OCBC Report 21 May 14

KEY IDEA Ascott Residence Trust: Expecting better 2H14 Ascott Residence Trust’s (ART) recent 1Q14 results were within our expectations. While portfolio RevPAU has remained stable both YoY and QoQ at S$124, we note that RevPAU for Japan, United Kingdom and Belgium saw a 18%, 13% and 11% increase respectively, driven by strong demand from corporate and leisure travelers. In Singapore and Vietnam, higher demand from executives on project assignments were also seen, and this has helped to push RevPAU up 6% in both countries. Looking ahead, management disclosed that it will continue to undertake AEIs to enhance customer experience and maximize returns. Coupled with the revenue from its Dalian property (acquired in Mar), Fukuoka property (to complete by Jul) and possibly new acquisitions in the key gateway cities, we believe 2H14 to be stronger. Maintain BUY with unchanged fair value of S$1.33 on ART. (Kevin Tan) MORE REPORTS Sembcorp Marine: Secures US$236m jack-up rig order Summary: Sembcorp Marine (SMM) announced that its subsidiary, Jurong Shipyard, has secured a US$236m (~ S$296m) contract to build a high specification, tailor-made jack-up rig for new customer Hercules North Sea Ltd. Scheduled for delivery in 2Q16, the rig will be based on the F&G 2000E design which has enhanced features suitable for UK operations. It will be chartered out to Maersk Oil and Gas upon completion. Payment terms are 10% upon contract signing, followed by another 10% a year after, and finally 80% upon delivery. Recall that SMM also had a F&G 2000E order in Oct 2010 from Seadrill with a price tag of US$192m per rig. Besides a general increase in jack-up rig prices, the current unit could also be priced higher due to more customization. YTD, SMM has secured new orders worth about S$1.93b, accounting for 48% of our full year estimate. This also brings the group’s total net order book to S$13.2b. Maintain BUY with S$4.90 fair value estimate. (Low Pei Han) Yoma Strategic Holdings: 4QFY14 boosted by fair value gains Yoma reported 4FYQ14 PATMI of S$6.4m, which dipped 44.9% YoY mostly due to the absence of gains from a bargain purchase recognized in 4QFY13, and partially offset by a S$5.2m fair value gain on investment properties in 4QFY14. Excluding these one-time items, we estimate core FY14 PATMI at S$11.9m, which forms 101% of our full year estimates. This is judged to be in line with our expectations but below consensus. In terms of the topline, 4QFY14 revenues increased 34.4% to S$27.5m as the group recognized higher sales from property developments and land rights mostly from Star City. Sales in Star City remain firm; as at end Mar-14, 528 units have been sold in Zone A’s Buildings A3 and A4 and 622 units have been sold in Zone B. We note that there is limited color for the group’s highly anticipated Landmark site acquisition and, given that Yoma now has six weeks to the long-stop deadline, we believe that the share price could potentially see increased volatility ahead. We will speak with management later today and, in the meantime, put our buy rating and fair value estimate of S$1.00 UNDER REVIEW. (Eli Lee)

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NEWS HEADLINES - US stocks ended Tue with broad-based losses after disappointing results from TJX Companies, Inc, Staples, Inc. and Caterpillar Inc. weighed on investor sentiment. - Singapore's manufacturing sector continued to power economic growth in 1Q14, building on earlier industrial strength first seen in the quarter before. - Ezra Holdings announced that it has won contracts totalling more than US$95m across its subsea services and offshore support services divisions. - Biosensors International Group said that substantial shareholder Citic Private Equity Funds Management is still considering options to enhance the value of its investment in the firm. - Savings in the Central Provident Fund (CPF) and the CPF Life annuity plan will be boosted to ensure that Singaporeans are better provided for retirement. - SMRT Corp shares revved up to the highest in 11 months after it jumped 14.5 S cents or 11% to $1.475 yesterday. - Yongnam Holdings announced that the Commercial Affairs Department has closed its probe on two of its top executives for a possible breach of securities law linked to insider trading.