R e t a i l M a r k e t M o n i t o r Monday, 26 January 2015

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1 MARKET NEWS PRICE CHART The FSSTI gained 41.21pt to close at 3,411.5 as a Chinese manufacturing gauge unexpectedly rose and the European Central Bank expanded its asset-buying programme. Keppel Corp announced its voluntary unconditional cash offer for Keppel Land with a two-tiered price approach, one with a base offer price of S$4.38 per share, and the other with a higher offer price of S$4.60 per share should Keppel Corp be entitled to exercise its rights from the compulsory acquisition. While Keppel Corp and Keppel Land halted trading activities, Capitaland rose 4.09% to close at S$3.56. The broader market saw 324 gainers and 167 losers, with total trading value at S$1,574.8m. US stocks ended mostly lower Friday as investors took profit from recent strong gains. The DJIA lost 0.8% to close at 17, while the S&P 500 fell 0.6%, to end at 2, UPS warned that its quarterly results are likely to disappoint, and its shares fell nearly 10%. Starbucks quarterly results reported late Thursday revealed same-store sales rose 6.4%, the 20th straight quarter where sales were up at least 5%. General Electric shares rose after the industrial conglomerate s fourth-quarter operating earnings of 56 US cents a share beat expectations of 55 US cents a share. WHAT S IN THE PACK CapitaMall Trust- 4Q14: Dark clouds looming over the horizon. (CT SP/SELL/S$2.25/Target: S$2.14) CapitaMall Trust (CMT) reported a 4Q14 DPU of 2.86 S cents (+5.6% yoy, +5.1% qoq). Full-year 2014 DPU of S cents is in line with our expectations, accounting for 100.4% of our full-year estimate of 10.1 S cents. Footfall fell 0.9% yoy Frasers Centrepoint Trust- 1QFY15: A challenging year ahead. (FCT SP/HOLD/S$2.02/Target: S$2.23) Frasers Centrepoint Trust (FCT) reported 1QFY15 DPU of 2.75 S cents, (+10.0% yoy, -1.3% qoq) its strongest first-quarter showing yet. The results are in line with our expectations with 1QFY15 DPU accounting for 23.9% of our full-year forecast. Keppel Corp Ltd- To take Keppel Land private at S$4.38/S$4.60 share. (KEP SP/HOLD/S$8.10/Target: S$8.80) Keppel Corp has unveiled an offer to privatise Keppel Land with a 2-tier approach. We deem the offer prices of S$ per Keppel Land share as fair and relatively in line with our target price of S$4.30 (20% discount to RNAV) for Keppel Land. Keppel Land- Privatisation Offer: A Fair Deal (KPLD SP/ACCEPT OFFER /S$3.65/Target: S$4.30) We recommend taking up the offer as it is above our target of S$4.30/share, although long-term investors are likely to hold out for a higher price as the offer is at a 7-12% discount to book. The deal will bring other privatisation plays back in focus including Wheelock KEY INDICES Prev Close Chg YTD DJIA (0.8) (0.8) S&P (0.5) (0.3) FTSE CSI FSSTI HSCEI HSI JCI KLCI KOSPI Nikkei SET TWSE BDI (2.5) (4.0) CPO (RM/mt) (0.4) (1.2) Nymex Crude(US$/bbl) (12.6) Source: Bloomberg TOP VOLUME Stock Price (S$) Chg Vol ( 000) Golden Agri-Resources ,880 Noble Group (0.5) 50,420 Siic Environment ,553 Capitaland ,891 Thai Beverage ,723 TOP GAINERS Stock Price (S$) Chg Vol ( 000) Bukit Sembawang Comfortdelgro Corp ,532 Petra Foods Wing Tai ,384 Wheelock Properties ,465 TOP LOSERS Get up to speed by learning from our experts - Sign up for a seminar today! Stock Price (S$) Chg Vol ( 000) Tianjin Zhong Xin (1.1) 237 Keppel REIT (1.0) 9,934 Mapletree Logistics (0.9) 4,467 Ezion (0.8) 21,348 M (0.5) 782 w w w. u t r a d e. c o m. s g 1

2 WHAT S IN THE PACK City Developments (CIT SP, C09) - Technical BUY with 14.9% potential returns The stock continues to form a series of higher lows and higher highs and looks poised to break above S$10.69 to Chip Eng Seng (CHIP SP, C29) - Technical BUY with 15.3% potential returns The stock has broken out of the downward sloping trendline previously and is currently trading above the 20- day EMA, which... GuocoLeisure (GLL SP, B16) - Technical BUY with 10.9% potential returns The stock looks poised for a breakout of its immediate resistance at S$1.65 with expanding volume... Oxley (OHL SP, 5UX) - Technical BUY with 14.9% potential returns The stock appears to have failed to trade below its immediate support at S$0.50 and currently looks poised to w w w. u t r a d e. c o m. s g 2

3 S I N G A P O R E R e t a i l M a r k e t M o n i t o r Monday, 26 January 2015 TRADERS CORNER City Developments (CIT SP, C09) Technical BUY with 14.9% potential returns Last price: S$10.53 Target price: S$12.10 Protective stop: S$10.24 BUY with a target price of S$12.10 with stops placed at S$ The stock continues to form a series of higher lows and higher highs and looks poised to break above S$10.69 to test S$11.15 with expanding trading volume during the last trading session. A golden cross has formed earlier and the MACD indicator has also form a bullish crossover above its centreline. Watch the stock to see if it could close above S$11.15 first. Expected timeframe: 2 months Our institutional research has a fundamental HOLD and target price of S$ GuocoLeisure (GLL SP, B16) Technical BUY with 10.9% potential returns Last price: S$0.955 Target price: S$1.06 Protective stop: S$0.925 BUY with a target price of S$1.05 with stops placed at S$0.86. The stock has formed a higher low for now and currently is attempting to trade above the immediate resistance at S$0.98 with expanding trading volume. The 20-day EMA has turned up and looks poised to cross above the 50-day EMA. Watch the moving averages to see if a golden cross could form. Expected timeframe: 2 weeks - 1 month ANALYST Jeffrey Tan jeffreytan@uobkayhian.com w w w. u t r a d e. c o m. s g 3

4 S I N G A P O R E R e t a i l M a r k e t M o n i t o r Monday, 26 January 2015 TRADERS CORNER Chip Eng Seng (CHIP SP, C29) Technical BUY with 15.3% potential returns Last price: S$0.910 Target price: S$1.05 Protective stop: S$0.86 BUY with a target price of S$1.05 with stops placed at S$0.86. The stock has broken out from the downward sloping trendline previously and is currently trading above the 20-day EMA, which has started to turn up after crossing above the 50-day EMA. The MACD indicator may continue to head north if the MACD histogram continues to trade above its centreline. Expected timeframe: 2 months Oxley (OHL SP, 5UX) Technical BUY with 14.9% potential returns Last price: S$0.535 Target price: S$0.615 Protective stop: S$0.49 BUY with a target price of S$0.615 with stops placed at S$0.49. The stock appears to have failed to trade below its immediate support at S$0.50 and currently looks poised to rebound towards its prior resistance-turned-support level. The 10-day EMA has turned up and the stock has also closed above the 50-day EMA which acted as resistance previously. Watch the moving averages to see if a golden cross could be formed. Expected timeframe: 2 weeks to 1 month Source: Nextview ANALYST Jeffrey Tan jeffreytan@uobkayhian.com w w w. u t r a d e. c o m. s g 4

5 CORPORATE NEWS F&N: F&N inks extension of licence agreements with Nestlé. FRASER and Neave Limited (F&N) has, through its Bursa-listed subsidiary Fraser & Neave Holdings Bhd in Malaysia, signed several agreements with Société Des Produits Nestlé SA and Nestec SA - collectively, Nestlé - to manufacture and distribute Carnation, Bear Brand, Bear Brand Gold, Ideal Milk and Milkmaid in Singapore, Thailand, Malaysia and Brunei. (The Business Times) De Clout: DeClout acquires shares in unit Corous360 for S$7.36m. DECLOUT Ltd, an information and communications technology provider, said it has acquired about 520,000 new ordinary shares of its subsidiary Corous360 for S$7.36m, shoring its interest in the subsidiary back up to a 100%. (The Business Times) w w w. u t r a d e. c o m. s g 5

6 FROM THE REGIONAL MORNING NOTES... CapitaMall Trust- 4Q14: Dark clouds looming over the horizon. (CT SP/SELL/S$2.25/Target: S$2.14) FY15F PE (x): 20.8 FY16F PE (x): 20.5 CapitaMall Trust (CMT) reported a 4Q14 DPU of 2.86 S cents (+5.6% yoy, +5.1% qoq). Full-year 2014 DPU of S cents is in line with our expectations, accounting for 100.4% of our full-year estimate of 10.1 S cents. Footfall fell 0.9% yoy and tenant sales dropped 1.9% yoy psfpm. Lukewarm consumer demand was likely exacerbated by increased competition from new malls (Suntec s Phase 3 AEI is slated to attain TOP soon) and the rise of e-commerce platforms. Tenant sales in segments such as toys and hobbies, telecommunications and Information Technology have been hit hardest, registering 10-15% drop in sales. Downgrade to SELL with an unchanged target of S$2.14, based on DDM (required rate of return: 6.8%, terminal growth: 1.8%). The retail environment is expected to remain challenging from the increased supply, rising costs and threat from alternative retail channels. Frasers Centrepoint Trust- 1QFY15: A challenging year ahead. (FCT SP/HOLD/S$2.02/Target: S$2.23) FY15F PE (x): 18.3 FY16F PE (x): 18.3 Frasers Centrepoint Trust (FCT) reported 1QFY15 DPU of 2.75 S cents, (+10.0% yoy, - 1.3% qoq) its strongest first-quarter showing yet. The results are in line with our expectations with 1QFY15 DPU accounting for 23.9% of our full-year forecast. FCT s latest operating asset, Changi City Point, registered the highest reversion rate within the portfolio, at 10.7% in 1QFY15. Over 50% of leases expiring in FY15 at Causeway Point and Northpoint were renewed in 1QFY15 at healthy reversion rates of 9.1% and 6.1% respectively. Downgrade to HOLD post the strong 13% yoy increase in the share price. Our target price of S$2.23 is based on DDM (required rate of return: 6.8%, terminal growth: 1.8%). Entry price is S$1.90. w w w. u t r a d e. c o m. s g 6

7 FROM THE REGIONAL MORNING NOTES... Keppel Corp Ltd - To take Keppel Land private at S$4.38/S$4.60 share. (KEP SP/HOLD/S$8.10/Target: S$8.80) FY15F PE (x): 9.7 FY16F PE (x): 10.2 Keppel Land privatisation. Keppel Corp (Keppel) has made a cash offer to privatise Keppel Land (KepLand) with a 2-tier approach: a) Base offer price of S$4.38/share b) Higher offer price of S$4.60/share, to be paid if Keppel is entitled to exercise its rights of the compulsory acquisition (with 90% shares held by the offeror). Our take on the deal. The offer prices are fair and relatively in line with our target price of S$4.30 (pegged at 20% discount to our RNAV of S$5.37) for KepLand. The base offer price of S$4.38 (20% upside to last done of S$3.65) is at KepLand s P/B of 0.88x and an 18.4% discount to KepLand s RNAV of S$5.37. The higher offer price of S$4.60 (26% upside to last done of S$3.65) is at a P/B of 0.93x and a 14.3% discount to RNAV of S$5.37. The offer prices are relatively in line with the target price of S$4.30 that we have ascribed to KepLand in our SOTP valuation for Keppel. Maintain HOLD and our target price of S$8.80, which values KepLand at S$4.30 and Keppel s O&M business at a 2016F PE of 9.5x. Amid the low oil prices, Sembcorp Industries (BUY/target: S$5.20) with half of its earnings from its relatively defensive utilities business - is the most defensive large-cap stock in the Singapore offshore & marine space. Keppel Land- Privatisation Offer: A Fair Deal (KPLD SP/ACCEPT OFFER/S$3.65/Target: S$4.30) FY15F PE (x): 12.3 FY16F PE (x): 11.0 Keppel Land privatisation offer. Keppel Corp (Keppel) has made a cash offer to privatise Keppel Land (KepLand) in a 2-tier approach: a) Base offer price of S$4.38/share (20% upside to last done of S$3.65) is at KepLand s P/B of 0.88x and an 18.4% discount to KepLand s RNAV of S$5.37. b) Higher offer price of S$4.60/share, to be paid of Keppel is entitled to exercise its rights of compulsory acquisition (with 90% shares held by the offeror. The higher offer price (26% upside to last done of S$3.65) is at a P/B of 0.93x and a 14.3% discount to RNAV of S$5.37. We recommend taking up the offer since even the base offer price (S$4.38/share) is above our target of S$4.30/share. However, long-term investors are likely to hold out for a higher offer price as the offer is at a 7-12% discount to the book value. The offer is inclusive of the 14 S cents per share dividend declared in the 4Q14 results. The final tender date has yet to be decided. Maintain BUY and target price of S$4.30, pegged at 20% discount to our RNAV of S$5.37/share. Key catalysts include acquisitions, divestment of its office assets and sustained recovery in China sales. w w w. u t r a d e. c o m. s g 7

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