OCBC Report

KEY IDEA Consumer Sector: Looking for resilience of growth We see three trends among our coverage’s 4QCY13 and CY13 earnings: 1) strong revenue growth, 2) stable margins, and 3) USD-denominated results being hurt by weaker regional currencies. Though the street expects FTSE Consumer Services Index’s EPS to increase by 10.6% to 44.3 in CY14, we maintain UNDERWEIGHT on the sector. We think the trading premium of 1 s.d. above its 2-year historical average could be eroded readily with downturn in market sentiments as seen in Feb-14. Other than strong expected corporate earnings, we are looking for resilience to headwinds in this jittery market. We continue to like Sheng Siong Group [BUY; S$0.68 FV] and Petra Foods [BUY; S$4.08 FV] but not BreadTalk Group [SELL; S$0.85 FV]. (Yap Kim Leng) MORE REPORTS Ascott Residence Trust: Acquires Japan rental housing property ART has acquired a rental housing property in Fukuoka named Infini Garden for JPY6.3b (~S$78.4m) and with an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to have increased FY13 distribution per unit by 2.1% from 8.40 S cents to 8.58 S cents. ART acquired the 389-unit Infini Garden from The Ascott Limited (Ascott) and ArcResidential Japan Investments Limited. We maintain our BUY rating on ART but place our fair value of S$1.33 under review. (Sarah Ong)

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NEWS HEADLINES - US stocks reversed post-Fed meeting losses and finished Thu with modest gains. Upbeat data from Philadelphia Fed, showing a rebound in manufacturing in Mar, boosted confidence. - The US Federal Reserve will probably end its massive bond-buying programme this autumn, and could start raising interest rates around six months later, Fed chair Janet Yellen said. - SGX enjoyed a 70% surge last year in the volume of OTC and exchange-traded commodity derivatives, outpacing the global commodity derivatives growth of 23%. - Singapore banks are expected to issue more Basel III compliant securities, with about 25% of their Basel II securities callable, or reaching maturity, this year, Moody's said. - Mapletree Industrial Trust has signed an agreement with Hewlett-Packard to develop and lease a new S$250m build-to-suit facility at its existing Telok Blangah Cluster. - Sim Lian Group will launch the first phase of its integrated development, Vision Exchange, for sale tomorrow. - CCM Group said that its wholly owned subsidiary, CCM Industrial Pte Ltd, had on Mon received a notice of termination of a Shenton Way contract.