Excerpts from analysts' reports

Maybank KE initiates coverage of Sino Grandness with $1.60 target

Analyst: Wei Bin

vege_fruit_juicesGarden Fresh juices are sold in 7-Eleven stores, Carrefour, Tesco, Jusco and Wal-Mart in various cities in China.
Photo: Company
In our view, the odds are still good for buying Sino Grandness now to bet on the catalyst of it pulling off a successful spinoff of Garden Fresh, its beverage subsidiary, at substantially higher
valuations in HK than what investors in Singapore are currently giving the whole group.

Sino Grandness could be worth up to SGD2.52 (158% upside) on our best case scenario and SGD1.31 (34% upside) on the worst case scenario, with potential 20% downside even if the listing does not take place.

The shares have doubled since 2012 as the market factored in good progress toward a successful spinoff but the odds are still good as a recent share placement drew in new
institutional investors.

Sino Grandness is a stock with a very specific catalyst, the impending listing of its beverage subsidiary in HK by Oct
2014. A successful listing of this subsidiary will make Sino Grandness a much more valuable company as HK comparables trade at significantly higher valuations than the entire group.

Sino Grandness’s holding in Garden Fresh alone could potentially worth SGD360m on our base case scenario relative vs Sino Grandness’ market cap of SGD285m.

We initiate coverage with a BUY and target price of SGD1.60 pegged to 6x FY13F PER.

Sino Grandness is still in the early stages of a multi-year growth cycle and the impending listing of its main growth engine will see it valued higher as a separate unit, unlocking substantial value for shareholders.

The full 21-page report can be accessed here.

OCBC Investment Research maintains HK$7.28 fair value on Fortune REIT

Analysts: Sarah Ong & Kevin Tan

Provident_Centre_FortuneREITPark'N Shop is Fortune REIT's top tenant. Photo: CompanyThe growth in HK’s retail sales has picked up significantly since 4Q12. Combining the first two months of 2013 to eliminate distortions from the timing of Chinese New Year, retail sales climbed up 15.8% in value.

Robust retail sales will continue to underpin the growth in retail rents throughout HK.

The media has reported that a group has called for the boycott of Park’N Shop supermarket chain, which is part of Li Ka-shing’s Hutchison Whampoa Ltd, in support of dock workers who are striking for better work conditions.

Park’N Shop is Fortune REIT's (FRT) top tenant, accounting for 8.0% of the REIT’s total gross rental income in Dec 2012.

According to FRT management, businesses are running as usual and impact to the Park’n Shop outlets in FRT’s malls has not been seen.

Management has indicated that 2013's rental reversions are likely to be in the mid-teen percentages. FRT has a low gearing of 23.4% and no refinancing needs till 2015.

We are maintaining our fair value of HK$7.28 and BUY rating on FRT.

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