FW: SG: Market Pulse (25 July 2016)

[Ye Tian (James)]

 

		Monday, 25 July 2016
		KEY IDEA
		Frasers Commercial Trust: Major lease renewal secured
		Frasers Commercial Trust (FCOT) reported its 3QFY16 results which met our expectations. Gross revenue increased 11.1% YoY to S$38.6m, while DPU rose 2.6% YoY to 2.41 S cents. One major development which took place during the quarter was Microsoft’s decision to extend its current lease at Alexandra Technopark for another five years till FY22. FCOT’s overall portfolio occupancy stood at 93.3%, a modest improvement from 2QFY16 (92.6%). Management also delivered robust rental reversions across its three assets in Singapore. We retain our forecasts given this in-line set of results. However, we lift our fair value estimate from S$1.42 to S$1.45 as we factor in a lower risk-free rate assumption of 2.4% (previously 3.0%) in our model, given our view that the interest rate environment would likely stay accommodative for a prolonged period of time.		Maintain BUY with fair value estimate increased from S$1.42 to S$1.45. (Wong Teck Ching Andy)
		MORE REPORTS
		CapitaLand Mall Trust: Transformation of Funan begins!
		CapitaLand Mall Trust (CMT) reported a 7.1% and 1.1% YoY increase in its 2Q16 gross revenue and DPU to S$170.9m and 2.74 S cents, respectively. Results were in-line with our expectations. CMT showcased its resilience by recording shopper traffic and tenants’ sales psf per month in 1H16. Occupancy at its malls was also stable at 97.9% (+0.2 ppt QoQ). However, rental reversions remained soft, coming in at 1.7% for 1H16 (1Q16: 1.4%; FY15: 3.7%). Management shared more details on its Funan redevelopment projection, which is estimated to cost S$560m and will comprise three components: retail, office and serviced residences. The projected ROI is 6.5%. We lower our FY16 and FY17 DPU forecasts by 1.6% and 4.4%, respectively, as we factor in the Funan redevelopment in our assumptions. However, our fair value estimate increases from S$2.10 to S$2.23, as our dividend discount model also captures the income from the completed asset in FY20, coupled with a lower risk-free rate of 2.4% (previously 3.0%) applied.		Maintain HOLD with    fair value estimate increased from S$2.10 to S$2.23. (Wong Teck Ching Andy)
		Raffles Medical Group: Small PATMI growth
		Raffles Medical Group’s 2Q16 revenue grew 19.8% YoY to S$119.0m as both the Healthcare and Hospital Services divisions saw their segment revenue increased 42.2% and 7.9%, respectively. This was driven by higher patient load, expansion of clinic network, increased contribution from more specialist consultants as well as from International SOS (MC Holdings) and its subsidiaries (MCH). However, revenue growth was offset by higher costs such as staff costs due to staff recruitment for the new medical centre at Holland V. As a result, PATMI grew 4.5% to S$16.7m. A DPS of 0.5 S-cents was also declared. We are keeping our HOLD rating but place our fair value estimate of S$1.57 under review, pending more information from the analyst briefing later today.	We are keeping our HOLD rating but placing our fair value estimate of S$1.57 under review. (Jodie Foo)
		NEWS HEADLINES
		- Spackman Entertainment Group announced that Alibaba Pictures has purchased the rights to distribute the Group’s film "Life Risking Romance" in movie theatres and online platforms in China.   - Alibaba Pictures Group expects to record a higher net loss for the six months ended Jun 30, 2016.   - Lum Chang Holdings has secured a tender for the construction of a high-specification building worth S$60.8m.   - Rowsley's 2Q16 revenue increased 26% YoY to S$22.3m, while PATMI slipped from a profit of S$0.5m in 2Q15 to a loss of S$5.5m for the current quarter.   - United Overseas Insurance's 2Q16 gross premiums written stayed flat at S$30.7m, while PATMI dropped 1.4% YoY to S$5.0m.
		For more information on the above, please refer to the detailed report attached.
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