OCBC Report 27 Jun 14

KEY IDEA Ascendas REIT: First acquisition in 2014 Ascendas REIT (A-REIT) yesterday proposed to acquire Hyflux Innovation Centre from Singapore-listed Hyflux Ltd’s subsidiary for S$170.0m. An upfront land premium of S$21.2m will be payable to JTC, thus bringing the total purchase consideration to S$191.2m. At 100% occupancy, the acquisition is expected to generate an initial NPI yield of 6.98% and add to add an annualised 0.118 S cents to A-REIT’s pro forma FY14 DPU, assuming the acquisition was funded by 40% debt and 60% equity. Apart from being DPU-accretive, we note that the acquisition would improve the portfolio weighted average lease to expiry from 3.85 years to 3.96 years as well as broaden its tenant base – a move that we view positively given the overall lacklustre industrial market. We maintain BUY on A-REIT with unchanged fair value of S$2.45. (Kevin Tan) MORE REPORTS Yoma Strategic Holdings: Private placement of 135m shares at 70 S-cents Yoma announced that it would raise S$92.8m (net) through a private placement of 135m new shares at 70 S-cents. These new shares will make up ~10.45% of the enlarged issued and paid-up capital, and Yoma intends to use the proceeds to help fund the growth and expansions of the group’s various businesses. The group has also recently been offered the right to acquire a 70% stake in 10.8m sq ft of land in Pun Hlaing Golf Estate (PHGE), comprising 9.6m sq ft of golf course and country club and 1.2m sq ft of land development rights (LDR). Assuming that this proposed acquisition is approved by shareholders, the recently proposed rights of 1 for every 8 shares at S$0.38 would likely be revised to 1 for every 3 shares. Note that the new placement shares will also eligible for the proposed rights issue ahead. Maintain BUY on Yoma; our fair value dips slightly to S$0.82, from S$0.85 previously, from the effect of dilution after the recent placement. (Eli Lee)

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NEWS HEADLINES - The US stock market staged a rebound in the afternoon session Thu, paring most but not all of the losses by the end of the day. - Singapore's economic growth now faces downside risks for 2Q14 and 2014 after the manufacturing sector slipped into contraction mode last month, for the first time since Jun last year. - Aspial Corporation CEO Koh Wee Seng has continued to buy shares in LCD Global Investments at prices above the 17 cents a share buyout offer from Lum Chang's Raymond and David Lum, fuelling further market talk of a counter-bid. - Anwell Technologies yesterday said a trade creditor has obtained a court order to auction 229.4m yuan (S$46.5m) worth of assets from its subsidiary Henan Kerry Digital Co Ltd. - Spackman Entertainment Group, which owns film production labels Zip Cinema and Opus Pictures, lodged its preliminary offer document for its proposed IPO with SGX yesterday. - Global Invacom Group announced that it would raise US$15.0m (S$18.7m) from a placement in conjunction with a listing of new shares on the Alternative Investment Market (AIM) of the London Stock Exchange.