Saturday, April 24, 2010

Power Root改進求勝

April 24, 2010
十全食美(第8篇)
咖啡市場不寂寞
Power Root改進求勝

在美國超級市場,產品多樣化多選擇是最大特色,單單橄欖就有100種選擇,完全照顧到不同顧客的需求。

在大馬,咖啡市場也不寂寞,除了進口咖啡豆,我們還有不同州屬的咖啡豆烘焙以及沖泡方式。

此外,還有各式各樣的即溶咖啡供消費者選擇,Power Root公司更看準不同消費群的需求,不只在口味上改進,也添加許多營養成分,鎖住不同的顧客群。

結合大馬優勢與掌握不同顧客群的需求,是致勝關鍵,尤其在國際舞台上。
運用本地口味特色,加上當地消費者對食物營養的需求,Power Root公司成功開拓不同市場。

Power
Root控股公司天然生物資源(NATBIO,7237,二板消費)執行董事施傳寶指出,未來公司放眼每年推出2至3項新產品,並且開拓2至3個新市場。

咖啡和茶類飲料的國際市場將是Power Root公司旗下的即溶咖啡與茶類產品的發展舞台。

他說,公司的產品以獨特香氣為名,根據公司調查,消費者一般上認為公司的功能咖啡飲料口味獨特,讓人喝了還想再喝。

考驗應變能力
儘管大馬人口不超過3000萬人,但由于我國多元種族文化與宗教特色,使得餐飲業者生產出多樣化口味的食品,這也是我國的優勢。

他認為,馬來西亞的另一個優勢為在國際上,符合生產規格的大馬生產食品可申請清真認證,這有助提高回教國家對我國出口食品的信任度,提高大馬產品國際回教市場滲透率。

在出口業務上,公司面臨最大的問題是不同國家對草藥食材訂有不同的標準,出口時需要通過嚴格的檢驗程序,若未能通過,產品就無法進入該市場。

他說,一些草藥成分如東革阿里的功能存在著爭議,一些國家無法通過檢測,以致公司主打的東革阿里人參咖啡無法進入一些市場。

不過,這也考驗公司研發人員的應變能力,因此公司陸續推出了不含其他草藥成分的即溶咖啡。

隨著人們保健意識增強,也為即溶咖啡產業帶來不同的商機。

為了迎合日本、韓國以及台灣等海外消費群,對產品附加營養價值的需求,公司推出了含膠原蛋白或寡果糖(Oligofructose)即溶咖啡,讓喜歡喝咖啡但又擔心健康問題的消費者,提供更多選擇。

遙控海外 需找可靠夥伴

拓展海外業務,伙伴與成本控制最重要。

施傳寶認為,在人生地不熟的海外市場,尋找可靠的經銷商是公司面臨的另一最大挑戰。

他指出,經由過去數次的海外參展,結識許多當地的商家,業者也藉由這個人際網絡進一步拓展銷售網絡。

另外,海外業務因山高皇帝遠,所以在財務指出方面也更需小心管控。

“由于公司經費有限,因此在成本和人力管控上很重要,在不需要太多資源的部分盡可能精簡化。”

衡量產能人力財力
他說,節省下來的經費可以投資在其他地方,如成立銷售團隊或是增設子公司,進一步加強市場滲透率。

他說,在未踏出國外前不應預設立場,對于不同市場的消費者和經銷網絡,都應採取彈性作業方式。

“國外的競爭環境、消費形態、經銷商優缺點、產品市場定位,以及產品推介時間點,每個國家都充滿不同的變數,必須量身訂造。”

他指出,在浩瀚的餐飲食品市場,機會處處都有,但是關鍵在于企業公司本身對自身產品牌特色的建立,以及對海外消費市場的了解,掌握了這兩個重要原則,就不妨放手一試。

他提醒有意往海外發展的企業家,應先衡量自己在產能、人力以及財務條件上的不足,完全掌握自己的優缺點,再開拓海外市場。

“這些步驟都完成后,接著就是等待時機。”

西亞上了一堂 震撼教育課
Power Root漂洋過海進入國外市場的路途,並非一帆風順,當中也遭逢許多難題,但最讓他們印象深刻的,就是在西亞的那堂“震撼教育”課。

他指出,當公司代表前往沙地阿拉伯與當地商人洽商時,他們以自己慣用的一套行銷模式,說服對方原版照用,但卻引起反彈,雙方討論更陷入僵局。

經過30分鐘的激烈討論后,對方笑著對他們說,“先生,這裡不是共合國,也不是民主國家,而是個王國,在王國里,是國王規定法律,決定事情的對與錯,”。
這段談話對他們而言,如同當頭棒喝,也體會到入鄉隨俗的重要性,在大馬可行的行政或行銷模式不可同樣套用在國外。

Source/转贴/Extract/: 中國報
Publish date:24/04/2010

Frasers Commercial Trust (FCOT -DBS)

23/04/10
Frasers Commercial Trust (FCOT)
HOLD S$0.14
Price Target : 12-Month S$ 0.16

Looking secured at half time
• DPU of 0.32 Scts in line with expectations
• 89% of FY10F income secured
• Maintain HOLD, TP S$0.16



Stability in results.
2Q10 DPU =0.32 Scts

Gross revenues and net property income are 24% and 26% higher by 24% yoy due to (i) impact of stronger AUD vs S$ on its Australian sourced income partially offset by lower incomes from Japan due to the weakening yen, (ii) contribution from Alexandra Technopark which was acquired back in Aug’09. Interest costs declined by 17%due after the draw-down of new loan facilities back in Dec’09. As such, distributable income to unitholders net CPPU holders grew by 82% yoy to S$9.8m.

Majority of FY10F incomes secured, but renewals in Singapore could be challenging. As of 1H10, FCOT have secured c89% of its incomes. For renewals for the remaining 11% in 2H10, we are expecting some pressure on topline from Singapore (comprising c3% of gross portfolio rent) given that current asking rents for 55 market street and Keypoint are lower than expiring monthly rents of S$7.40 psf and S$5.6 psf respectively. Australia’s performance is likely to remain stable given expected stronger rental reversions at Central Park property in Perth, given low passing rents (average of A$345 psm pa), backed by a strong AUD vs S$ exchange rate.

Keeping asset portfolio updated & relevant. Apart from organic growth, FCOT is evaluating enhancement plans at Keypoint and China Square Central, aimed at boosting occupancy levels there. In addition, the manager is also looking at acquisition opportunities in Singapore and Australia and will only execute these plans if it is accretive to the trust.

Maintain HOLD, TP S$0.16. While we acknowledge that FCOT trades at an attractive 0.5 x P/BV with relatively secured FY10-11F yields of 7.9-8.3%, we believe that catalysts to emerge upon more certainty from its operations and its asset enhancement plans.

Cambridge Industrial Trust-phillip

23/04/10
Cambridge Industrial Trust
Hold (Unchanged)
Closing Price S$0.505
12-month Target Price S$0.51 (+0.0%)
52w k High (4/12/2010) 0.51 / 52w k Low (5/4/2009) 0.28

• 1Q10 revenue = $18.6 million (+1.3% y-y, -1.5% q-q),
. Net property income =$16.3 million (+1.2% y-y, -2.7 q-q)
. Distributable income = $11.1 million(7.8% y-y, -7.2% q-q).
• 1Q10 DPU of 1.27 cents.(-1.3% y-y, -7.5% q-q)
• Disposal of assets worth $21.5 million, 10% take-up for 4Q09 DRP
• Maintain hold recommendation, fair value $0.51

Consistent Results
Stable growth y-y resulted from the annual rent increases. However as the Trust had started divesting assets from 4Q09, q-q results reflected the decrease in income. DPU was higher in 4Q09 compared to 1Q10 due to the dividend income from AIMS AMP Industrial REIT. Contribution in 1Q10 was minimal at $0.1 million. Cambridge has since fully divested its interest. Portfolio occupancy continues to climb and improved to 99.9%.

We continue to see progress on the assets divestment program. Cambridge disposed another 32 strata units of the 48 Toh Guan Road East property for $21.5 million, approximately 7.5% above book value. To-date, it has sold $28.1 million of assets. The Trust has classified on its balance sheet another $70 million of assets for disposal. The Dividend Reinvestment Program (DRP) was carried out for 4Q09 and received an approximate 10% take-up rate, translating to $1.1 million of funds. The proceeds from the divestments and DRP program are earmarked for asset enhancements as well as reducing debt.

Capital management
To recap, Cambridge has total debt of $390.1 million, which is due in 2012. Gearing is at 42.6%. Management has a long term gearing target of 30-35% and this will be achieved through a combination of divesting non-core assets as well as accumulating funds from the DRP.


Forecasts
The sales of the assets above book value bolster our view that industrial capital values are holding up well and should not see further weakening. We also like to see the amount of debt reduced as we feel it is the main overhang on the Trust, with a gearing ratio of 42.6%, it is one of the highest geared REIT. We make some changes to our assumptions, raising our occupancy projection to 99% while incorporating loss of revenue from the divestment assets and also increasing the amortised loan transaction amount to the distributable income. We further assumed that the trust reduced its gearing to 39% at year-end. Our DPU for FY10E is 4.92 cents, which translate to a yield of 9.7%. We raised our fair to $0.51 and maintain our hold recommendation.

Cambridge Industrial Trust -DMG

Cambridge Industrial Trust: Stable earnings; BUY on defensive strengths (BUY, TP S$0.64)
23/04/10


Maintain BUY for its defensive strengths.
• 1Q10 revenue = $18.6 million (+1.3% y-y, -1.5% q-q),
. Net property income =$16.3 million (+1.2% y-y, -2.7 q-q)
. Distributable income = $11.1 million(7.8% y-y, -7.2% q-q).
• 1Q10 DPU of 1.27 cents.(-1.3% y-y, -7.5% q-q)
• Maintain hold recommendation, fair value $0.64

Annualised DPU came in at 5.17¢, marginally below our forecast of 5.3¢. The YoY decline in DPU was due to the divestment of 16 Tuas Avenue and 32 strata units at Enterprise Hub. This is part of its broader plans to reduce its leverage to 38% by end-2010. Net property income rose 1.2% YoY underpinned by strong occupancy levels. CREIT will trade ex- 1Q10 distribution on 26 April. Maintain BUY, DDM-based TP of S$0.64.

Gearing target of 38% by end-2010. CREIT has completed the divestment of 32 strata units at Enterprise Hub, following its Dec 09 sale of 16 Tuas Avenue building. CREIT’s cash position improved by S$19.4m to S$58.7m, due predominantly to the disposal of an additional 32 strata units. Total gross proceeds from this sale amounted to S$21.5m, exceeding its book value of S$1.6m. Management will use part of its S$58m cash to retire its debt over the next few quarters. Management intends to bring its gross gearing down to 38% by end-2010 (42% currently), closer in-line with major REITs which has gearing levels between 30-35%.

Defensive business structure is a relative strength. We favour CREIT for its bondlike characteristics anchored by: 1) long tenant leases of 4.4 years; 2) high levels of bank-guaranteed security deposits of 15.3 months; 3) built-in portfolio rental escalation of 2.5% pa; 4) high occupancy (99.9%) and diversified tenant mix; and 5) 51% of portfolio sublet providing second layer of income support. Besides, its existing interest costs are hedged for the next three years, minimising interest rate fluctuation risks. CREIT does not have any debt expiring until Feb 2012.

Laggard to A-REIT; room for yield compression. CREIT’s dividends are well supported by rental guarantees and step-up rental agreements. Prior to the credit crisis, CREIT traded at 140bp yield premium over A-REIT. That gap now stands at 350bp, suggesting that it is still a laggard play. At our TP of S$0.64, CREIT offers an attractive FY10 yield of 8.2%, a reasonable peg in our view.

Friday, April 23, 2010

Courage Marine-DMG

Courage Marine enters into MOA (21 April 2010) to acquire MV Cemtex Leader (built in 1989 ) for US$12.9m from U-Ming Marine Transport Corp(SGXnet)

Our thoughts: As of now, Courage Marine has a total of 10 vessels (3 Handysize, 2 Handymax, 4 Panamax and 1 Capesize dry bulk carriers) which boast of a total tonnage of ~590k dwt. The company’s management has expressed interest in increasing its fleet size, especially on Panamax and Capesize in order to gain market share. While in the medium term, the oversupply of vessels will still put pressure to shipping rates, we believe that the worst is over for the shipping companies. This may be a good time for acquisitions of vessels on the cheap due to the industry oversupply.

Pacific Shipping Trust- OCBC

23/04/10

Pacific Shipping Trust: 1Q results in line; ready and willing to acquire
DPU = 0.793UScts (US$4.7m )-4.1% QoQ and -19.1% YoY
Revenue = US$15.2m -0.5% YoY and -2.9% QoQ
loan amortisation payments = US$4.3m
Net distributable cash =US$6.5m
retained Cash = US$1.8m
Payout ratio = 71.7%.


The manager said it was “cautiously optimistic [that] charter rates have begun to bottom out”. The manager said a number of deals were on the table, with some in the final stages of due diligence. PST could potentially acquire US$37.5m worth of vessels without raising additional equity, an amount that should not be under-estimated in our view. In light of increased stability in PST’s operating environment, we are 1) lowering our discount rate from 13% to 11.5%; and 2) using a 20% discount to this discounted FCFE value (prev: 30%) to derive our fair value estimate. We are also incorporating the assumed impact of a US$37.5m acquisition at 10% asset yield, 60% LTV, and 6% interest cost. We maintain our HOLD rating on valuation grounds with revised US$0.29 fair value [prev: US$0.23].

Results were in line.
The results were in line with our expectations, with revenue and cash earnings within 0-2% of our estimates. DPU was also just 0.8% shy of our 0.80 US cents estimate. The manager said it was “cautiously optimistic [that] charter rates have begun to bottom out”. Meanwhile, charterer CSAV has now raised US$773m in equity through fund-raising and charter-hire reductions, and the manager seems quietly optimistic that CSAV will deem it unnecessary to re-iterate its request for rate renegotiations.

Ready and willing to acquire. The manager emphasized that “PST is actively on the lookout for potential acquisitions that meet [its] investment criteria and add value for [its] unitholders”. The manager said a number of deals were on the table, with some in the final stages of due diligence. It also said any deal is likely to diversify PST out of container vessels. PST is currently geared at 0.87x debt-to-equity, and has cash at hand of US$19.6m as of 31 Mar. Assuming US$15m equity is deployed and debt is available at 60% loan-to-value, PST could potentially acquire US$37.5m worth of vessels without raising additional equity. This amount should not be underestimated, potentially adding 0.15 US cents to annual DPU (a conservative estimate). The key concerns here are counterparty quality and PST’s ability to execute well outside the container space.

Valuation. We have revised our DPU estimates slightly upwards to reflect the payout ratio achieved in the last two quarters. In light of increased stability in PST’s operating environment, we are 1) lowering our discount rate from 13% to 11.5%; and 2) using a 20% discount to this discounted FCFE value (prev: 30%) to arrive at our fair value estimate. This also aligns our assumptions with our FSL Trust [HOLD, FV: S$0.59] valuation. We are also incorporating the assumed impact of a US$37.5m acquisition at 10% asset yield, 60% LTV, and 6% cost of debt. We maintain our HOLD rating on valuation grounds with revised US$0.29 fair value [prev: US$0.23].

Cambridge Industrial Trust -DBS

22/04/10
Cambridge Industrial Trust
BUY S$0.51 STI : 2,967.65
Price Target : 12-Month S$ 0.54

One step at a time
• Portfolio restructuring on track – additional S$70m of assets earmarked for sale
• Gearing could head down towards 38% post restructuring
• Maintain BUY, TP S$0.54, offers total return of 16%

• 1Q10 revenue = $18.6 million (+1.3% y-y, -1.5% q-q),
. Net property income =$16.3 million (+1.2% y-y, -2.7 q-q)
. Distributable income = $11.1 million(7.8% y-y, -7.2% q-q).
• 1Q10 DPU of 1.27 cents.(-1.3% y-y, -7.5% q-q)
• Disposal of assets worth $21.5 million, 10% take-up for 4Q09 DRP
• Maintain BUY recommendation, fair value $0.54

Divestment strategy on track – earmarking additional S$70m of assets. In 1Q10, CIT divested additional 32 strata units in Enterprise Hub, bringing in S$21.5m in proceeds. The manager has earmarked an additional S$70m worth of assets to be sold during the course of this year. Cash received from the divestment are earmarked for debt repayment or can reinvested into new assets. Incorporating the first scenario and assuming debt repayment at the end of FY10, we estimate that (i) impact from the loss on contributions on earnings in FY11 is minimal at -3% and (ii) gearing levels is projected to improve towards 38% in FY11.

Evaluating asset enhancement opportunities. Management also shared that they are exploring several opportunities to enhance a couple of its properties, where plans could include (i) minor works to raise gross NLA or (ii) intensifying current plot ratios at a couple of its properties. While no firm details have been finalized, we believe that the execution of these opportunities could present re-rating catalysts for the stock.


Attractive 10% yields. We like the asset and financial management initiatives by CIT’s, which will result in a stronger balance sheet going forward. The stock currently trades at 0.85x P/bv, below its industrial peers who are trading in the 1.0x – 1.2x P/bv range and offers a stable FY10-11F DPU yields of c10%.

Thursday, April 22, 2010

First Ship Lease Trust-OCBC

22/04/10
FSL Trust: Asset values edge up versus October

Comment on Results
Revenue = US$24.4m,
Operations generated net cash = US$16.3m
DPU = 1.50UScts (flat QoQ but -38.8% YoY)
Outstanding loans in April 2010.= US$477m


The manager said an announcement on acquisition plans utilizing placement proceeds is likely in “a matter of weeks / possibly in a month of two”. A significant change in guidance is that FSLT is “now hopeful of lifting acquisition projects over and above” the placement proceeds because of increasing access to capital. In a Mar 2010 charter-free revaluation of its portfolio, FSLT recorded a 5.5% gain in asset values versus Oct 2009. In light of increased stability in FSLT’s operating environment, we are 1) lowering our discount rate from 13% to 11.5%; and 2) reducing the discount used to derive our fair value estimate from 25% to 20%. But balance sheet issues are not eliminated completely, and we maintain our HOLD rating with revised S$0.59 fair value [prev: S$0.53].

DPU in line. Guidance for 2Q10 DPU is flat at 1.5 US cents, offering an annualized yield of 13%. The manager quite emphatically stated it would not return to the days of a 100% payout; it prefers a “fixed dividend + incremental growth” strategy that will allow it to retain some excess cash.

Acquisition plan hits the “homestretch”. FSLT has yet to deploy the US$28.3m net proceeds from its Sep 2009 placement; so for roughly seven months, the larger unit base has not been offset by additional income or lower expenses – creating a shortfall between cash generated and cash paid out. The manager is now saying an announcement is likely in “a matter of weeks / possibly in a month of two”. FSLT reiterated its target asset yield of 15% and its plan to further diversify into a previously untapped vessel sub-sector (for example, offshore). A significant change in guidance is that FSLT is “now hopeful of lifting acquisition projects over and above” the placement proceeds because of increasing access to capital.

Asset values edge up. In a Mar 2010 charter-free revaluation of its portfolio, FSLT recorded a 5.5% gain in asset values versus Oct 2009. The current value-to-loan (VTL) coverage of 129% is comfortably above the current reduced 100% VTL requirement but below the 145% threshold required after end-2Q FY11. Assuming asset values remain stable and taking US$8m quarterly repayments into account, FSLT can touch 140% coverage by Jun 2011. Cash in hand and the planned unencumbered acquisition adds further cushion. Still, FSLT is taking no chances and may opportunistically issue unsecured debt (the manager guided that BB- high yield debt in Asia is attracting pricing of 10-13% at present). The trade-off versus secured debt (costing roughly 6% today) is large, but this may be a necessary evil to remove the VTL covenant overhang, once and for all.

Valuation. We have revised FY10 estimates to reflect an assumed acquisition completion date of 01 Jun (prev: 01 Jan). In light of increased stability in FSLT’s operating environment, we are 1) lowering our discount rate from 13% to 11.5%; and 2) now derive our fair value estimate using a 20% discount to this discounted FCFE value (prev: 25%). But balance sheet issues are not eliminated completely, and we maintain our HOLD rating with revised S$0.59 fair value [prev: S$0.53].

First Ship Lease Trust-DBS

First Ship Lease Trust
21/04/10

Buy for yield and underlying recovery
BUY S$0.64
Price Target : S$ 0.78

Comment on Results
Revenue = US$24.4m,
Operations generated net cash = US$16.3m
DPU = 1.50UScts (flat QoQ but -38.8% YoY)
Outstanding loans in April 2010.= US$477m


Outlook and Recommendation
The Trust also took the opportunity to announce the independent charter-free valuations of its 23 vessel-fleet, which stood at US$623m as of March 2010. This is about 6% higher than a similar valuation of US$590m obtained in October 2009, pointing to a gradual recovery in asset values in line with demand recovery. The “charter-free” valuation, while not fully relevant to FSLT’s business model, represents a 24% discount to the vessels’ NBV of US$821m.


The valuation also represents 129% of current indebtedness of US$484m, well within the revised LTV limit of 100%, which is applicable until 2Q11. Based on the expected indebtedness of US$440m at end-2Q11, the charter-free value required to fulfil the original 145% LTV covenant would be US$638m, or only about 2.5% higher than current valuations. Thus we would not be unduly worried at this stage about the chances of future technical defaults. Hence, we are maintaining our BUY call on FSLT at a TP of $0.78 (10% target yield), given the visibility in payouts, possibility of acquisitions in 2H10 and our perception of it being a laggard stock

Malaysian Airlines (MAS)-RHB

21/04/10
M’sian Airline System
Share Price : RM2.29
Fair Value : RM1.60
Recom : Underperform (Maintained)
Flights To Europe To Resume Today, To Cap Net

♦ Forecasts. Maintained.

Flights To Europe To Resum e Today, To Cap Net Gearing At 2x Over The Next Three Years

♦ Highlights. Key takeaways from MAS’s Investors Day yesterday are:

1. MAS’s flights to Europe will resume from today, with the threat of volcanic ash cloud from Iceland subsiding;

2. MAS took the trouble to highlight again the fleet renewal plan it has put in place, but did acknowledge for the first time that the move is not pre-emptive but to pace itself with its competitors; and

3. MAS guided that it will cap its net gearing at 2x over the next three years despite the heavy new aircraft delivery.

♦ Risks to our view . These include: (1) A stronger-than-expected recovery in the air travel sector; (2) Lower jet fuel cost; and (3) Effective containment of outbreaks of pandemic diseases.

♦ Road to recovery not without speed bumps. We believe the airline sector is poised for improved prospects in 2010, in line with the recovery in the global economy, but not without some speed bumps along the way such as: (1) A mild rebound in the global economy will not materially stimulate demand for air travel; (2) Over the short term, new capacity will continue to hit the market, intensify competition and capping yields; and (3) Rising crude oil prices that will crimp margins. Indicative fair value is RM1.60 based on 14x FY12/10 EPS, in line with its nearest comparable issue Singapore Airlines Ltd. Maintain Underperform .

Tuesday, April 20, 2010

Starhill Global REIT-DBS

Starhill Global REIT
19/04/10
BUY S$0.595
Price Target : 12-Month S$ 0.73 (Prev S$ 0.66)
A landmark transaction
• Asset portfolio to grow to S$2.6bn post acquisition of 2 Malaysian malls
• Partially funded through new issuance of convertible preference units (“CPUs”)
• Accretion to earnings estimated at 6-13% in FY10-11F
• Maintain BUY, TP revised to S$0.73.

Adding Malaysia exposure in its portfolio. Starhill Global REIT (SGREIT) has signed an agreement to purchase Lot 10 and Starhill Gallery (located in central Kuala Lumpur, Malaysia) from Bursa-listed Starhill REIT at a cost of RM 1.03 b (S$450.1m). Upon completion of the transaction, SGREIT’s portfolio of assets will increase by 20% to S$2.6bn.

Issuing new convertible units. The transaction will be funded through :
asset-backed securitisation structure,
a) Cash 31% of purchase price,
b) Debt 32% and
c) Issuance of new convertible preference units (“CPUs”) 39% .( The CPUs, amounting to RM405 m (est. S$177m) will be paid an annual coupon of 5.65%, and convertible into new SGREIT units at a 30% premium to the last vwap upon listing of the CPUs. There is a moratorium of 3 years before the conversion, which will turn mandatory after 7 years.)

6-13% accretion to FY10-11F distributions. Upon completion, we estimate distribution income accretion of c6- 13% in FY10-11F. We have also accounted for the conversion of all of the CPUs in year 3 into new SGREIT units.

BUY, TP adjusted S$0.73. Maintain our BUY call, with adjusted target price of S$0.73 assuming the full conversion of the CPUs from FY13 after moratorium period. Further price catalyst in our view may come from: (i) stronger than expected 1Q10 results, and (ii) clarity of its refinancing plans for majority of its loans due in Sept 2010.

Securing the Malaysian portfolio
Adding prime assets in Malaysia into its portfolio. In a widely anticipated deal, Starhill Global REIT’s (SGREIT) portfolio looks set to add an additional S$450.1m (RM 1.03bn) of assets with the trust signing a purchase agreement with Bursa-listed Starhill REIT to purchase two properties (Lot 10 and Starhill Gallery – both located in central Kuala Lumpur, Malaysia). Upon completion of the transaction, SGREIT’s portfolio of assets under management will increase by c20% to S$2.6bn. The assets are purchased through a tax efficient asset-backed securitisation structure (“ABS structure”) where incomes are not be subjected to withholding taxes in Malaysia. “EGM” sought on both REITs. As the transaction involves interested parties, both Starhill Global REIT and Starhill REIT will be convening an extra-ordinary meeting (“EGM”) for unitholders to vote upon the acquisition.

The Assets
Starhill Gallery. This is a FH ultra luxurious retail property located along Jalan Bukit Bintang with a total NLA of 297,354 sqft. The building comprises a 7-storey building with 5 basement levels and is part of an integrated development including a hotel known as JW Marriott Kuala Lumpur. Latest occupancy at the retail mall remains high at 96%. Tenants range from international brands and prominent local retailers like Louis Vuitton, Audemar Piguet, Chopard and Bottega Venetta

Lot 10. This property in 137 strata parcels has a leasehold interest expiring 2076. Lot 10 consists of an 8-storey building with a basement and lower ground floor together with a 7- story annex building. Latest occupancy rate is at 97%. Lot 10 re-opened after massive renovations in Oct 2009 with a new concept and new look targeted at the young urbanites. Post completion of the face-life, the mall houses flagships stores like Apple (largest store in Malaysia), Isetan and Debenhams.

Purchase price appear fair. Based on the initial acquisition announcement, the purchase consideration of RM$1.03bn (S$450.1 m), which is near to the latest appraised value done in 26th Feb 2010 & 1st March 2010. The purchase price on a psf basis for the 2 Malaysian malls represents a 30-50% discount to latest valuation of Suria KLCC and similar to latest valuation of Sungei Wang Plaza nearby.

Impact on Starhill Global REIT portfolio
Earnings certainty with underlying master lease arrangement with YTL. The properties will be master-leased back to YTL Corp Berhad under a fixed tenancy term of 3+3+3 years, reducing volatility to earnings. Based on the acquisition price, the injection yield of the 2 malls is estimated to be c7.0%, which in our view compares favorably to current yield on book (5.7%). In addition, fixed step-up feature of c7% every 3 years will provide a natural in-built growth in earnings for SGREIT over the next 9 years

Malaysia to contribute up to 8% of topline. Post completion of the purchase, based on our projects, the contribution from the 2 Malaysian assets will account about 8% of topline, while its Singapore assets (63% of topline, down from 79% as of 4Q09) will continue to be the main driver of the group’s incomes going forward.

Gearing estimated to remain low at c28%. SGREIT’s gearing is expected to rise to c28% post completion of the acquisition, which is still below the S-REIT’s average of c33%. The low gearing will enable the reit to gear up in the future to acquire further assets or embark on its proposed asset enhancement activities.

Funding sources
Issue of new convertible preference units to part fund acquisition. The purchase consideration of S$1.05bn (including transaction costs) will be funded using a combination of senior notes, cash and new issuance of convertible preference units to YTL Berhad in the following proportions.

We note that SGREIT, as per its trust deed will issue S$4.5m of new units to the manager, YTL Pacific Star, as consideration for the acquisition fee for this transaction. The manager will have a 1 year moratorium for these units.

What is this CPUs? The CPUs will rank junior to debt of SGREIT but senior to units. They will be paid a fixed coupon of 5.65% p.a. for a 7 year term. The CPUs will not be nonconvertible for 3 years upon issue, after which the holder will have the right to convert into new SGREIT units at a price 30% above the issue price, which is yet to be fixed. The CPUs will have a mandatory conversion after 7 years from the date of issue.

Earnings Impact
Accretion of c6- 13% for FY10 - FY11. The transaction is accretive to earnings based on our estimates. Assuming that the acqusition is completed by Jun’2010, our DPU forecast for FY10-11F will inch up by c6% and 13% respectively to 4.1 Scts to 4.4 Scts respectively, translating to a forward yield of 6.8 – 7.5%.

In addition, we have assumed full conversion of the CPUs by the holder, YTL in year 3 in our numbers, which result in a c3% dilution from FY13 onwards.

What next for SGREIT?
Re-financing loans due. SGREIT will be looking to re-finance a majority of its loans that will be due in Sept 2010. While we believe that re-financing should not be an issue given the trust current low gearing level and strong backing from YTL Corp, further clarity on the progress in this front will provide another catalyst for stock re-rating in the medium term.

Malaysian Airlines (MAS)-MIDF

19/04/10
Malaysian Airlines (MAS)-MIDF
Downgrade to NEUTRAL
Ash Cloud In The Way

• The aviation industry will be faced with a logistical “nightmare” as mountains of volcanic ash originating from Iceland caused disruption in travels to and from Europe. It is expected that the volcanic ash would continue to blanket European airspace for at least a week.

• We expect that the impact of the shutdown of European airspace would have an adverse short-term impact to MAS as we expect there would be cancellations, rescheduling and refunds to travellers affected. We expect the effect to MAS would continue a month after the ash clouds settle as it has to clear a backlog of flights and reorganize its fleet utilization.

• We are downgrading the aviation sector to NEUTRAL to take into account the disorder that the ash cloud is causing and the expected reorganizing after the dust has settled. However, we believe that the long term outlook remains positive as the continuing economic recovery would see an increase in passengers and business travellers, suggesting a re-rating later.

• We are downgrading our call to TRADING SELL for MAS (Reduced TP: RM2.05 from RM2.20).

Icelandic volcanic ash spews out.
An Icelandic volcano spewed out an ash cloud on Thursday, 15 April 2010, turning Western Europe into a “no-fly” zone on Thursday and Friday, while limited flying during the weekends. The volcanic ash cloud caused severe disruption in aviation travel to and from Europe, where 16,000 of the usual 28,000 daily flights had to be cancelled. It was expected that disruption should ease but a continuing eruption is causing further delays. Although British Airways did a successful test flight in which it was shown that an aircraft can fly through the ash cloud, we believe that the European authorities would remain cautious as it need to balance between airlines needs and passenger safety.

Aviation industry to face logistical “nightmare”. It has been estimated that the volcanic ash disruption has caused the aviation industry as a whole to have lost USD200m (RM642m) due to the grounding of flights. While the majority of flights may be back in the air this week, we estimate that it will take at least a month for the aviation industry to get their schedules back on track. This is due to airlines having to clear the backlog of flights and getting back stranded airplanes.

MAS to have an adverse short-term impact. We expect that the impact of the shutdown of European airspace would have an adverse short-term impact to MAS as approximately 30% of their revenues are derived from its European route. The impact would be coming from cancellations, rescheduling and possible refunds to travelers affected. We estimate that FY10 net profit would decline by 7.6% from our previous estimate as the effect on MAS would continue a month after the ash clouds settle as it has to clear a backlog of flights and reorganize its fleet utilization.

Demand might spike up after dust has settled. Once the ash cloud has settled, it may be possible that demand would spike up for MAS. However, we expect that the demand would be due to passenger rescheduling their flight date and this would see an increase in load factor, where we expect to reach 80% to 90% immediately after the complete reopening of European skies. However, we do not expect that MAS would be hiring or utilizing more aircrafts to cover any shortfalls due to the operational cost involved. Besides, the rescheduling of flights does not involve an increase in revenues.

Downgrade sector to NEUTRAL. We are downgrading our call for the aviation sector to NEUTRAL to take into account the short-term disruption the volcanic ash cloud is causing the airlines and the reorganization after the ash cloud has settled. However, we believe the long-term prospect of the aviation sector remains positive as the economic recovery would still be the catalyst, with the expected increase in leisure travelers and the recovery of the business travelers.

Recommendations. Given that we expect MAS to have a short-term impact due to the ash cloud, we are downgrading our call for MAS to a TRADING SELL with a reduced target price of RM2.05 from previously RM2.20. However, we expect that there is room for a re-rating later once the disruption caused normalized.

Malaysian Airline (MAS)-CIMB

19 April 2010
Malaysian Airline System Bhd
OUTPERFORM Maintained
RM2.15 Target: RM3.00
Europe flights on Ice

Europe affected by volcanic eruption in Iceland
Maintain OUTPERFORM and target price of RM3.00. Since Thursday 15 April, many airlines’ flights to and from European airports have been cancelled as a result of a second volcanic eruption in Iceland. MAS’s flights to London, Amsterdam, Paris and Frankfurt have been cancelled, disrupted or rerouted since 15 April although flights to

Rome still continue. It is difficult to estimate the negative impact of this natural event on MAS as it depends on how long the ash cloud lingers in the environment, if a third eruption happens, if passengers rebook and reschedule their flights or if they permanently cancel. We believe that the impact on airlines like MAS will not be as significant as the European carriers or other Asian hub carriers that carry a lot of traffic from Europe. We, therefore, maintain our earnings forecasts, target price of RM3.00 (6x CY12 core EPS) and OUTPERFORM recommendation. We advise investors to focus on potential re-rating catalysts such as improved results in FY10 from the global yield recovery and the structural fleet renewal.

Asian airlines not as affected as European carriers
The volcanic eruption in Iceland on 15 April has blanketed much of European airspace with ash, threatening the safety of flights. Airports have been closed and flights have been cancelled since then. IATA estimated that airlines could turn in US$200m losses for every day of disruption.

The cost
-British Airways’ entire long-haul fleet =US$20mday
- Finnair - €2m (US$2.7m/day)
- MAS (15% 2008 annual report)-RM33m (10% FY10 net profit forecast)
- SIA European flights +/- 25%
- Australia/New Zealand European flights +/- 20%

Valuation and recommendation
Maintain OUTPERFORM with unchanged earnings and target price of RM3. We recently turned bullish on MAS because (1) the rights issue is finally over, (2) the stock has lagged behind regional peers like AirAsia and Singapore Airlines, (3) analysts are almost universally bearish on the stock, (4) the macroeconomic environment is improving, and (5) the major fleet renewal programme should contribute to significant unit cost reduction by FY12.

The outcome of the European flight disruptions is impossible to predict but MAS’s focus on the Asian market should reduce the impact on the airline. The stock remains an OUTPERFORM and our preferred aviation pick in the region. Potential key rerating catalysts include analyst recommendation upgrades, improved results in FY10 from the global yield recovery and a structural downward shift in the airline’s cost structure from FY11 onwards that will help to lift profit margins. We retain our earnings forecasts and our end-CY10 target price of RM3, which is based on 6x CY12 core EPS. However, we think MAS can eventually reach RM4 (P/E of 8x) over a two-year period. We have used CY12 earnings as it better reflects MAS’s true potential due to continuing core net losses in 2010 and shallow profits in 2011
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock