Saturday, July 31, 2010

DXN Holdings Berhad - aaa

DXN Holdings Berhad
Recommendation: TRADING BUY
Current Price : RM 0.785
Target Price : RM 1.53

Investment Highlights
_ FYE 11 1st quarter EPS came in at 4.43 sen.
_ Early settlement of its CLO loan for RM35 mil and RM50 mil.
_ 2.00 sen dividend has been proposed in the first quarter. We expect the management to maintain high dividend payout going forward due to its improved cash position.
_ Management is committed to stay focus on its core business activities, focus on cost efficiency, profitability enhancement and higher dividend distribution.
_ RM19mil of borrowings had been reduced in the previous quarter and further reduction in borrowings is likely, thus reducing interest expense.
_ Distributable retained earnings stand at RM154 mil.
_ Cash and cash equivalents stand at RM43.5mil (equivalent to 18 sen per share).
_ DXN is relatively undervalued compared to its peers.
_ “One Dragon” company with own cultivation, own R&D, own manufacturing facility that produce and selling its product under its own Brand “DXN”.
_ Aggressive and strong multi-level marketing agency force throughout world through its “One World One Market” strategy.
_ Successful new market development in North America, Middle East, European, Mongolia and Africa are expected to bring explosive growth in profit in near future.
_ Richmont Residence project, Penang – certificates of fitness (CF) has been obtained.
_ Stargate Project, Phase 1 – CF is expected to be completed by FYE’ 11 3rd quarter.

Corporate Developments
Operations Review
The Group recorded RM 67.8 million revenue for the current quarter and financial year-to date ended 31 May 2010, representing an increase of 4.6% as compared to RM 64.8 million in the corresponding quarter ended 31 May 2009. The increased was due to higher revenue contributed from multi-level marketing segment.

The Group recorded a higher profit before tax (“PBT”) of RM 12.5 million with PBT margin of 18.5% for the current quarter and financial year-to date ended 31 May 2010 as compared to the corresponding quarter ended 31 May 2009 of RM 6.6 million with PBT margin of 10.1%. Multi-level marketing segment has contributed higher profit margin due to cost efficiency.

The Group reported higher revenue of RM 67.8 million in the current quarter ended 31 May 2010 as compared to RM 60.1 million in the preceding quarter ended 28 February 2010. The increased was due to higher overseas sales generated from multi-level marketing segment. The Group’s PBT for the current quarter was RM 12.5 million as compared to RM 7.3 million in the preceding quarter. The increased in the PBT was mainly due to the provision of RM5.65 million for diminution of investment in CLO subordinated bond in the preceding quarter.

Future Outlook
Global Expansion and Potential
The rapid global expansion of DXN in more than 150 countries for its global presence with its own brand name is recognized internationally by its vast growth of members worldwide and its amplification of footprint in key strategic locations. DXN is unique in the MLM industry that applies “One Dragon Concept” from R&D, cultivation, manufacturing and marketing, and is fully integrated under its own brand name and apparently it has differential with established strong global presence in a diversified overseas market, so called “One World One Market” Concept.

Product Development
The company has a strong base for its R&D activities in Mycological and Biotechnology that will lead the exploitation of new products such as skin care and cosmetic products which was launched to the Malaysia Market but yet to its overseas market. The pipeline product development of the vitamin series product is expected to launch by 3rd quarter, 2010. The company is also the 1st company in Malaysia to start cultivation for Spirulina and granted the Pioneer Status for 10 years tax exemption from MAIDA, it is notice that the Spirulina sales has been picking up steadily and the company is now under construction to build more Spirulina cultivation pound to expand its capacity.

Product Quality
DXN Pharmaceutical Sdn. Bhd and DXN Industries (M) Sdn Bhd are an integrated factories that involved Lingzhi and Spirulina Cultivation, Coffee factory, GMP factory for Health Food Supplement and beverage, juice, skin care, household products and its R&D centre with approximately 25 hectres land located at Bukit Wang, Jitra, Kedah. The
company is certified by ISO14001, 9002, TGA from Australia, MS ISO/IEC 17025, GMP, Skim Organic Malaysia and Halal.

Stargate Project
The Stargate Project is a township development project involving 300 acres of development land that comprises of commercial building for shop office, private institutional, private hospital, hypermarket, petrol station and residential project. The project is strategically located just an exit from Alor Setar South Toll of South-North Highway. The company had signed a S&P to dispose a piece of land to Tesco Store for its hypermarket operation (expected to be completed by 3rd quarter) and fully sold off all its freehold shop office building in Phase 1. The company is now undergoing the land acquisition for its next phase of development and expected to launch 113 units of shop office building on 1st quarter of 2010.

Its Richmont Residence project at Jelutong Penang is completed. 70 units out of 94 units are sold and there are still 24 units available but it is on hold by the company for higher sale price due to “Built & Sell” premium.

Valuation & Recommendation
Valuation
FYE 11 1st quarter EPS came in at 4.43 sen, which is 26% of our forecasted EPS of 17sen for FYE 11. On a standalone valuation basis, we think it’s fair for a company which has a reasonably recognized brand and has been growing at around 8% for the past 7 years to trade at a P/E multiple of 8x. On a relative valuation basis, DXN should be valued at P/E multiple of 10x given most of its peers are trading around that range.

To be conservative, we would value DXN based on the average of the two valuation methods (9x P/E multiple). We have a Trading Buy call on DXN Holdings Berhad with a target price of RM1.53, which translates to a potential upside of 95% from the current price of RM0.785.

DXN Holdings Bhd - Apex

DXN Holdings Bhd
Price (29 July 2010) RM0.785
52-week price Range RM0.38 – 0.80
Major Shareholders
1. DXN Group Sdn Bhd 43.35%
2. Boon Yee Lim 18.14%
3. Temasek Sejati Sdn Bhd 0.85%
Non Rated
Hidden gems among Malaysia MLM companies Target Price: RM1.11

DXN Holdings Berhad or “DXN” is mainly involved in the cultivation, manufacturing and marketing of the health food supplements, with its revenue mainly derived from its Ganoderma business. The Group’s earnings improved significantly in 1Q2010 with its net income more than double y-o-y to RM10.1m. By ascribing 8.7x PER to our FY2011 EPS forecast, we value DXN at RM1.11. Despite being a Non Rated stock, our target price indicates potential 41.4% upside.

Highlights
o Ling Zhi or Ganoderma healthcare product – DXN is a multi-level marketing (MLM) company which was established in 1993. Founded by Dato’ Dr. Lim Siow Jin, the Company’s range of healthcare product is mainly made from “Ling Zhi mushroom” or Ganoderma. DXN’s health product has achieved Malaysian Organic Scheme, MS ISO/IEC 17025, ISO 14001, ISO 9001 and TGA recognition.

o Owns integrated factory of 28,000 square feet – DXN owns an in-house production line to process Ganoderma products. Its fully owned subsidiary, DXN Pharmaceutical Sdn. Bhd is an integrated factory of 28,000 square feet.

o Strong 1Q2011 results - DXN recorded revenue of RM67.8m (up 4.66% y-o-y and 12.74% q-o-q) in 1Q2011. The higher revenue y-o-y is mainly caused by higher revenue contributed from multi-level marketing segment. However, net profit in 1Q2011 surged to RM10.1m (up 101.04% y-o-y and 96.60% q-o-q). The significantly higher net profit was attributed to the higher profit margin due to cost efficiency from the multi-level marketing segment.

o Gross dividend yield of 7.64% expected - DXN has declared gross interim dividend of 2 sen per share in 1Q2011. As compared to gross interim dividend of 0.75 sen announced last year, the dividend has more than doubled in the absolute value. We have assumed that DXN should be able to pay higher dividend of 6 sen in FY2011, translating into 7.64% gross dividend yield.

o Target price of RM1.11 - By ascribing our discounted industry average PER of 8.7x (for Malaysia listed MLM companies) to our forecasted EPS of 12.73 sen for FY2011, we value DXN at RM1.11. In our opinion, DXN is attractive for investors seeking dividend-paying stocks with plenty of opportunities for growth overseas.


Financial Review
In FY2010, DXN managed to record an overall positive revenue growth trend for the last five years. In FY2010, DXN’s revenue drop slightly from RM276.73m to RM259.92m, representing 6.1% decline. This was mainly caused by lower revenue generated from the property segment. Besides that, we believe that the recent economy slowdown may have affected FY2010 revenue. Nevertheless, DXN managed to record Compounded Average Growth Rate or “CAGR” of 9.53% from RM276.73m in FY2006 to RM259.92m in FY2010.

Despite lower revenue, DXN’s FY2010 net income registered 39.8% growth y-o-y to RM28.42m (vs. RM20.33m last year) due to improvement in cost management and operational efficiency.

Profitability improved with EBIT Margin, Pretax Profit Margin and Net Profit Margin all improved. In FY2010, Net Profit Margin was at 10.94%, vs. 7.35% in FY2009.

DXN gross gearing ratio (debt to equity) has improved from 0.58x in FY2009 to 0.41x in FY2010. Besides, DXN’s net cash operating cash flow also improved in line with its improved net income, suggesting high earnings quality. Lastly, the Group’s equity reserves of RM136.0m is more than double its share capital of RM60.2m.

1Q2011 Results Review
DXN recorded revenue of RM67.8m (up 4.66% y-o-y and 12.74% q-o-q) in 1Q2011. The higher revenue y-o-y is mainly caused by higher revenue contributed from multi-level marketing segment. However, net profit in 1Q2011 surged to RM10.1m (up 101.04% y-o-y and 96.60% q-o-q). The significantly higher net profit was attributed to the higher profit margin due to cost efficiency from the multi-level marketing segment.

In its filing to Bursa Malaysia, DXN has maintained its positive outlook on FY2011 by mentioning that “The Group will remain focus on its existing core business activities and targeting more on overseas markets to enhance Group performance. Barring any unforeseen circumstances, the Directors anticipate that the performance of the Group for the financial year ending 28 February 2011 to be optimistic.”

Lastly, DXN has declared 1st interim dividend of 4% less 25% tax and 4% tax exempted dividend per ordinary share of RM0.25 each. Effectively, this translates into gross interim dividend of 2 sen per share. As compared to gross interim dividend of 0.75 sen announced last year, the dividend has more than doubled in the absolute value. We have assumed that DXN should be able to pay higher dividend of 6 sen in FY2011, translating into 7.64% gross dividend yield.

Investment Risks
We expect the overseas MLM market to remain competitive as DXN is relatively new in some of these markets. Thus, DXN may need some time to generate profit from these markets.

Besides that, global economy slowdown may affect demand for DXN product. However, the risk is partly mitigated due to its presence in 150 countries throughout the world.

Valuation and Recommendation
By ascribing our discounted industry average PER of 8.7x (for Malaysia listed MLM companies) to our forecasted EPS of 12.73 sen for FY2011, we value DXN at RM1.11. In our opinion, DXN is attractive for investors seeking dividend-paying stocks with plenty of opportunities for growth overseas.

Besides that, we noticed that DXN is trading at 6.2x forward PER 2011. This is significantly lower than its peers which include Amway (16.23x), Hai-O (11.19x) and Zhulian (9.81x). (based on Bloomberg consensus mean for next financial year). Thus, there is still plenty of potential upside for DXN should its PER converge to industry PER.

DXN Holdings Bhd - Income Forecast

Q12011 Result



HistoricalRevenue



Income Forecast


Source: Apex Equity

DXN Holdings Bhd-Company Background

Company Background


Based in Malaysia, DXN is a multi-level marketing (MLM) company which was established in 1993. Founded by Dato’ Dr. Lim Siow Jin, the Company’s range of healthcare product is mainly made from “Ling Zhi mushroom” or Ganoderma.

DXN’s health product has achieved Malaysian Organic Scheme, MS ISO/IEC 17025, ISO 14001, ISO 9001 and TGA recognition. Besides that, the Company’s product lines include dietary supplements, food and beverages, personal care products, household products and water treatment system.

The Company has undergone rapid expansion for its first ten years. Subsequently on 30-Sep-2003, the Company gained its listing status on the Main Board of the Kuala Lumpur Stock Exchange (KLSE).

DXN owns an in-house production line to process Ganoderma products. Its fully owned subsidiary, DXN Pharmaceutical Sdn. Bhd is an integrated factory of 28,000 square feet. The integrated factory has allowed DXN to differentiate itself from other MLM company as the Company undertake the entire process from cultivation of “Ling Zhi
mushroom”, processing and marketing. In our opinion, this strategy will reduce the dependency on supplier and providing better cost control mechanism.

DXN has established and operated its business activities in more than 150 countries around the world. Its major market are in Philippines (RM84.5m or 32.5% of FY2010 revenue), Malaysia (RM59.4m or 22.9% of FY2010 revenue) and Mexico (RM40.3m or 15.5% of FY2010 revenue).

In DXN’s FY2010 Annual Report, the CEO of the Company has set DXN’s visionary corporate “to continue to build the strong based of foothold in market by pursuing an aggressive penetration strategy in more overseas market especially in the region of Europe and Latin America”. Due to its strong presence in many countries, we believe that there is potential for growth in the future in these markets.



Market





Products















Property Sector Picks - uob

Natural Bio Resources -apex

Natural Bio Resources
Buy

Venturing into Multi Level Marketing business

Price ( 29-Jul-10 ) 0.575

TP: RM0.63

52-week price range 0.45 - 0.64



Highlights

Sales exceeded our expectation – For the quarter ended 31 May 2010, NATBIO recorded RM49.7 million in revenue, significantly higher than our expectation of RM44.2 million. As compared to previous results, sales increased by 33% q-o-q and 50% y-o-y. Revenue improvement was mainly attributed by higher sales from both domestic and overseas markets. The Group has also ventured into a new Multi Level Marketing business, which also has contributed to this improvement.



EPS falls within our expectation range – Despite the encouraging sales, earnings within our expectation to higher than expected operation costs. We believe that the

increase in operation cost was due to aggressive promotional and marketing activities in sponsoring the World Cup 2010. However, we are of the view that this is a positive step to strengthen the Group’s brand name in the longer term prospect.



In terms of profitability, NATBIO achieved a satisfactory net profit margin of 9.19% as compared to the past 2 year’s achievements. Since first quarter of FY09, excluding

the previous loss quarter, NATBIO recorded an average net margin of 7.82%.



Dividend

No dividend was declared during the quarter.



Recommendation

Buy – Given the increasing sales performance and satisfactory operating results, we maintain the target price of NATBIO at RM0.63. This value was derived based on the P/E ratio of 10 times with a 15% discount on the estimated FY2011 EPS of 7.27 sen. This translates into a 9.6% upside potential with the stock price closing at RM0.575. Incorporating the estimated dividend yield of approximately 7.0% for FY11, we maintain our buy call for this stock.



Risks to our target price include – 1) increase in commodity prices, 2) competition from existing and new players due to low barriers of entry in the industry, and 3) low market liquidity which makes it difficult to enter and exit.

Friday, July 30, 2010

Natural Bio Resources - sp

Natural Bio Resources
Recommendation: BUY
Price: MYR0.57 12-Month Target Price: MYR0.66

Summary: Natural Bio Resources Bhd (NatBio) ,through its subsidiaries, is engaged in the manufacture, marketing and distribution of the group’s ready-to-drink coffee, tea and energy beverages.

Results Review & Earnings Outlook
• NatBio’s 1QFY11 (Feb) results were within expectations, with net profit coming in at 26% of our full-year forecast.

• Revenue growth was a strong 50.1% YoY, led in part by NatBio’s maiden foray into direct selling as an alternative marketing avenue, which contributed about MYR5 mln to revenue for the quarter. Stripping this out, sales through traditional channels remained strong (+35% YoY), with domestic and export sales up 30% and 66% YoY respectively. 1QFY10 was a relatively weak quarter for sales and the company has seen stronger consumer demand in recent quarters.

• On the exports front, growth emanated primarily from sales to Dubai, Shanghai and Hong Kong. Dubai continues to be the primary export market, accounting for about 50% of total export sales. Plant utilization for its beverage line was about 70%-80% and higher for its canned drinks. Premixed coffee continues to account for about 65% of sales.

• Due to seasonality, we expect a weaker 2QFY11 ahead. Nevertheless, with improved consumer demand as well as maiden contributions from direct selling, we forecast strong sales growth of 22% for FY11.


Recommendation & Investment Risks

• We raise our call on NatBio to a Buy from Hold, with a raised 12-month target price of MYR0.66 (MYR0.60 previously). The recovery in earnings is encouraging and we expect the group’s new marketing initiatives and regional push to be the key drivers of growth. Providing share price support would be NatBio’s attractive dividend yield of 7.0%, which we believe is sustainable, given stable cash flows and a healthy net cash position of MYR55.9 mln (18.6 sen per share).

• Our valuation is based on a target FY11 PER of 10.6x (9.6x previously), which is a 20% discount (unchanged) to the Malaysian food and beverage sector. The discount was applied in view of NatBio’s smaller size and lower trading volume. We also include our projected DPS of 4 sen.


• Risks to our recommendation and target price include: (i) higher-thanexpected operating costs, (ii) increased competition from other food and beverage products, (iii) lower-than-expected success in penetrating export markets, and (iv) exchange rate fluctuations. Slower-than-expected economic growth would also have a dampening effect on consumer demand, which would negatively impact sales.

Frasers Commercial Trust - phillip

Frasers Commercial Trust – 3QFY10
HOLD (Downgrade)
Closing Price S$0.15
Target Price S$0.17 (+13.3%)
52w k High (7/29/2009) 0.21 / 52w k Low (12/1/2009) 0.13

• 3Q10 revenue of $29.2 million, net property income of $22.7 million, distributable income of $7.7 million

• 3Q10 DPU of 0.25 cents

• Downgrade to Hold, fair value of $0.17



FCOT recorded 3Q10 revenue of $29.2 million (+28.9% y-y, -1.8% q-q), net property income of $22.7 million (+32.9% y-y, -3.9% q-q) and distributable income available to unitholders of $7.7 million (+38.7% y-y, -21.5% q-q). 3Q10 DPU was 0.25 cents (-65.8% y-y, -21.9% q-q). The improved y-y performance is mainly attributed to the contribution from Alexandra Technopark. However we also note that there was a general drop on a q-q basis. DPU was much lower from the previous year due to the increased unit base from the equity fund raising. Revenue contributions from Singapore, Australia and Japan are 52%, 35% and 13% respectively. Average portfolio occupancy rate is 93.1%, with most properties holding steady.



Zooming in on the individual properties, KeyPoint and Galleria Otemae occupancy increased by 2.9% and 7.7% respectively however 55 Market Street saw a drop of 6.1%. There are five properties with full occupancy. KeyPoint has seen a gradual take-up in occupancy since management started repositioning the property to capitalize on the opening of the circle line MRT station. On Japan side, Cosmo Plaza continues to be the drag and the property is still listed as an asset to be sold. Effective occupancy is only 25.6% which drags down overall Japan properties occupancy to 77.6%.



FCOT has total debt of $818.5 million and gearing is 40.4%.



We think the property portfolio has shown consistent results, with not much change from the prior quarters. Step-by-step, we have seen management carrying out its plan to rebalance the REIT. A quick flow of event is the recapitalization of the REIT through the injection of Alexandra Technopark, forming a natural hedge of the foreign sourced income by rebalancing debts in the local currencies, the improvement in occupancy of KeyPoint. We believe there is further upside to KeyPoint occupancy rate. Something we would like to see is the divestment of the Cosmo Plaza and the AWPF investment since these two are not contributing effectively to the bottomline and which is also part of management plan when it took over from the previous management team.



We tweaked some of our expenses assumptions as we had been overly conservative in estimating the non-core expenses. This reduces our FY10E DPU forecast by 11% to 1.12 cents. Accordingly, we lower our fair value from $0.18 to $0.17. Thus we are downgrading our recommendation to Hold and reiterate that our said divestment and lowering of debt would be a re-rating catalyst for the stock.

lippo mapletree indonesia retail trust -ocbc

LMIR Trust: DPU disappoints on higher tax expenses

NPI in line. LMIR Trust (LMIR) reported 92% YoY and 72.5% QoQ gains in 2Q revenue to S$40.1m, this as LMIR collected additional income from services charges receipt and utilities cost recovery on seven of its retail malls with the 31 Dec expiry of the operating costs agreement in place at listing. That additional income was offset by the additional costs incurred, relating to the maintenance and operation of the malls. 2Q10 reflects the full six months effect for 1H10 due to a delay in the transfer of operations. Net property income of S$21.6m was up 17% YoY and 6% QoQ, boosted by the strong Indonesian Rupiah (IDR) against the Singapore Dollar (SGD). NPI was in line with our S$21.6m estimate in both SGD and IDR terms. Retail mall occupancy improved 360 bps to 97.4% from three months ago; this is significantly higher than the market average of 82.7%. LMIR is leveraged at 10.3% debt-to-assets as of 30 Jun.

But DPU disappoints on tax. 2Q10 DPU fell 20% YoY and 13% QoQ to 1.04 S cents. The manager attributed this to the appreciation in the IDR, which has caused the gap between the hedged rate on distributions and the physical rate to reverse unfavorably in the last four quarters. LMIR booked a realized (cash) forex loss this quarter of S$2.4m versus a loss of S$1.7m in 1Q10 and a realized gain of S$1.2m in 2Q09. This is likely to be a continuing issue as we estimate 3Q’s hedged rate is roughly 15% higher (unfavorably) than current levels. While we had expected the forex impact, DPU was 14% below our 1.21 S cents estimate due to actual tax expense of S$5.5m versus our S$3.6m estimate. The manager explained that it is now incurring revenue tax on the additional service charge and utilities income. It is exploring options to increase tax, and also operational, efficiencies.

Valuation. We have adjusted our earnings estimates to reflect the additional service charge and utilities income and additional operating expenses; we also incorporate actual 1H10 results. Additionally, we have adjusted our tax estimates upwards. On the plus side, we have increased our occupancy estimates. Our FY10-11F DPU estimates fall 11.5% and 12.6% to 4.4 S cents and 4.5 S cents. Finally, our fair value estimate (at an unchanged 20% discount to SOTP value) falls to S$0.52 from S$0.55 previously. With an estimated total return of 14%, maintain BUY on valuation grounds.

Frasers Commercial Trust -dbsv

Frasers Commercial Trust
HOLD S$0.15
Price Target : S$ 0.16
Steady performance


At a Glance

. 3Q10 DPU of 0.25 Scts in line

• Keypoint’s occupancy inching up to 78.6% as of 3Q10

• HOLD, TP S$0.16 maintained



Comment on Results

3Q10 DPU of 0.25 Scts in line. Gross revenues and net property income were higher by 29% and 33% yoy to S$29.2m and S$22.7m respectively. Performance was largely due to contributions from Alexandra Technopark, which was acquired back in 4Q09. Distributable income to unitholders came in at S$7.7m (DPU of 0.25 Scts), up 39% yoy, partly lifted by lower interest costs post debt re-financing in conjunction with its rights issue a year back. Stable balance sheet metrics. FCOT’s balance sheet remains healthy with gearing at 40.4% and interest cover of 2.74x.



95% of income secured YTD, Keypoint’s occupancy inching up. With a quarter to go, FCOT has secured majority of its income to date. Keypoint has also seen an improvement in average occupancy after the opening of nearby MRT train station– inching up to 78.6% as of 3Q10. Looking forward, 11.6% of revenues will be up for renewal in FY11, of which a majority will be for leases in Keypoint asset in Singapore (5.3% of portfolio income). Average expiring rentals are at cS$5.50psf pm and we expect renewals to remain flattish.



Recommendation

HOLD, TP S$0.16 maintained. Valuations are undemanding at 0.6x P/BV and FY10-11F yields of 7.6-8.0%. However, we see further catalysts only upon completion of its portfolio restructuring with the proposed sale of its Japanese assets. Maintain HOLD.

Wednesday, July 28, 2010

Starhill Global REIT -dbsv

Starhill Global REIT
Stable performance, refinancing done
BUY S$0.59
Price Target : S$ 0.73

At a Glance
• 2Q10 DPU of 0.91 Scts in line, down 4% yoy
• Re-financing of near term debt done
• Maintain BUY and TP S$0.73

Comment on Results
2Q10 DPU of 0.91 Scts. Gross revenues and net property income were higher by 11.4% yoy and 7% yoy to S$37.2m and S$28.8m respectively. The better performance was mainly attributed to a full quarter’s contribution from David Jones asset (DJA) slightly offset by lower office revenues and weaker RMB/S$ exchange rate. Interest costs were 22% higher yoy due to the loan taken for DJA acquisition. As such, distributable income came in at S$18.0m (-4% yoy), translating to a DPU of 0.91 Scts.

Stable earnings profile in 2Q10 but overseas portfolio performance hit by strengthening S$. Stable 2Q performance reflected the resilient retail portfolio in Singapore +4% yoy. However, this was offset by lower office occupancies (-3%yoy) and overseas properties’ earnings were down 2%, excluding DJA, due to weaker RMB/S$. In RMB terms, Chengdu reported 8% higher gross sales. Bullet loan expiring in 2010 settled. Apart from S$124m MTN issuance recently, SGREIT has also completed its refinancing of near term expiring debt with a new 3-year facility of S$496m, secured over SGREIT’s interest in Ngee Ann City, with a consortium of 5 banks. Interest costs is expected to inch up to 3.5-3.6% post refinancing.

Recommendation
Maintain BUY, TP S$0.73 with prospective yields of 6.7-7.5%. At a P/BV of 0.7x, SGREIT is trading below its Sreit peers average of 1.0x. Forward yields of 6.7-7.5% are attractive.

First Ship Lease Trust -dmg

First Ship Lease Trust (FSLT): loss of US$6m in 2Q10 (SGXnet)

The news: FSLT reported loss of US$6.1m in 2Q10. This is due to impairment loss related to the termination of long term charter contracts, and non-recurring expenses associated with the redelivery and arrest of two vessels. Meanwhile, net cash generated from operations remains healthy at US$17.3m (+0.9% YoY, +5.7% QoQ). However, due to larger amount of cash retention, dividend for distribution is lower at US$5.7m (-55.2% YoY, -36.7% QoQ), which translates to DPU of US0.95¢.



Our thoughts: Revenue was higher due to one-off lease revenue of US$6m. Stripping that out, FSLT’s 2Q10 revenue would have come in at only US$22.5m (vs 2Q09: US$24.8m; 1Q09: US$24.4m). Excluding the one-off revenue and charges related to impairment and legal costs, FSLT’s net loss is lower at ~US$3.1m in 2Q10. Key reason for the loss is due to premature termination of long term charter contracts of two vessels. On the other hand, FSLT’s management expresses optimism towards the tanker and containership sectors which are gradually recovering from the abyss of global economic crisis on the back of improving global trade.

First Ship Lease Trust -dbs

First Ship Lease Trust
A quarter of woes
Price Target : S$ 0.40 (Prev. S$0.36)
FULLY VALUED S$0.42

At a Glance
• 2Q10 DPU down 37% q-o-q to 0.95 UScts as Trust deals with series of recent negative events
• No DPU guidance for 3Q; two product tankers trading on spot market impair income visibility
• Maintain Fully Valued call with revised TP of S$0.40

Comment on Results
The lower DPU payout follows premature re-delivery of two product tankers by customer Groda Shipping, consequent arrest of the vessels and loss of long-term charter-hire from the two vessels. Revenue of US$28.5m included the US$6m security deposit received from defaulting counterparty. Excluding that, revenue would have been down 8% q-o-q owing to the default. Trust expenses were higher as well by about US$3.5m due to one-off expenses. Moreover, given the termination of the long-term lease
contracts, the Trust recognised a non-cash impairment loss of US$7.9m and registered an accounting loss of US$6.1m in 2Q10.

Outlook and Recommendation
The product tankers have since been released after FSL Trust put up guarantees amounting to a total of US$4.4m at the respective courts. Lawsuits are now ongoing under respective jurisdictions. Separately, FSL Trust has filed a writ in the Supreme Court of Singapore against Daxin and the bareboat charterers of the 2 vessels but it is unclear at this point what the outcome of these legal actions will be, and whether FSL Trust will be able to recover the guarantee amounts. Meanwhile, the two product tankers will be deployed on the spot market, but current day rates are much lower than previous rates and utilisation could be volatile. The only positive in this set of results is the charter-free valuation of its fleet, which improved by about 10% q-o-q to US$686m. This implies a safe 156% LTV coverage at the end of waiver period in June 2011.

We raise FY10F DPU forecast by 7% to 4.2UScts to account for the slightly higher-than-expected DPU payout in 2Q10, but given the potential volatility in future cash flows and lack of DPU guidance, we maintain our Fully Valued call at a slightly higher TP of S$0.40 (15% target yield). We recommend a switch to Pacific Shipping Trust (BUY, TP US$0.37) for more stable distributions.

胡立阳:出人头地八大法则

一、不要只听 “周遭朋友”的话,一般的建议只会让你成为“平凡人”。

二、不要只知道“用功读书”,更重要的是“要读对书”

三、不要只知道“努力工作”, 更重要的是“做对工作”。

四、不要只结交“志趣相投”的朋友,否则你永远只看到 “一半” 的世界。

五、不要只是“默默期待”等升迁,要勇于创造“自我推荐”的场合与机会。

六、不要以为“机会是只留给准备好的人”,它会留给主动向它叩门的人。

七、不要以为“钱不会从天上掉下来”,只是你必须“站对地方”接。

八、不要只会“正面思考”,要“逆向思考”,“不正常”的人才能出人头地。

Tuesday, July 27, 2010

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DXN_LandHeldforPropertyDevelopment_2010AR

DXN_InvestmentProperties_2010AR

DXN_Investories_2010AR

DXN_Business Segment_ 2010AR

DXN_Geographical segments_ 2010AR

DXN_Terms&Debt repaymentschedule_2010AR

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Ascendas India Trust -dbs

Ascendas India Trust
BUY S$0.985
Price Target : 12-Month S$ 1.06 (Prev S$ 1.14)

Operationally stable

• DPU of 1.66 Scts (-19% yoy, -7% qoq)

• Operationally stable, development pipeline on track

• Lowered DPU estimates by 9-3% due to weaker Rs/S$ forex assumptions

• Maintain BUY with lowered TP of S$1.06 offers total return of 17%.



DPU of 1.66 Scts (-19% yoy. –7%qoq). Ascendas India Trust (a-itrust) reported steady performance with topline and NPI up 4% and 3% to S$30.9m and S$18.9m respectively. Distributable income was 19% lower yoy due to a one-off realized gain of S$4.1m a year ago vs a loss of S$0.7m in the current quarter.



Operationally stable, development pipeline on track.

Occupancy remained stable at 97% while its 200,000 sqft of space were renewed at flat rates in the current quarter. Development pipeline remains on track for completion by the end of 2010 – Zenith (ITPC) and Park Square Mall (ITPB) expected to contribute 1.2m sqft of space (25%) earliest in 4Q11. Takeups are understood to be <20% currently but to pick up progressively as the building completes.



Adjusting estimates. We moderated our rental assumptions slightly for FY11 and reduce our INR-S$ assumptions from Rs32.5/S$ to Rs34/S$ in view of current hedging levels done for Nov’10 distributions. We keep our longer-term rates at Rs33.5/S$ in line with DBS Bank economists’ forecasts.



BUY, TP lowered to S$1.06 but still offers total return of 17%. A-itrust continues to offer a strong DPU growth of 13% with the completion of its development pipeline by yearend. Potential acquisitions could present upside earnings surprise. Key risks will lie on the forex fluctuations as its operations are based in India, while paying dividends in S$.

CapitaRetail China Trust -dbs

CapitaRetail China Trust

HOLD S$1.26 STI : 2,973.47

Price Target : 12-month S$ 1.26 (Prev S$ 1.20)

Stabilising portfolio

. Results in line

• Organic growth near term driver

• Maintain Hold with TP of $1.26



1H10 within expectations. CRCT reported a -2.8% y-o-y dip in topline to S$29.6m due to impact from the stronger SGD, while NPI and distribution income rose 1.9% and 7.3% to $19.8m and $12.9m (DPU 2.07Scts) respectively, on better cost management. In Rmb terms, revenue grew 3.7% to RMB 145.1m thanks to better portfolio occupancy, higher contributions from Xizhimen and Saihan malls, partially offset by lower income from Qibao mall. Rental renewals averaged 3.4% over preceeding levels. Higher gross turnover rents as tenant sales picked up 28.8% yoy and 7.6% qoq. NPI rose 8.8% yoy to Rmb97.2m. The group enjoyed a 1.7% revaluation surplus in 1H10, bringing adjusted book NAV to S$1.09.



Benefiting from AEI and firming rents. Looking ahead, we expect 2H to remain robust on the back of firming rents and improved demand as retailers regain confidence and resume expansion activities in the Beijing and Shanghai micromarkets. This will benefit CRCT with a remaining 15.9% of rental income to be renewed this year and a further 15.1% next year, in particular at Xizhimen and Wangjing malls. Moreover, the planned opening of another c2ksm in B2 at Xizhimen later this year should provide some income uplift. Saihan Mall is also anticipated to continue its positive traffic and contribution trend with the establishment of a cinema operator in 2H10. Repositioning of Qibao is underway in tandem with the rejuvenation activities in this Shanghai satellite city, to tap opportunities offered by the new infrastructure and population catchment in the area. In terms of capital management, the trust has a remaining S$231m of debt to be refinanced this year. We expect average cost of debt to rise to 3-3.5% from the present 2.8% after renewal. This has been accounted for in our estimates.



We retain Hold rating. CRCT is trading at FY10 and FY11 yields of 6.6-6.7%. Our target price translates to a 6-7% absolute return. Maintain Hold. Key risk to our view include faster than expected improvement in operating fundamentals.

Starhill Global REIT -ocbc

Starhill Global REIT:
2Q10 in line; valuations still compelling

Starhill Global REIT (Starhill) declared a 2Q10 DPU of 0.91 S cents, down 52.1% YoY (because of an enlarged unit base post-rights issue) and down 4.2% QoQ. The results were in line, with DPU just 3% higher than our 0.88 S cents estimate. Portfolio performance was steady but Wisma Atria’s retail and office occupancy declined from 31 Mar to 98.5% (-0.8%) and 81.4% (-0.6%) respectively. Starhill is leveraged at 30.8% debt-to-assets as of 30 Jun; it has already secured sufficient financing to address the S$570m in debt maturing later this year. We have adjusted our expense assumptions marginally with FY10-11 DPU up 0.5% and 1.1% respectively to 3.84 S cents and 3.96 S cents. We continue to find valuations compelling at a significant 35% discount to book value. Our DDM-derived fair value estimate of S$0.65 (6.7% discount rate, 0.5% terminal growth rate) is intact; this is equivalent to a fairly reasonable (in our opinion) 0.72x price-to-book. With an estimated total return of 16.7%, we maintain our BUY rating on Starhill.

2Q10 in line. Starhill Global REIT reported 2Q10 revenue of S$37.2m, up 11.4% YoY but down a marginal 1.1% QoQ. Revenue was boosted by the acquisition of David Jones Building in Perth, Australia on 20 Jan 2010. This was partially offset by lower revenue from the office component of Starhill’s Singapore assets. Net property income of S$28.8m was up 6.9% YoY but down 1% QoQ. Starhill declared a 2Q10 DPU of 0.91 S cents, down 52.1% YoY (because of an enlarged unit base post-rights issue) and down 4.2% QoQ. Starhill acquired Malaysian assets Starhill Gallery and Lot 10, on 28 Jun, and made its first distribution payment on the convertible preferred units issued in relation to the acquisitions. The results were in line, with revenue and NPI within 3% of our estimates. DPU was just 3% higher than our 0.88 S cents estimate.

Portfolio performance steady. Office and retail occupancy at Ngee Ann City (NAC) was steady at 95.6% and 100% respectively, flat compared to 31 Mar. Wisma Atria (WA)’s retail occupancy declined 80 basis points from 31 Mar and 150 bps from 31 Dec to 98.5%. WA’s office occupancy also declined to 81.4%, down 60 bps from three months ago but up 390 bps compared to six months ago. Elsewhere, occupancies were stable at 100% for Starhill’s China and Australia assets. The Japan assets, meanwhile, achieved an impressive 700 bps increase in occupancy from 31 Mar to 95.6%; this as Starhill brought in three new tenants over 2Q10. Starhill is leveraged at 30.8% debt-to-assets as of 30 Jun; it has already secured sufficient financing to address the S$570m in debt maturing later this year.

Valuation. We have adjusted our expense assumptions marginally with FY10-11 DPU up 0.5% and 1.1% respectively to 3.84 S cents and 3.96 S cents. Starhill is up 8.3% since our initiation on 02 Jul. Nevertheless, we continue to find valuations compelling at a significant 35% discount to book value. We believe this discount is unjustified when considering Starhill’s high-quality assets, healthy balance sheet and its strong sponsor. Our DDM-derived fair value estimate of S$0.65 (6.7% discount rate, 0.5% terminal growth rate) is intact; this is equivalent to a fairly reasonable (in our opinion) 0.72x price-to-book. With an estimated total return of 16.7%, we maintain our BUY rating on Starhill. Key risks to our view include macro-economic headwinds, increasing competition in the retail space, foreign exchange risk and changing regulatory and taxation regimes.

Singapore Prime Office Rent -cimb

DXN_TreasuryShares_2010AR

REITs yield forecast -cimb

CIMB Stock picks

Singapore Market Scenarios & Their Probabilities - cimb

Monday, July 26, 2010

Top Pick Is iCapital.biz



Tan Teng Boo, Managing Director of Capital Dynamics, tells whether he believes there will be a double dip and his outlook for China in 2H 2010, as well as for Malaysia. He also tells how he picks stocks for his iCapital Global Fund (Singapore) and iCapital International Fund (Australia). On the closed-end fund, iCapital.biz (Malaysia), he explains why the fund is trading below its net asset value (NAV). Capital Dynamics will be organising an Investor Day ala Berkshire Hathaway style on the AGM of iCapital.biz

Source/转贴/Extract/Excerpts: www.bfm.my/breakfast-grille-270710-tan-teng-boo.html
Publish date:26/07/10
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
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