (BTS) facility for
Hewlett Packard (HP) for a total consideration of S$250m. HP
will, upon completion of this BTS in FY18F, sign a long term
lease of 10.5 years, with two 5-year extension options,
providing strong income visibility for MINT. The proposed
development is estimated to yield 9.0% on total cost and is
positive for MINT in many ways. Upon completion in FY18F,
MINT will benefit from (i) higher property specifications with
the property repositioned as a hi-tech property, (ii) higher
revenues through the maximization of un-utilized plot ratios
(1.3x to 2.5x) resulting in c. 89% increase in GFA, (iii)
stronger income visibility through a longer weighted average
lease expiry (WALE) backed by a strong tenant.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,302.8 (28.3) (0.2)
S&P  1,866.5 (5.5) (0.3)
NASDAQ  4,276.8 (42.5) (1.0)
Regional Indices
ST Index  3,073.4 16.2 0.5
ST Small Cap  535.4 1.4 0.3
Hang Seng  21,436.7 254.5 1.2
HSCEI  9,427.3 224.3 2.4
HSCCI  3,974.0 27.5 0.7
KLCI  1,820.5 2.3 0.1
SET  1,360.5 (1.0) (0.1)
JCI  4,700.2 1.2 0.0
PCOMP  6,339.3 (78.1) (1.2)
KOSPI  1,945.3 10.3 0.5
TWSE  8,577.2 (20.2) (0.2)
Nikkei  14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 1,790
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
21 Mar
Target Price
(S$)
ComfortDelgro Buy 1.945 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.580 12.60
Yangzijiang Buy 1.060 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
21 Mar
Target Price
($)
Ezion Holdings Buy 2.170 3.26
Goodpack Buy 2.250 2.60
China Merchants Buy 0.970 1.32
Pacific Radiance Ltd Buy 1.030 1.20
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 3
At c. 9% yield, this development project is expected to be
yield enhancing to earnings upon completion. Gearing is
estimated to hit c. 41% upon completion in the medium
term. Given the phase investment, we believe that there is
no urge need to raise new equity. Maintain BUY, target
price raised to S$1.50 (Prev S$ 1.44).
Tigerair has entered into an agreement with Airbus and
Pratt & Whitney (P&W) for the order of 37 fuel-efficient
Airbus A320neo aircraft powered by Pratt & Whitney
PW1100G-JM engines. The purchase agreement also gives
Tigerair the option to increase its order by up to 13
additional aircraft and convert the A320neos into the larger
A321neo model. Consequent to the agreement, the airline’s
existing order of nine Airbus A320 aircraft, that were part of
a larger 2007 order, will now be cancelled. These aircraft
were originally scheduled for delivery in 2014 and 2015.
K-Green Trust will be proposing an expansion of its
investment mandate and a change of the Trust’s name to
Keppel Infrastructure Trust. In alignment with the wider
business activities of KI, K-Green Trust is proposing
expanding its current focus on “green” infrastructure assets
to cover a wider range of infrastructure assets.
F&N has signed an agreement to acquire a 70% stake in
Yoke Food Industries (YFI), a Malaysia-based company with
an annual turnover of more than RM85m (S$32m). YFI
manufactures, markets and distributes beverages in
Malaysia, as well as exports to Singapore, Indonesia and
Indochina, under brands such as Day Day, SoSoy and Juice
Secret.
Hotel Royal is looking to acquire Burasari Resort in Phuket,
Thailand for about 1.3 billion baht (S$51m) via the
acquisition of the entire issued and paid-up share capital of
Panali Company. The resort is situated at Ruamjai Road, and
is less than three minutes' walk from Patong beach. The
four-star property has 186 rooms and sits on freehold land
area of about 6,722 sq m with an approximate gross floor
area of about 11,441 sq m. According to Hotel Royal, the
acquisition is an opportunity for the group to expand its
hotel operations in the region.
Enviro-Hub Holdings has been awarded a piling contract
with a contract value of approximately S$19.2m. The
contract is expected to contribute positively to the Group’s
financial performance for the current financial year ending
31 Dec 14.
Announced merger and acquisition (M&A) deals involving
Asia-Pacific companies got off to a strong start this year,
powered by a property deal in China and the purchase of a
Korean brewer. The total value of such deals in Asia-Pacific
excluding-Japan was up 22% y-o-y at US$112.7 bn in the
first three months of 2014, according to a preliminary
report by Thomson Reuters. China companies continued to
be choice targets, with US$39.1 bn of announced deals
involving them. Singapore companies attracted some
US$12bn of the Asia-Pacific M&A volumes.
China’s economy slowed this quarter, with industries
including retail and mining showing weaker revenue growth
while loans through non-traditional channels became more
expensive, according to the China Beige Book survey. Even
with the moderation, the labour market and wage growth
were little changed from the previous quarter, the private
survey showed