GUOCOLEISURE --> OSK-DMG: The general offer by Guoco Group (53 HK) resulted in the latter’s property assets being independently valued by external parties and the hotel portfolio was collectively valued at EUR890m, or USD 1,370m. This compares against our more optimistic valuation of USD1,680m, implying a USD310m shortfall. We believe that the valuation is overly conservative as it is based on existing-use basis and does not factor redevelopment potential. Third party transactions validate our view, with prime London hotels transacted at meaningful premium to book values.
The bulk of GLL’s hotel portfolio value is concentrated in five key hotel properties, namely the Tower London, Charing Cross, the Royal Horseguards, The Grosvenor and Thistle Marble Arch with a total of 2,359 rooms. We use per key valuation of EUR500,000 to value this portfolio versus the average transacted per key of EUR641,000 in the
comps set. Our revised sum of parts for the stock is raised to SGD1.79/share (from SGD1.78 previously). BUY TP SGD 1.25
COURTS ASIA --> HSBC: Share price correction creates a good entry point
Well capitalized to exploit growth opportunities
Reiterate OW(V) rating; trim DCF-based target price to
SGD1.32 from SGD1.44.
Courts recorded weaker-than-anticipated 4Q y-o-y revenue growth of 3% versus our expectation of 29%. The weak growth was the result of lacklustre sales of Apple products as well as the temporary renovation of Suntec City, a major convention centre in Singapore for
electronic trade shows. More importantly, revenue growth appeared weak because 4Q FY Mar 2012 revenue was boosted by a SGD7.5m positive transfer of service charge income
while the same transfer in 4Q FY Mar 2013 amounted to only SGD0.2m. Based on the questions we have received from investors, we think the market is concerned about this
accounting treatment, yet this policy is consistent with IFRS 39 on Recognition and Measurement. Stripping away the service charge income transfer, revenue would have
increased 8% for the quarter. Same-store-sales growth (SSSG) in both Singapore (8.2% in FY13 versus 12.1% in FY12) and Malaysia (6.3% in FY13 versus 1.4% in FY12) also
indicates that underlying operations remain strong.
Roubini: Stock Market 'Is Going to Rally' for 2 More Years
Tuesday, 04 Jun 2013
By Michael Kling
The stock market rally will continue for the next two years, renowned economist Nouriel Roubini told CNBC.
Roubini, a professor at New York University, is known for correctly predicting the housing bubble and ensuing financial crisis.
His forecast for a long-running stock rally seems at odds to his reputation for predictions so pessimistic they sometimes seem to border on the apocalyptic.
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
But Roubini, who runs Roubini Global Economics, explained that stocks have room to run because the economy is performing poorly. That means the Federal Reserve will maintain low interest rates through quantitative easing (QE).
"Growth is not going to pick up and inflation actually is falling," Roubini told CNBC. "So the markets are worried about tapering off sooner, but I think tapering off is going to occur later and, therefore, the market is going to rally."
Many observers credit the Fed's QE program for boosting the stock market.
However, the good times for equities will end when the wealth gap between Wall Street and Main Street becomes too large, Roubini warned.
Eventually, the economy will have to accelerate or stocks will face a correction.
"You're going to have an increasing gap between Wall Street and Main Street, between what's happening to asset prices and real economic growth," he said.
Fed-driven low interest rates remain the over-riding factor, Roubini explained. "But of course over time it cannot trump those gravitational forces of economic fundamentals."
Many investors fear stocks will flounder when the Fed decides to stop purchasing large amounts of Treasury and mortgage-backed bonds, as rates are expected to jump.
Roubini doesn't see it that way. He expects the Fed to taper QE carefully and slowly so the exit will not unsettle the stock market.
The Fed will continue QE at least through the middle of next year before gradually phasing it out over the next year and hold rates at zero until the end of next year or the beginning of 2015.
"That's a recipe for long-term interest rates going higher but in a way the market can digest."
When the Fed will start tapering QE is a matter of much discussion. San Francisco Federal Reserve Bank President John Williams has said an improving economy might permit the Fed to start tapering QE this summer, Reuters reported.
"It really is a question for me of watching for continuing signs in the U.S. labor market, continuing signs of greater confidence in the momentum in the U.S. economy, but also watching carefully where the underlying inflation rate is and what the outlook for inflation is," he told reporters.
MIDAS--> OCBC INVESTMENT RESEARCH: Midas Holdings (Midas) announced that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has, together with its consortium partners Shanghai ALSTOM Transport Electrical Equipment and ALSTOM Transport S.A., clinched a CNY1.1b metro contract. This is for the supply of 29 train sets
(or 174 train cars) for the Nanjing Metro Line 4 Phase 1 project. Delivery is scheduled from 2014 to 2016. Although NPRT’s percentage share of the contract was not disclosed, we believe that it may be around the 70-75% range, after taking reference from previous contract wins by NPRT and its consortium partners. This would equate to a contract amount of ~CNY770-825m for NPRT, which is a sizeable win, in our opinion.
Maintain BUY on Midas, with an unchanged fair value estimate of S$0.54, pegged to 1.1x FY13F P/B. (Wong Teck Ching Andy)
SINGAPORE PROPERTY DEVELOPERS --> Maybank KE:
- We recently advocated switching out of S-REITs into property developers. In particular, we like CapitaLand (CAPL SP, BUY, TP SGD4.20), CMA (CMA SP, BUY, TP SGD2.57) and Keppel Land (KPLD SP, BUY. TP SGD4.82) for their China exposure and diversified businesses.
- Singapore now accounts for less than 50% of their respective asset base. Our analysis shows that should higher interest rates lead to a 10% decline in Singapore residential property prices and a 50 bps hike in Singapore commercial cap rates, the RNAVs of CapitaLand, CMA and KepLand are only negatively impacted by 1.8%, 2.8% and 2.2% respectively.
- We are also positive of their diversification into China, as the fundamental theses of urbanization and growing affluence remain sound. Having been in the market long enough, these three companies have their individual competitive advantages to hold their own in China, as evidenced by the operational metrics reported in recent quarters.
DBS VICKERS' report on Myanmar : Singapore companies are good proxies to ride on several segments in the country’s current stage of development.
Infrastructure: Infrastructure development and planning is rapidly underway. To fast track development, foreigners have been invited to bid for mobile networks, airports, and oil & gas exploration. We like Ezion (BUY, TP: S$3.00) and Interra Resources (NR, TP: S$0.57) as Oil & Gas proxies with operations there. Other potential beneficiaries include Yongnam (BUY, TP:S$0.41) in the development of airports, Tiong Seng (BUY, TP: S$0.33) to set up a pre-cast factory, and SingTel (HOLD, TP:
S$3.80) in the bidding for a mobile phone license.
Hospitality: Our visit to Yangon earlier this year revealed overwhelming demand for quality hotels, service apartments and offices from the continuous influx of travelers. On this, we expect Amara (NR, FV: S$0.75) to be a beneficiary with its proposed JV for the development of a hotel.
Consumer goods/ services: Lastly, demand for consumer goods and services is poised to grow as affluence picks up. We like Super (BUY, TP: S$5.35) with its leading share in the packaged coffee market. Other companies with presence include FNN (HOLD, TP; S$9.52) with its 55%-owned brewery, and Parkson Retail Asia, which has a 70%/30% JV with Yoma for a 4,000 sqm retail store in Yangon.
