OCBC Report 18 Jun 14

KEY IDEA Frasers Centrepoint Trust: New mall to propel growth Frasers Centrepoint Trust (FCT) announced that it has completed the acquisition of Changi City Point (CCP) on Mon. The acquisition was funded partially by net proceeds of S$158.7m raised from the private placement of 88m units, while the balance of the purchase consideration by borrowings and internal resources. Based on our projections, the CCP deal is expected to add an annualised 0.12 S cents to FCT’s DPU. FCT’s gearing ratio, on the other hand, is likely to increase from 27.7% as at 31 Mar to 30.3%. In connection with the placement, FCT has also declared an advance distribution of 2.288 S cents per unit for the period of 1 Apr to 9 Jun 2014, payable on/around 17 Jul. This translates to a respectable yield of 6.4%. We now incorporate the private placement and acquisition into our forecasts. Consequently, our fair value is raised from S$2.02 to S$2.08. Given that upside potential remains attractive, we maintain our BUY rating on FCT. (Kevin Tan)

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NEWS HEADLINES - Wall Street stocks on Tue finished higher as investors weighed continued violence in Iraq with mixed US economic data and looked ahead to a Federal Reserve policy statement on Wed. - Singapore’s non-oil domestic exports (NODX) unexpectedly slipped 6.6% YoY in May, returning the NODX to negative terrain where it has languished in recent months. - Starburst Holdings Ltd has lodged its preliminary prospectus for a listing on Catalist. It is an engineering group specialising in the design and engineering of firearms-training facilities. - Global Logistic Properties has signed a new build-to-suit agreement to lease an upcoming 62,000 sqm facility in Greater Tokyo to Japan Logistic Systems Corp. - Ace Achieve Infocom has clinched a new IT infrastructure project worth 48m yuan (S$9.6m) from China Unicom. The project is expected to be completed within 18 months. - CapitaCommercial Trust has repurchased S$42m of the principal amount of convertible bonds for about S$58.5m (including accrued interest). - Tianjin Zhong Xin Pharmaceutical Group requested that the trading halt of its shares on SGX be converted into a voluntary suspension, with effect from today.