ASIAN INSIGHTS VICKERS SECURITIES ed: TH / sa:JC, PY Analyst Yeo Kee Yan CMT +65 6682 3706 Derek TAN +65 6682 3716 [email protected][email protected]Straits Times Index STI and 12-mth fwd PE Source of all data on this page: DBS Bank; Bloomberg Finance L.P. Closing price as of 18 Apr 2017 2,500 2,600 2,700 2,800 2,900 3,000 3,100 3,200 3,300 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 2,200 2,400 2,600 2,800 3,000 3,200 3,400 3,600 3,800 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Avg @ 13.6x - 1SD @ 12.1x +1SD @ 15.2x - 2SD @ 10.6x DBS Group Research . Equity 19 Apr 2017 Singapore Market Focus Refer to important disclosures at the end of this report A Breather for Property Stocks Singapore government unlikely to announce further property measures easing anytime soon given strong March new home sales figure Property developer stocks vulnerable to short-term profit taking – trading at post-GFC mean P/NAV of 0.86x Buy only after pullback as continued positive physical property transactions can underpin stocks – Picks UOL and Frasers Centrepoint Ltd Strong technical support for UOL at $6.54. Capitaland to pull back to $3.58 followed by $3.47. Singapore’s strong March new home sales figure well anticipated. Singapore’s March new private home sales rose 82% m-o-m and 111% y-o-y to 1,780 units, the highest figure since June 2013 when property prices peaked. The improved sentiment was partly driven by the recent tapering of seller stamp duties. Therein lies the irony. Given the strong March new home sales figure, we see no reason why the Singapore government should announce further easing of property measures anytime soon, especially those targeted at buyers such as ABSD or LTV limits. We think investors’ euphoria regarding the start of a multi-year relaxation trend of current property curbs will fade in the weeks/month ahead. Property stocks susceptible to short-term profit taking. Singapore property developer stocks have re-rated higher by close to 20% YTD and are trading at 0.86x P/NAV. This level coincides with the post-GFC mean and is seen as a near- term target for property developers. We see the FTSE ST Real Estate Holdings Index pulling back 3.5% (maximum of 6%) in the weeks ahead to 827 (maximum to 801). Watch property transactions. Short-term traders should thus be watchful of near-term profit taking following the YTD run-up in stock prices. Investors with a mid-term horizon can look to buy on pullback. Watch the physical property transactions. Property stocks should find support on pullback if the figure remains strong going forward. Picks UOL and Frasers Centrepoint Ltd (FCL) We have a $2 fundamental price objective for FCL. For UOL, the initial pullback level is $6.76 while a deeper pullback to $6.54 will be similarly a good BUY opportunity. For Capitaland, we see a pullback to $3.58 followed by $3.47. STOCKS 12-mth Price Mkt Cap Target Price Technical support levels S$ US$m S$ 1 st Level 2 nd Level Rating UOL Group 7.00 4,036 7.64 6.76 6.54 BUY CapitaLand 3.64 11,077 3.85 3.58 3.47 BUY Frasers Centrepoint Ltd 1.80 3,748 2.00 N.A. N.A. BUY Model Portfolio Price (S$) 12-mth Target Price (S$) Upside (%) Rec Conservative Sheng Siong 0.990 1.13 14 BUY Croesus Retail Trust 0.945 0.99 5 BUY Frasers Logistics & Ind'l 0.995 1.10 11 BUY Balanced UOL Group 7.000 7.64 9 BUY ST Engineering 3.750 3.80 1 BUY Growth Ezion Holdings 0.330 0.62 88 BUY PACC Offshore Services 0.330 0.42 26 BUY Singapore O&G 1.370 1.60 17 BUY Blue Chips UOL Group 7.000 7.64 9 BUY ST Engineering 3.750 3.80 1 BUY Dividend Croesus Retail Trust 0.945 0.99 5 BUY Sheng Siong 0.990 1.13 14 BUY Frasers Logistics & Ind'l 0.995 1.10 11 BUY Small Mid Cap Cityneon Holdings 0.830 1.26 51 BUY Ezion Holdings 0.330 0.62 88 BUY Japfa Ltd 0.700 1.25 79 BUY Midas Holdings 0.230 0.36 57 BUY Singapore O&G 1.370 1.60 17 BUY Page 1
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Singapore Market Focus 19Apr2017 - DBS Bank Our Singapore property analyst comments the strong figure came as no surprise given the recent robust selling rates for new property launches
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Source of all data on this page: DBS Bank; Bloomberg Finance L.P.
Closing price as of 18 Apr 2017
2,500
2,600
2,700
2,800
2,900
3,000
3,100
3,200
3,300
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 2,200
2,400
2,600
2,800
3,000
3,200
3,400
3,600
3,800
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Avg @ 13.6x
- 1SD @ 12.1x
+1SD @ 15.2x
- 2SD @ 10.6x
DBS Group Research . Equity 19 Apr 2017
Singapore
Market Focus Refer to important disclosures at the end of this report
A Breather for Property Stocks
Singapore government unlikely to announce furtherproperty measures easing anytime soon givenstrong March new home sales figure
Property developer stocks vulnerable to short-termprofit taking – trading at post-GFC mean P/NAV of0.86x
Buy only after pullback as continued positivephysical property transactions can underpin stocks –Picks UOL and Frasers Centrepoint Ltd
Strong technical support for UOL at $6.54.Capitaland to pull back to $3.58 followed by $3.47.
Singapore’s strong March new home sales figure well anticipated. Singapore’s March new private home sales rose 82% m-o-m and 111% y-o-y to 1,780 units, the highest figure since June 2013 when property prices peaked. The improved sentiment was partly driven by the recent tapering of seller stamp duties.
Therein lies the irony. Given the strong March new home sales figure, we see no reason why the Singapore government should announce further easing of property measures anytime soon, especially those targeted at buyers such as ABSD or LTV limits. We think investors’ euphoria regarding the start of a multi-year relaxation trend of current property curbs will fade in the weeks/month ahead.
Property stocks susceptible to short-term profit taking. Singapore property developer stocks have re-rated higher by close to 20% YTD and are trading at 0.86x P/NAV. This level coincides with the post-GFC mean and is seen as a near-term target for property developers. We see the FTSE ST Real Estate Holdings Index pulling back 3.5% (maximum of 6%) in the weeks ahead to 827 (maximum to 801).
Watch property transactions. Short-term traders should thus be watchful of near-term profit taking following the YTD run-up in stock prices. Investors with a mid-term horizon can look to buy on pullback. Watch the physical property transactions. Property stocks should find support on pullback if the figure remains strong going forward.
Picks UOL and Frasers Centrepoint Ltd (FCL) We have a $2 fundamental price objective for FCL. For UOL, the initial pullback level is $6.76 while a deeper pullback to $6.54 will be similarly a good BUY opportunity. For Capitaland, we see a pullback to $3.58 followed by $3.47.
STOCKS
12-mth
Price Mkt Cap Target Price Technical support levels
Singapore’s strong March new home sales well anticipated
Data released by the Urban Redevelopment Authority (URA) earlier this week showed that new private home sales (excluding executive condominiums [ECs]) in Singapore rose to 1,780 units in March, up nearly 82% compared to February, and 111% higher versus March 2016. The latest figure is the highest since June 2013, when developers sold 1,806 private homes. Including ECs, developers sold 2,358 units in March, higher than the 1,308 units in February. 1Q17 primary sales transactions amounted to nearly 3,026 units, one of the highest since 2013 (c.3,800 units in 1Q13).
Great news! But that’s all well anticipated
Our Singapore property analyst comments the strong figure came as no surprise given the recent robust selling rates for new property launches at Grandeur Park (484 units); Park Place Residences (217 units) and Parc Riveria (163 units). At the same time for ECs, Inz Residences sold 187 units while Sol Acres sold 147 units.
The improved sentiment was boosted by the recent government relaxation of seller stamp duties (SSD). This resulted in potential buyers becoming more willing to commit to an investment purchase given that their “holding period” have been reduced from four years to three.
The irony of the strong March figure
The post-March 10 gains came about from optimism that the easing of SSD may well signal the start of a multi-year relaxation trend of current property curbs that will mean continued sector-wide re-rating opportunities. The move that everyone is waiting for would be a tapering of the Additional Buyers Stamp Duty (ABSD) or loan-to-value (LTV) limits.
Therein lies the irony – given the strong March new home sales figure, we see no reason why the Singapore government should announce further easing of property measures anytime soon, especially those targeted at buyers such as ABSD or LTV limits.
The Singapore government reminded that the current property measures are necessary to “promote a sustainable residential property market and financial prudence among households”. We think investors’ euphoria regarding the start of a multi-year relaxation trend of current property curbs will fade in the weeks/month ahead.
Bottoming process takes time
Our property analyst maintains the view that the Singapore property market is in a bottoming out process this year, led by the luxury market. For the suburban region, we still expect a 3-5% dip in prices given expectations of lower rental yields, high vacancy rates and the risk of higher interest rates. The process of bottoming takes time.
Property stocks susceptible to short-term profit taking
Singapore property developer stocks have re-rated higher by close to 20% YTD and are trading at 0.86x P/NAV. This level coincides with the post-GFC mean and is seen as a near-term target for property developers.
Singapore developers have re-rated to post-GFC mean of 0.86x P/NAV (ex-GLP)
Source: DBS Bank
Short-term traders should thus be watchful of profit taking in the near term following the YTD run-up in stock prices.
Investors with a mid-term horizon should look to buy on the anticipated short-term consolidation. Watch the property transactions, which should underpin property stocks on pullback if the figure remains strong going forward. The first two months’ primary sales (pre-property relaxation) were 61% higher y-o-y, suggesting good positive momentum, which bodes well for the sector in general.
Our picks are UOL and Frasers Centrepoint Ltd. We have a $2 fundamental price objective for FCL. For UOL, the initial pullback level is $6.76 while a deeper pullback to $6.54 will be similarly a good BUY opportunity. For Capitaland, we see a pullback to $3.58 followed by $3.47.
Technical outlook - FTSE ST Real Estate Holdings Index to pull back 3.5% (maximum of 6%) short-term
The FTSE ST Real Estate Holdings Index (FSTREH) has risen 21% YTD and remains the best performing sector index in Singapore. The initial lift was brought about by M&A activity on Global Logistics Properties. The March 10 announcement on the tapering of property measures lifted the FSTREH by another 6%.
The recent high at 868 coincided with levels around the 2013 and 2015 peaks. With technical oscillators such as the 14-day RSI stretched overbought and negative divergences apparent on the daily MACD, we see likelihood for the FSTREH to pull back to 827 (23.6% downward retracement) or at most to 801 (38.2% downward retracement) in the weeks ahead. This represents a 3.5-6% decline from current levels.
FTSE ST Real Estate Holdings Index (FSTREH): Daily
Source: DBS Bank
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Market Focus
ASIAN INSIGHTS VICKERS SECURITIES Page 4
UOL technical outlook – Pull back to $6.76, at worst $6.54
Shares of UOL look to have completed a 5-wave up intermediate cycle up move that started from a low of $5.56 last November. We observe negative divergence on the daily MACD, which is a forewarning of price weakness. The stock
currently rests at its 15-day exponential moving average. We see the likelihood of an initial pullback to $6.76, which coincides with the 23.6% downward retracement level. In the event that the pullback gets deeper, we look for the $6.54 level (38.2% downward retracement level) as a BUY opportunity.
UOL (Daily)
Source: DBS Bank
Capitaland technical outlook – Pullback to $2.59 followed by $2.48
The leading technical indicators are forewarning a consolidation of the stock’s YTD gains. The daily MACD and the 14-day RSI
have been showing negative divergences and the 14-day RSI is also declining from an overbought level above 70. The stock is starting to dip below its 15-day exponential moving average, currently at $3.67. We see downside to initial support at $2.59 while a deeper pullback will bring the stock lower to $2.48.
Capitaland (Daily)
Source: DBS Bank
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Market Focus
ASIAN INSIGHTS VICKERS SECURITIES Page 5
Sources: Data for all charts and tables are from CEIC, Bloomberg Finance L.P. and DBS Group Research (forecasts and transformations).
Page 5
Market Focus
ASIAN INSIGHTS VICKERS SECURITIES Page 6
FTSE ST Financials FTSE ST Real Estate Holdigs FTSE ST REITs
FTSE ST Telecommunications FTSE ST Consumer Goods FTSE ST Consumer Services
Shanghai Composite Index Hang Seng Index Nikkei Index
FTSE100 (UKX Index) S&P500 (SPX Index) NASDAQ Index
Source: Datastream, Bloomberg Finance L.P., DBS Bank
Event Period DateCPI Core YoY Mar 24-Apr-17CPI YoY Mar 24-Apr-17CPI NSA MoM Mar 24-Apr-17Automobile COE Open Bid Cat B Apr 26-Apr-17Automobile COE Open Bid Cat A Apr 26-Apr-17Automobile COE Open Bid Cat E Apr 26-Apr-17Industrial Production YoY Mar 26-Apr-17Industrial Production SA MoM Mar 26-Apr-17Credit Card Billings SGD Mar 28-Apr-17Credit Card Bad Debts SGD Mar 28-Apr-17Money Supply M2 YoY Mar 28-Apr-17Money Supply M1 YoY Mar 28-Apr-17Bank Loans and Advances YoY Mar 28-Apr-17Unemployment rate SA 1Q 28-Apr-17URA Private Home Prices QoQ 1Q F 28-Apr-17
Company Ty pe Part iculars Ex Date Paid/ Pay ableGREAT EASTERN HLDGS LTD DIV IDEND SGD 0.4 ONE-TIER TAX 20-Apr-17 08-May-17
Purchasing Managers Index Nikkei Singapore PMI Foreign ReservesElectronics Sector Index Automobile COE Open Bid Cat B GDP YoYURA Private Home Prices QoQ Automobile COE Open Bid Cat E GDP SAAR QoQ
SPH REIT 2Q 17 SPH 2Q 17Soilbuild Business 1Q 17
Retail Sales SA MoMRetail Sales YoYRetail Sales Ex Auto YoY
First Real Estate Investment Trust 1Q 17 Keppel T & T 1Q 17 CapitaLand Commercial Trust 1Q 17 Ascott Residence Trust 1Q 17 Ascott Residence Trust 1Q 17Keppel DC REIT 1Q 17 China Aviation Oil Singapore 1Q 17 CapitaLand Mall Trust 1Q 17 CapitaLand Retail China Trut 1Q 17Keppel Infrastructure Trust 1Q 17 Keppel REIT 1Q 17 Cache Logistics Trust 1Q 17M1 1Q 17 United Overseas Insurance 1Q 17 Keppel Corp 1Q 17Qian Hu Corp 1Q 17 Singapore Exchange 3Q 17
Non-oil Domestic Exports SA MoMElectronic Exports YoYNon-oil Domestic Exports YoY
What’s New FY16 results below expectations, impacted by fair
value losses
New launches mostly in 2018
UOL most aggressive in landbanking
FY16 dividend of 15 Scents was flat y-o-y
Price Relative
Forecasts and Valuation FY Dec (S$ m) 2015A 2016A 2017F 2018F
Revenue 1,279 1,441 1,286 1,192 EBITDA 514 483 558 679 Pre-tax Profit 460 354 422 542 Net Profit 391 287 343 447 Net Pft (Pre Ex.) 343 324 343 447 Net Pft Gth (Pre-ex) (%) (5.9) (5.3) 5.8 30.2 EPS (S cts) 49.2 35.7 42.7 55.5 EPS Pre Ex. (S cts) 43.0 40.3 42.7 55.5 EPS Gth Pre Ex (%) (7) (6) 6 30 Diluted EPS (S cts) 49.2 35.7 42.7 55.5 Net DPS (S cts) 15.0 15.0 15.0 15.0 BV Per Share (S cts) 991 1,010 1,038 1,078 PE (X) 13.5 18.6 15.6 12.0 PE Pre Ex. (X) 15.5 16.5 15.6 12.0 P/Cash Flow (X) 10.2 9.9 19.8 18.9 EV/EBITDA (X) 15.6 16.4 14.3 11.6 Net Div Yield (%) 2.3 2.3 2.3 2.3 P/Book Value (X) 0.7 0.7 0.6 0.6 Net Debt/Equity (X) 0.3 0.2 0.2 0.2 ROAE (%) 5.0 3.6 4.2 5.2
Earnings Rev (%): (8) 16 Consensus EPS (S cts): 48.7 47.7 Other Broker Recs: B: 10 S: 0 H: 3
Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P
One of the cheapest landlords in Singapore
Valuations still attractive. We maintain our BUY rating on UOL Group (UOL) based on its attractive valuation of c.0.65x P/NAV, which is below the low end of its historical trading range, making it one of the cheapest large cap landlords in Singapore. The successful launches of recently purchased land sites in the enbloc market will be re-rating catalysts for the stock. We have lifted our TP to S$7.64 based on a 30% discount to RNAV of S$10.90 as we updated the valuation with newly acquired projects.
FY16 results below expectations; impacted by fair value losses. UOL’s FY16 net profit fell 27% y-o-y to S$287m, mainly due to fair value losses recorded vs gains in FY15. Property sales had halved in FY16. However, management believes the Singapore property market has stabilised and UOL has been more aggressive in land banking than the other large cap developers. Key positives from the results were: i) revenue growth from all divisions, except Investments, ii) rental reversions were largely positive with stable occupancy rates, and iii) overall RevPAR was up 2%. Key negatives: i) property sales had halved, ii) lower margins, and iii) challenginghospitality sector.
Most aggressive in landbanking in Singapore; bulk of new launches in 2018. The Clement Canopy (1Q17; 505 units) was officially launched last weekend (25 Feb 16). Management expects to launch Raintree Garden, Amber Road and Bishopsgate in 2018. Management continues to keep an eye on the take-up rates from The Clement Canopy.
Valuation: Maintain BUY on attractive valuations. We raise our TP to S$7.64, pegged to a 30% discount to our RNAV of S$10.90, taking into account new properties acquired.
Key Risks to Our View: Economic slowdown. The downside risk to our projections is if residential sales are slower than our projections or if commercial properties and hotels operations are impacted by slower-than-projected growth in rental/room rates.
At A Glance Issued Capital (m shrs) 805
Mkt. Cap (S$m/US$m) 5,351 / 3,808
Major Shareholders (%)
CY Wee & Co Pte Ltd 13.9
Wee Investment Pte Ltd 13.4
United Overseas Bank 7.5
Free Float (%) 59.8
3m Avg. Daily Val (US$m) 4.4
ICB Industry : Real Estate / Real Estate
DBS Group Research . Equity 27 Feb 2017
Singapore Company Guide
UOL Group Version 7 | Bloomberg: UOL SP | Reuters: UTOS.SI Refer to important disclosures at the end of this report
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147
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207
4.7
5.2
5.7
6.2
6.7
7.2
7.7
8.2
8.7
Feb-13 Feb-14 Feb-15 Feb-16 Feb-17
Relative IndexS$
UOL Group (LHS) Relative STI (RHS)
Page 11
ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
UOL Group
WHAT’S NEW
A clement improvement in Singapore property
FY16 results below expectations, impacted by fair value
losses. FY16 net profit fell 27% y-o-y to S$287m, below
consensus’ full-year estimates, mainly due to fair value losses
of S$37m recorded in FY16 vs fair value gains of S$41m in
FY15, and lower profits from JV companies due to
completion of JV projects such as Archipelago and Thomson
Three. FY16 revenue grew 13% to S$1.4bn, supported by
higher earnings from all segments led by property
development, except for dividend income from UOB as there
was a special dividend paid in 2015 for the latter’s 80th
anniversary.
4Q16 net profit fell 15% y-o-y on muted revenue growth of
3% y-o-y coupled with lower gross margin of 33% vs 36% in
4Q15 and lower profit from associates / JV companies (-5%).
Declared a final dividend of 15 Scents, flat y-o-y.
Sold 484 units (S$558m in value) in 2016; half of the sales in
FY15. UOL sold 484 residential units (S$558m in value) in
FY16 which was half of the sales made in FY15. However,
management has turned positive on the Singapore property
market despite the government’s statement that ‘there will
be no relaxation of property measures’ in the near term.
Management believes that the Singapore property market is
in a steady state and the increase in industry sales volume is
encouraging. Its latest project, Clement Canopy was soft
launched on 10 Feb, drawing a large crowd to the showroom
over the weekend. Clement Canopy was officially launched
on 25 Feb 17, and take-up rates will be a testament to
management’s optimism on Singapore property market.
Among the large-cap developers in Singapore, UOL has been
the most aggressive in landbanking with the enbloc and land
acquisition of Raintree Garden and Amber Road respectively
to ride on the pick-up in property sales momentum in
Singapore. Both projects are expected to be launched in
2018. Management continues to look for landbanking
opportunities.
In China, Park Eleven sold 126 units out of 168 units in phase
1 and achieved selling prices of c.RMB 77k per square metre.
Management expects to launch phase 2 in 1H17.
Strong revenue growth from property development on lower
margins. Revenue from property development grew 27% y-o-
y from higher progressive recognition from development
projects – Riverbank@Fernvale, Botanique at Bartley and
Principal Garden. However, EBIT margin fell to 7%.
Hotel revenues
Projects expected to be completed in 2017 are
Riverbank@Fernvale, while Principal Garden and Park Eleven,
Shanghai are expected in 2018 and Botanique at Bartley in
1Q2019.
Commercial portfolio holding firm: The Group’s Property
Investment segment is holding firm with topline up 3% y-o-y,
mainly driven by newly acquired (in June 2016) 110 High
Holborn. Occupancy rates for its office portfolio is understood
to be above 90%, with the exception of United Square (88%
occupancy rate), which management said is still challenging.
Its retail properties continue to see high occupancy rates of
96-98%.
Rental reversions for FY16 were positive to the tune of 0.7%
(retail) and 3% (office). While rental reversions have remained
strong in FY16, management expects potentially marginal
negative rental reversions from OneKM (FY16 rental
reversions of -3.8%) as the mall undergoes its first cycle of
renewals (63% of leases expiring in FY17) in view of potential
competition from upcoming developments in Paya Lebar.
Other commercial properties with substantial leases expiring
in 2017 include Faber House (60%), United Square office
(32%) and United Square mall (25%).
More contributions from new UK commercial properties in
FY17. FY16 recorded some contribution from newly acquired
(in June 16) 110 High Holborn. Management expects higher
contributions in FY17 from Holborn Island which was
acquired in Nov16. Management believes these properties are
less susceptible to the impact from Brexit as these have
tenants mostly from media, publishing and professional firms
and less from the financial sector. On its first investment in
UK – Bishopsgate, London, management has obtained
approval to increase residential and hotel rooms to 160 and
237 respectively (previously 106 units and 196 rooms).
Management expects to launch the project in 2018, and
hotel to be completed by 2020.
Management continues to explore new commercial
properties with attractive yields especially in countries in
which they have a presence in, such as the UK, China and
Australia.
Revenue from its hotel operations grew 2% y-o-y. But, EBIT
Note : Share price and Target price are adjusted for corporate actions.
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4.99
5.49
5.99
6.49
6.99
Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16
S$
Acquisition of 2 properties in London and Raintree Gardens in 2017
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ASIAN INSIGHTS VICKERS SECURITIES ed: TH / sa: JC, PY
BUY Last Traded Price ( 16 Feb 2017): S$3.45 (STI : 3,096.69) Price Target 12-mth: S$3.85 (12% upside) Potential Catalyst: Better-than-projected pre-sales & redeployment Where we differ: Estimates generally more conservative Analyst Derek TAN +65 6682 3716 [email protected] Rachel TAN +65 6682 3713 [email protected]
What’s New Acquires properties in Japan to bulk up portfolio
to S$2.5bn
Stable returns, supported by low carrying cost,
clear exit strategy through a REIT/fund in medium
term
BUY with TP of S$3.85
Price Relative
Forecasts and Valuation FY Dec (S$ m) 2015A 2016A 2017F 2018F Revenue 4,762 5,252 5,561 4,668 EBITDA 2,325 2,374 1,881 1,953 Pre-tax Profit 1,839 1,907 1,590 1,428 Net Profit 1,066 1,190 960 843 Net Pft (Pre Ex.) 1,066 1,190 799 843 Net Pft Gth (Pre-ex) (%) (8.2) 11.7 (32.9) 5.6 EPS (S cts) 25.0 28.0 22.5 19.8 EPS Pre Ex. (S cts) 25.0 28.0 18.8 19.8 EPS Gth Pre Ex (%) (8) 12 (33) 6 Diluted EPS (S cts) 25.0 28.0 22.5 19.8 Net DPS (S cts) 8.98 9.95 9.95 9.95 BV Per Share (S cts) 420 413 426 436 PE (X) 13.8 12.3 15.3 17.4 PE Pre Ex. (X) 13.8 12.3 18.4 17.4 P/Cash Flow (X) 6.0 4.4 13.6 36.9 EV/EBITDA (X) 14.4 13.1 17.2 17.1 Net Div Yield (%) 2.6 2.9 2.9 2.9 P/Book Value (X) 0.8 0.8 0.8 0.8 Net Debt/Equity (X) 0.5 0.4 0.4 0.5 ROAE (%) 6.1 6.7 5.4 4.6 Earnings Rev (%): 0 1 Consensus EPS (S cts): 19.8 20.3 Other Broker Recs: B: 18 S: 0 H: 3
Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P
Bulking up on recurring incomes Improving earnings quality. Despite the recent run-up in share price, we continue to see good value in CapitaLand Limited (CAPL), trading at an attractive 0.8x P/NAV and 0.7x P/RNAV. Our TP of S$3.85 is based on a 20% discount to RNAV (vs 25% before) given the projected completion of major projects in 2017 which will lift NAVs upwards. Coupled with opportunistic asset recycling of mature assets into its listed REITs/funds, we see re-rating opportunities going forward. BUY! CapitaLand announced the acquisition of a portfolio of commercial properties in the greater Tokyo region for JPY49.7bn (S$620.1m). A key question is why now after years of asset reflation in Japan which have lifted asset values higher. The key investment rationale in our view will be to add to a stable recurring income base and it is also an ROE-enhancing deal at close to 10%. There is also upside to returns (4.3-4.5% yield vs entry yield of 4.1%) with active property management. We reckon that there is also a clear exit strategy in the form of an income fund or REIT to be launched in the medium term given an enlarged portfolio size of S$2.5bn. 2017 to be a banner year for the group. The group’s various business units are expected to deliver strongly in 2017. Noteworthy are (i) S$161m in one-off gains to be recorded in 1Q17 post the bulk-sale of The Nassim in Singapore, (ii) launching of 7,000 units in 2017 in China which will add to the unrecognised RMB8.9bn in sales, and (iii) the completion of close to 1 million sqm of retail GFA through the year which is expected to contribute significantly to recurring revenues. Valuation:
Our target price of S$3.85 is based on a 20% discount to our adjusted RNAV of S$4.81/share. Key Risks to Our View:
Slowdown in Asian economies. The risk to our view is if there is a slowdown in Asian economies, especially China, which could dampen demand for housing and private consumption. At A Glance Issued Capital (m shrs) 4,237 Mkt. Cap (S$m/US$m) 14,619 / 10,318 Major Shareholders (%) Temasek Holdings Private Ltd 41.1
Free Float (%) 53.9 3m Avg. Daily Val (US$m) 21.8 ICB Industry : Real Estate / Real Estate
DBS Group Research . Equity 17 Feb 2017
Singapore Company Guide
CapitaLand Version 9 | Bloomberg: CAPL SP | Reuters: CATL.SI Refer to important disclosures at the end of this report
66
86
106
126
146
166
186
206
2.4
2.9
3.4
3.9
4.4
Feb-13 Feb-14 Feb-15 Feb-16 Feb-17
Relative IndexS$
CapitaLand (LHS) Relative STI (RHS)
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ASIAN INSIGHTS VICKERS SECURITIES Ă
Company Guide
CapitaLand
WHAT’S NEW
Acquiring Japan portfolio
What has happened?
CapitaLand (CAPL) invested JPY49.7bn (S$620.1m) in a portfolio of office and retail assets in Greater Tokyo area of Japan. The agreed consideration is in line with independent valuers (Tanizawa Sogo Appraisal and Cushman & Wakefield Kabushiki Kaisha). The portfolio was valued at JP 49.8bn.
The portfolio consist of two office buildings in Yokohama (Yokohama Blue Avenue and Sun Hamada), one office building in Tokyo (Kokugikan) and one shopping mall in Saitama (Seiyu & Sundrug).
Initial property yield is estimated at 4.1% but is expected to rise to 4.3-4.5% in the next two to three years driven mainly from (i) renewing lease expiring for the shopping mall at Saitama, and (ii) bumping up occupancy rates at Yokohama blue office building (78%).
Investment expected to be funded through debt (estimated to close to 1% for close to 95% of the acquisition cost); implying an IRR of close to 10%.
Investment Rationale
Stable returns. Management believes that the acquisition will add to the stable of recurring revenues for the group. Portfolio estimated to contribute c.S$25m in cashflows annually to the group and deepens their exposure in a developed, transparent and liquid real estate market.
Deepens exposure. This will also enlarge CapitaLand’s exposure in Japan from S$1.8bn to S$2.5bn; well diversified across asset classes of shopping malls, offices and serviced residences.
Accretion. ROE of close to 10% for the deal expected. A big question is – why now?
We believe investors will be asking "Why now?" This is because prices have remained elevated after years of quantitative easing in Japan which led to a reflation in asset prices. In addition, the group has generally taken a very conservative view on adding to its Japan portfolio given lower returns.
A recent report that we saw from JLL also indicated that rents and capital values growth are moderating but should be on a steady uptrend given high competition for assets putting downward pressure on yields in the coming year. This might allay investors’ concerns that the group is investing at towards the last leg of asset reflation story in Japan.
What are future plans; in our view
Future plans could involve a launch of an income fund or Japan-focused commercial REIT which adds to Capitaland’s fund management business in the medium term. This will also tie in with the group's longer-term US$8-10bn AUM target for its fund management business.
So in summary, stable yields, low carrying cost, and a clear exit strategy pushed the group to invest in Japan once again.
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ASIAN INSIGHTS VICKERS SECURITIES Ă
Company Guide
CapitaLand
Target Portfolio
Source of all data: Company, DBS Bank
Page 21
ASIAN INSIGHTS VICKERS SECURITIES Ă
Company Guide
CapitaLand
CRITICAL DATA POINTS TO WATCH
Earnings Drivers:
Growing recurring revenues from retail mall portfolio and Ascott. While trading properties (residential development and strata offices) account for 24% of assets, we see continued strength from CMA (CAPL’s retail mall division) and commercial integrated developments, including Ascott Group, its successful serviced residence brand, which form a significant 76% of total assets and is expected to contribute to growing recurring income for the group. CapitaMalls Asia (CMA) continues to perform steadily despite ongoing operational headwinds. There are 87 operating properties across Asia (56 of them in China). For 2016, the group’s shopping malls continued to record steady sales and occupancy rates. Portfolio tenant sales remained healthy at 2.6% for Singapore and 10.2% in China on the back of improving traffic. Shopper traffic and tenant sales generally performed better on a y-o-y basis. CAPL will be completing a substantial 1m sqm of retail GFA in 2017, a majority coming from China (Suzhou Center Mall) and three raffles city projects (Raffles City Changning, Raffles City Hangzhou and Raffles City Shenzhen) which have seen strong pre-leasing interest with committed rates of north of 80% as of 30 December 2016. The Ascott Limited remains on the fast track to achieve its 80,000-unit target by year 2020 and will add another 770 units by 4Q16. Ascott’s investment in China’s largest and fastest-growing online apartment sharing platform, Tujia has yet to bear fruit meaningfully but we continue to believe in its longer-term synergies and ability to leverage on Tujia’s platform to reach out to a wider addressable market in the medium term. Residential sales see strong uplift. CAPL continue to see strong momentum in its residential division in both Singapore and China. In Singapore, the group has substantially sold most of its available development projects and will book a one-time gain of close to S$161m post the bulk-sale of The Nassim in 1Q17. In addition, China sales momentum remains strong and the group will look to launch another 7,000 units in 2017. In addition, the group has close to RMB8.9bn in unrecognised revenues which will be booked in 2017-2018. Launch of new PE funds. CAPL remains on track to reach its S$8-10bn AUM target by 2020. We think that by tapping on third-party capital, CAPL would be able to leverage on larger economies of scale, better capitalise on market opportunities and at the same time de-risk its property level exposure. The group launched the US$1.5bn Raffles City China Investment Partners III (RCCIP III) aimed at prime integrated developments in gateway cities in China which will likely be seeded by their properties.
Revenue (S$’m)
EBIT (S$’m)
AUM breakdown (%) : S$44.2bn as of Dec’16
RNAV
RNAV of CapitaLand S$'bn
Value of CapitaLand Singapore 7,331.8
Value of CapitaLand China 9,819.4
CapitaMalls Asia 17,399.3
Ascott 4,237.1
Others 855.0
GDV of CAPL Group 39,642.6
Less: Net Debt (11,552.3)
Less: devt capex (7,709.0)
RNAV of CAPL 20,501.3
Total Shares 4,258.6
RNAV per share 4.81
Discount to RNAV 20%
Target price 3.85
Source: Company, DBS Bank
-
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
13A 14A 15A 16A 17F 18F
S$'m
CapitaLand Singapore CapitaLand China and CMA Ascott Financial
-
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
13A 14A 15A 16A 17F 18F
S$'m
CapitaLand Singapore
24%
Capitaland China 26%
CapitaMalls Asia30%
Ascott 16%
Others4%
CapitaLand Singapore Capitaland China CapitaMalls Asia Ascott Others
Page 22
ASIAN INSIGHTS VICKERS SECURITIES Ă
Company Guide
CapitaLand
Balance Sheet:
Balance sheet remains strong. We forecast debt/equity ratio to remain stable, at below c.0.6x over the coming years. Debt maturity profile remains long at 3.5 years (as of 3Q16) with an average cost of 3.4%. Approximately 70% of the interest cost is hedged into fixed rate debt. Share Price Drivers:
De-risking its Singapore residential exposure to replenishing land bank. CAPL has been actively de-risking its Singapore residential exposure through active marketing of its unsold units and is now substantially sold.. Looking ahead, while the group has not been an active investor in Singapore’s residential market, winning any new land tenders will imply improved confidence in the outlook for Singapore’s residential market in the medium term. Relaxation of government policies. Expectations of policy relaxation (especially cyclical measures like the Buyers’ and Sellers’ stamp duties) may improve buyers’ market sentiment and spark a revival in transactional volumes in the Singapore residential market. This is also expected to lift sentiment on property stocks, which we believe will enable CAPL to close the gap between its stock price and NAV. Asset recycling into listed S-REITs/funds. CAPL will continue to demonstrate its ability to crystallise value through strategic divestments of mature assets to its listed REITs, which are market leaders in their respective subsectors of retail, office and hospitality. The ability to recycle capital efficiently will enable the group to free up capital, improve its balance sheet position and deploy capital to projects with higher returns. Key Risks:
Slowdown in Asian economies. The risk to our view is a further slowdown in Asian economies which could dampen demand for housing and private consumption expenditure and retail sales. This in turn could result in slower-than-expected projections. Company Background
CapitaLand (CAPL) is one of Asia’s largest real estate companies headquartered and listed in Singapore. Its two core markets are Singapore and China; while Indonesia, Malaysia and Vietnam have been identified as new growth markets.
Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P
Timely home run Growing developer with high dividend yields. We maintain our BUY rating on Frasers Centrepoint Ltd (FCL) for its attractive valuations at 0.7x P/NAV and 12x FY17F PE, and offering one of the highest dividend yields among developers at c.5%. While most developers have re-rated to an average of 0.9x P/NAV following the government’s recent tweaking of property measures, FCL has lagged behind, implying that the market has broadly overlooked the potential of its upcoming Singapore projects. Where we defer. Upcoming Singapore projects yet to be fully priced in at current price. Following an uptick in the sentiment in the Singapore residential market post government policy relaxation and upgrades to GDP forecasts, we believe that FCL’s latest residential project - Seaside Residences, which is launching soon, will garner good buyer interest. In addition, Frasers Tower, which is the only major building completing in the Central Business District (CBD) in 2018, should do well in the midst of a drop off in competitive supply that year. With this two well-timed projects entering the market, we see re-rating catalysts for the stock. Historically, we have seen that strong property sales translate to higher prices for FCL (charts in page 5). Potential catalyst: Improved property sales and asset monetisation. Asset recycling into its listed S-REITs. FCL will continue to demonstrate its ability to crystallise value by strategically divesting matured assets to its listed REITs. Potential assets include Waterway Point and Northpoint City. Valuation:
We maintain our BUY rating and target price at S$2.00 (30% discount to RNAV) from rolling forward our earnings estimates. Key Risks to Our View:
Dependent on the outlook of the Australian real estate market and currency. The group derives an estimated 30% of PBIT from Australia, and returns could be impacted by the weakening AUD/SGD exchange rate. At A Glance
Issued Capital (m shrs) 2,906Mkt. Cap (S$m/US$m) 5,100 / 3,637Major Shareholders (%) TCC Assets Ltd 59.1Thai Beverage 28.4
Free Float (%) 12.53m Avg. Daily Val (US$m) 0.45ICB Industry : Real Estate / Real Estate Investment & Services
DBS Group Research . Equity 7 Apr 2017
Singapore Company Guide
Frasers Centrepoint Ltd Version 7 | Bloomberg: FCL SP | Reuters: FRCT.SI Refer to important disclosures at the end of this report
Page 27
ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
Frasers Centrepoint Ltd
WHAT’S NEW
Timely home run
The recent positive sentiment in Singapore’s property market and economic growth bodes well for Frasers Centrepoint Ltd (FCL) with a few recent/upcoming launches (Frasers Towers and Seaside Residences) and projects in Singapore. In addition, we see FCL continuing with its asset monetisation strategy with potential divestments of Waterway Point and Northpoint City into its REIT in the coming few years. We highlight below these projects that could benefit from the improved sentiment on Singapore currently.
Seaside Residences could bring in total sales of c.S$1.2bn @ estimated ASP of S$1,700psf: Seaside Residences, which sits on the highly contested Siglap residential site that FCL won last year will launch soon. The project will offer 841 residential units with a higher composition of smaller units; 1-bedroom (35%), 2-bedroom (29%) and 3-bedroom (29%) and two units of shops.
The recent government move to relax SSD and TDSR came in timely for the launch. The strong buying interest seen in Park Place Residences at Paya Lebar (take-up rates of 50% @ ASP S$1,700psf) is an encouraging sign and we expect the same interest for Seaside Residences. Although slightly further away from the city, it is located two minutes away from the upcoming Siglap MRT station (expected completion by 2019) with seaside view, which are key attributes that will attract buyers.
Assuming that the project is priced at an average of S$1,700psf, similar to Park Place Residences, we estimate FCL to book potential sales of S$1.2bn when fully sold. Our forecasts assume 1-5% contribution to the group’s EBIT over four years of construction period adjusted for FCL’s 40% interest in the project.
Frasers Tower, positive leasing momentum ahead of completion in 2018: Frasers Tower is expected to be completed by mid-2018, where we are expecting to see a drop off in new supply completions, meaning that there will be limited alternative office space for tenant prospects.
Frasers Tower has a total NLA of 663,000 sqft with floor plates of between 20,000 and 22,000 sqft. The smaller floor plates compared to the bigger office buildings have seen interests from multi-sector conglomerates, financial firms, and legal services and technology firms.
Since its launch, we understand that Frasers Tower has attracted interest (a few looking for large space) and is in discussions for close to 40% of the building. The first leased signed with service office provider, The Executive Centre which will be taking an entire floor of 20,000 sqft and the group will be setting up a city office there.
In addition, based on media and consultant reports, competition for tenants is expected to ease, especially with new buildings - Marina One, DUO Tower and Guoco Tower
having achieved 60%, 45% and 90% commitment rates respectively.
When completed, on a stabilised basis, we estimate that rental income from Frasers Tower could contribute approximately 4-5% of the group’s recurring EBIT.
Asset-recycling opportunities - Waterway Point is coming soon; Northpoint City is on the way. FCL’s newest mall, Waterway Point opened its doors in January 2016, is trading well and is at close to full occupancy. We understand that the mall, situated in an integrated development sitting atop Punggol MRT station, has been flourishing since it opened its doors, attracting 21m shoppers as at FY16. We believe this mall could be the most imminent acquisition target for its REIT (divestment from FCL), likely to take place within the next two years, in our view.
In addition, another integrated mall, Northpoint City which is expected to complete by 2017 (possibly concurrently with Northpoint Shopping Centre’s AEI completion by September 2017 and in time to open for the Christmas season in 2017), would likely be an attractive acquisition target for its REIT. With direct linkages to the existing Northpoint shopping mall (owned by FCT), the enlarged integrated shopping centre will be the largest shopping mall in the north with a combined retail space of 859,000 sqft GFA.
Our ballpark estimate for both malls (100% basis) could be valued at a total of S$2bn (assumed at close to S$2,500psf).
Maintain BUY; TP S$2.00. We maintain our BUY rating on FCL for its attractive valuations at 0.7x P/NAV, and offering one of the highest dividend yields among developers at c.5%. While most developers have re-rated to an average of 0.9x P/NAV following the governments’ tweaking of property measures, FCL has been lagging behind, implying its upcoming Singapore projects has yet to be fully priced in.
Key re-rating catalysts include i) improved property sales across its major markets following a potential recovery / continued positive sentiment in the property market, ii) potential asset monetisation from ongoing strategies to crystallise value across its portfolio including Northpoint and Waterway Point, and iii) improve free float and liquidity in the market.
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ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
Frasers Centrepoint Ltd
Photos from Seaside Residences Tour (sneak peak)
Seaside Residences… …smell the sea and feel the sky…
Source: DBS Bank Source: DBS Bank
Imagine waking up to a sea view below!... …or only 30% of the home dwellers will getSingapore’s skyline
Source: DBS Bank Source: DBS Bank
Source: DBS Bank Source: DBS Bank
Page 29
ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
Frasers Centrepoint Ltd
Waking up and feel like you are on a cruise….
Source: DBS Bank Source: DBS Bank
Photos from Frasers Towers
Frasers Tower Efficient floor plate with no interior columns
Source: DBS Bank Source: DBS Bank
Progress of construction – up to 19th floor going to 20th floor
Source: DBS Bank Source: DBS Bank
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ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
Frasers Centrepoint Ltd
CRITICAL DATA POINTS TO WATCH
Critical Factors:
Growing recurring revenues from its commercial and hospitality divisions. Frasers Centrepoint Limited (FCL) is one of the largest property developers in Singapore with an asset base of over S$24bn as at end-FY16. The group aims to grow recurring revenues to 60-70% of PBIT in the medium term.
The group’s commercial portfolio will see incremental income from the completions of Waterway Point (completed in January 2016), Northpoint City (retail) and Frasers Towers (commercial) from 2018 onwards, which will boost its earnings further while The Centrepoint mall’s asset enhancement initiative (AEI) was completed in September 2016. Frasers Hospitality is also expected to expand its footprint to 30,000 managed units by 2019. In addition, the acquisition of the Malmaison Hotel du vin Group (MHDV), which has a portfolio of 29 boutique lifestyle hotels and 2,082 keys within 25 regional cities in the UK, will further deepen its presence and clientele reach. We see cross-selling opportunities and synergies between MHDV and the Frasers brand, propelling the division’s performance to greater heights.
New launches across its portfolio; more than 20m sqft of development space to be realised. The group currently has more than 20m sqft of development space to be progressively realised, largely in Australia industrial properties. The group continues to replenish its land bank with recent purchases mostly in Australia (residential and industrial). Unrecognised revenues from its property division, including Frasers Property Australia totalled about S$3bn.
Sustainable high dividend. FCL has one of the highest ROEs among property developers (c.8-11% over FY14A-16A) and dividend yield of close to 6% vs industry average ROE of close to 6% and dividend yield of c.2-3%. This is mainly due to the group’s efficient operating model of quick-asset turns for its residential development projects and its focus on a portfolio of recurring commercial properties (hotels, retail and office) which boosts returns.
Golden Land acquisition to bear fruit in the medium term. The group currently owns close to a 40% stake in Golden Land Property Development PCL (GOLD) and management believes that this acquisition offers good synergies to FCL as both companies share similar investment philosophies with an aim to continue growing its recurring income base. GOLD also offers FCL the ability to tap into the growing real estate market in Thailand, supported by favourable market fundamentals.
Revenue (FY15A-FY19F)
PBIT breakdown by divisions (FY16)
PATMI (FY15A-19F)
RNAV RNAV S$'mSurpluses from:Commercial Portfolio (Office, retail, hotels) (699)Stakes in REITs 190Frasers Australand 519Fee income : Hotel Mgmt 854Fee income : REITs 373NPV development projects 346Total Surpluses 1,583Add:Book NAV 8,053Gross Development Value 9,636less: preference shares (1,392)less: MI (3,791)Add: MI Attributable to REITs 3,827RNAV 8,280RNAV/share ($) 2.86Discount 30%TP ($) 2.00
Source: Company, DBS Bank
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
2015 2016 2017F 2018F 2019F
S$'m
Development properties
31%
Commercial properties
30%
Hospitality13%
Frasers P roperty Australia
26%
-
100.0
200.0
300.0
400.0
500.0
600.0
2015 2016 2017F 2018F 2019F
S$'m
Page 31
ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
Frasers Centrepoint Ltd
Balance Sheet:
Balance sheet remains strong. Debt/equity ratio is expected to remain fairly stable at between 0.8-0.9x over FY16F-19F which is within management's comfortable range. Debt maturity profile remains long at approximately three years with an average cost of debt of c.3%. Fixed rate percentage of its loans remains high at 81%.
Share Price Drivers:
Replenishing land bank key to income sustainability. The group currently has more than 20m sqft of development space, mainly in Australia. It is actively looking to replenish its land bank especially in Singapore but remains selective, given the sustained high land prices seen in recent government land tenders. The ability to secure additional land bank at lower prices will mean upside to RNAVs, which could re-rate the stock.
Relaxation of property cooling measures in Singapore. Expectations of policy relaxation (especially cyclical measures like the buyers’ and sellers’ stamp duties) may improve sentiment for property buyers, and spark a revival in transaction volumes in the Singapore residential market. This would also lift sentiment on property stocks, which we believe will enable FCL to close the gap between its stock price and NAV.
Gains from asset recycling into its listed S-REITs to boost share price. Recycling activities are perceived positively by investors as FCL is able to free up capital by selling its matured assets to its listed REITs, which will improve the group’s balance sheet position and recycle capital to projects with higher returns.
Key Risks:
Small free float. The stock has a low free float with 87.9% held by major shareholders TCC Group and Thai Beverage, thus leading to low liquidity.
Dependent on the outlook of Australia's real estate market, currency outlook. The group derives an estimated 30% of PBIT from Australia which is dependent on the real estate market there, and whose returns could be impacted by the weakening AUD/SGD exchange rate.
Company Background
Frasers Centrepoint Ltd (FCL) is a one of Singapore’s main real estate companies with assets exceeding S$20bn. The group has four key core businesses focused on residential, commercial, hospitality and industrial sectors spanning 77 cities across Asia, Australasia, Europe and the Middle East.
Leverage & Asset Turnover (x)
Capital Expenditure
ROE (%)
Forward PE Band (x)
PB Band (x)
Source: Company, DBS Bank
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ASIAN INSIGHTS VICKERS SECURITIES
Company Guide
Frasers Centrepoint Ltd
FCL relative performance vs Singapore property sales Remarks
Strong property sales
preclude the re-rating of
share prices.
Source: DBS Bank, Thomson Analytics, Company
FCL relative performance vs group property sales Remarks
Strong group property sales (led by all major countries – Singapore, China and Australia) led to a continued share price outperformance from September 2014 to December 2015.
Some correlation of share price outperformance prior to the listing of FHT and FLT. However, we do not find much share price movements from divestment of assets.
The acquisition of Australand which was perceived as expensive at the time could have led to the fall in share price in 2H14.
Sources for all charts and tables are DBS Bank uness otherwise specified
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This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated
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The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other
factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or
warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without
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The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
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The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
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which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
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Market Focus
ASIAN INSIGHTS VICKERS SECURITIES Page 12
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
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The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
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issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real
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COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates have proprietary positions in
2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research
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3. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates have a net long position
exceeding 0.5% of the total issued share capital in Croesus Retail Trust, Frasers Logistics & Industrial Trust, recommended in this report as of
31 Mar 2017.
4. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates beneficially own a total of 1% of any class of common equity
securities of Croesus Retail Trust, Frasers Logistics & Industrial Trust, as of 31 Mar 2017.
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Compensation for investment banking services:
6. DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for
investment banking services from Croesus Retail Trust, Frasers Logistics & Industrial Trust, Ezion Holdings, Midas, Japfa Ltd as of 31 Mar
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1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
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Page 38
Market Focus
ASIAN INSIGHTS VICKERS SECURITIES Page 13
7. DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for
Croesus Retail Trust, Frasers Logistics & Industrial Trust, UOL Group, Ezion Holdings, Midas Holdings, in the past 12 months, as of 31 Mar
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Directorship/trustee interests:
9. Lim Sim Seng, a member of DBS Group Executive Committee, is an Independent Non-Executive Director of ST Engineering as of 1 Apr 2017
10. Euleen Goh Yiu Kiang, a member of DBS Group Holdings Board of Directors, is a Non-Exec Director of CapitaLand as of 31 Mar 2017.
Disclosure of previous investment recommendation produced:
11. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other
investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12
months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by
DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.
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198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
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Market Focus
ASIAN INSIGHTS VICKERS SECURITIES Page 14
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