Excerpts from analysts' reports
StanChart upgrades ARA to Outperform and $2.04 target price
Analyst: Meenal Kumar
John Lim, Group CEO of ARA Asset Management. Company photo. ARA Asset Management announced that its largest shareholders have sold a 20% stake in the company to Straits Trading Co (STC).
StanChart upgrades ARA to Outperform and $2.04 target price
Analyst: Meenal Kumar
John Lim, Group CEO of ARA Asset Management. Company photo. ARA Asset Management announced that its largest shareholders have sold a 20% stake in the company to Straits Trading Co (STC). ARA believes STC can act as an alternative funding source for increasingly steep seed capital requirements.
With lower capital required at the ARA level, our concerns of periodic equity funding to finance AUM growth become irrelevant.
We upgrade ARA to Outperform from In-Line with a new SGD 2.04 price target (from SGD 1.82).
ARA will manage STC’s entire investment property portfolio (excluding hospitality assets) through a separate account arrangement.
The portfolio includes commercial and residential assets, such as Straits Trading Building (an office asset in Singapore), nine good-class bungalows, 13 units in Gallop Green, 14 units in The Holland Collection and Malaysian properties.
We understand these assets are high quality but low yielding and will be divested so that the proceeds can be used to fund STC’s SGD 850mn capital commitment in SRE.
Potentially, ARA’s Suntec REIT (SUN SP, IL, PT: SGD 1.69) could acquire Straits Trading Building, which we have assumed in our earnings estimates for ARA.
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DBS Vickers says market has not priced in stronger 4Q earnings of IndoAgri
Crude palm oil prices have been weak.Indofood Agri Resources registered sequentially higher earnings, as expected. Ex-translational FX loss of Rp88.7bn, 3Q13 earnings of Rp211.6bn (-13% y-o-y; +220% q-o-q) were ahead.
3Q13 operating margin rebounded to 12.3% from 5.4% in 2Q13, as unit cost eased in line with higher output FY13F-15F earnings were raised by 5-18%.
BUY for 12% upside to revised TP of S$1.00 (Prev S$ 0.93).
We believe the market has not yet priced in stronger 4Q13 earnings.
Technically, the stock looks set to head to the fundamentally of $1 and may even trend beyond that eventually, once it clears the $0.92 level.