綜指有望更上一層樓

如圖所示，富時綜合指數上週以1493.53點開市，以全週的最高水平為1505.66點閉市，按週上揚15.02點或1%，全週總成交量為62億7千560萬3千200股，按週減少了10%。

主要指標－圖形
綜指上週基本上橫擺中緩緩的上揚，更在上週五上揚突破1500點的心理阻力水平，最終以全週最高水平閉市。由於綜指突破了1500點的關口，所以接下來1500點反過來成為綜指的支持水平，阻力水平則是1525點的費氏線。

布林頻帶
如圖中箭頭A所示，布林頻帶（Bollinger Band）上週開始打開，可是打開的幅度緩慢，所以雖然綜指已處於布林中頻帶（Bollinger Middle Band）以上，仍然未大舉上揚，只要布林頻帶繼續打開，那綜指將有望繼續轉強，更上一層樓。

技術指標
成交量
如圖中箭頭B所示，雖然綜指上週的漲幅不大，不過馬股的成交量一直都處於40天的成交量移動平均線（VMA）以上，這表示整體市場的交投活躍，市場的承接力量也充足，這對綜指轉強的走勢有著保溫的作用。

平均乖離
平均乖離（MACD）的振蕩指標（Histogram）上週開始上揚，惟速度緩慢，所以綜指短期上揚的趨勢也不大，若振蕩指標持續上揚，並且形成一個圓底，綜指的短期走勢將有望形成上揚的趨勢。

勝圖強弱指標
勝圖強弱指標（Win Chart RSI）上週在70%的水平徘徊，這顯示綜指的中期走勢並未明顯的確認為上揚，不過由於勝圖強弱指標達到70%，所以綜指的中期走勢有偏強的跡象，直到指標跌破50%為止。

隨機指標
隨機指標（Stochastic）上週上揚突破70%的水平，這表示綜指的短期走勢再度回到上揚的格局，直到隨機指標跌破70%為止。

總結
布林頻帶上週開始打開，而綜指始終處於布林中頻帶以上，所以開始走高，並且創下33個月的新高水平。接下來，綜指是否能繼續走高，除了取決於布林頻帶是否繼續打開，就是成交量是否能維持在40天平均值以上。在綜指上揚時，成交量是投資者對後市的信心高低的指標，接下來若成交量亦能保持在40天平均值以上，綜指繼續走高的機會濃厚。

Source: sinchew.com.my

a-iTrust Portfolio in India

a-iTrust Development Project

a-iTrust 2Q FY 2010/11

FCOT Portfolio detail as at 30 September 2010

Frasers Commercial Trust- Full Year Financial Results

AIMS AMP REIT: Results for 2Q FY2011

AIMS AMP REIT -The Acquisition

The Acquisition: 27 Penjuru Lane, Singapore 609195

Starhill Global REIT 3Q 2010 financial results

MIDF’s top 10 laggard picks from Bursa’s FBM 100

• The FBM KLCI breached the psychological 1500 again this morning, the level of which seems to be diffi cult to be maintained. At current rate, we expect the index to end the month of October on a positive note, making it the fi fth monthly gain.

The KLCI rose 3.4% last year. If it were to surpass that, the index will have to close October at 1513. We do not believe that will happen unless the push
emanates from local funds, as foreign funds are likely to be idle. As we wrote on Monday, foreign fund flow to Asian equity appears to lose momentum for the time being.

• At 1500, the FBM KLCI is trading at 17x CY11 PER assuming 16% earnings growth. The top outperformers this year had outperformed the KLCI by more than 50% point in the year till yesterday, including MTD Capital, AirAsia, Titan Chemicals, Tan Chong, UEM Land, KFC Holdings and Time dotCom. It is time to readjust the radar screen.

• Our top 10 BUYs, culled from the top 100 stocks on Bursa Malaysia, based on market capitalisation are Sime Darby, Sapuracrest, Tenaga, IOI Corp, TM Bhd, Digi.com, KL Kepong, Mah Sing, AMMB Holdings and WCT Berhad. At the extreme, Sime Darby, for example, had lagged FBM KLCI by 15.8% point and FBM100 by 16.8%point. At the other end, WCT had outperformed the KLCI and FBM 100 by 4.0% and 2.7% respectively. However, we still defi ne WCT as a laggard as it has a beta of 1.7.

S&P: Stock Market Outlooks

Long Term Outlook
• The Monetary Authority of Singapore’s (MAS) move to widen and steepen the trading band for the SGD, allowing more volatility and a faster pace of appreciation for the currency, sent the SGD to a new high against the USD.

The adjustment reflects MAS’ growing concern over rising inflation and as such, seeks to cap CPI at 2%-3% YoY in 2011 from 2.5-3.0% in 2010. In our view, the move indicates further gradual appreciation for the SGD as inflation materializes in 2011 and 2012.

Market Outlook
Fundamental Outlook
• The FSSTI gained 5.0% in September and as of Oct. 22, is up a further 2.5%, after losing 1.3% in August. The decent performance was in line with global stock market gains, driven by receding concerns of a double-dip recession in the U.S. and the promise of further quantitative easing by the Federal Reserve. • Following recent gains, Singapore equity values are back to historical averages, with the FSSTI at 17.1x 2010 PER. Markets look extended and poised for some consolidation in the near term, although we note that performances are mixed and opportunities remain. We lower Consumer Staples to MW from OW, following recent outperformance on rising cost risks and our belief that high crude palm oil prices cannot be sustained in 2011 on improved yields.

• The FSSTI has moved above our 3,100 target and it appears likely that the index should end this year comfortably at the 3,200 level. We believe investors are looking ahead to 2011 but with market consensus looking for FSSTI 2011 EPS growth of 10.1%, we don’t see catalysts for a significant rerating upward. However, an 11% gain in 2011 to the 3,500 level should be supported, pricing the market at a still comfortable 15.6x 2011 earnings.

source:S&P report on 26/10/2010.

HLG: Consolidate around 1500 first

 The FBM KLCI briefly crossed the 1,500-pt mark last two days but persistent profit taking activities capped its rally to a shade below the 1500 mark, prior to the US mid-term election and FOMC meeting next week. The commencement of domestic Nov reporting season next week and the two by-elections in Galas and Batu Sapi are expected to dictate FBM KLCI’s near term direction.

 Overall, unless the index overcomes the Oct 14’s high of 1504 convincingly on high volume, it could drive sideways in the near future given the divergence with its indicators. Immediate resistance levels are 1504 (27 Oct 10) and all time high of 1525 whilst support levels are situated around 1492 (10-d SMA), 1480 (30-d) and 1472 (40-d).

CIMB: STI Chart

Prices are still likely to head lower to test the channel support at 3,098. The 50-day SMA at 3,081 could also give the bulls a minor boost. Longer term, if these support levels give way, a deeper correction to below 3,000 is possible. Closing above 3,180 would suggest this correction has ended and the index could rise above the 3,220-3,221 resistance. Until then, we are neutral to slightly bearish.

CIMB: Berlian Laju Tanker stays an Outperform

BLTA stays an Outperform with a target price of Rp680, reflecting a small discount
to its fully-diluted sum-of-parts. Although chemical tanker rates are expected to remain weak in 2010-11 before rising in 2012, BLTA is trading at only 0.6x P/BV and potential re-rating catalysts include the potential listing and growth of its cabotage business.

Apex: Power Root- Concern over the surge of the cost of raw materials

Power Root -HOLD
Price ( 26-Oct-10 ) 0.70
TP: RM0.63
52-week price range 0.49 - 0.73
Concern over the surge of the cost of raw materials

Highlights
Flat sales – For the quarter ended 31 August 2010, Power Root (PWROOT) recorded RM49.8 million in terms of revenue, which is a 0.2% increase from RM49.7 million in the previous quarter. Revenue improvement was mainly attributed to higher sales from the domestic market. Lower sales from the overseas markets have reduced revenue growth for the quarter.

Concern over the surge of the raw material costs – Operating profit dropped by 27.5% q-o-q and more than 35% y-o-y. We noted that this is mainly due to a significant increase in the cost of raw material used. The cost of raw material almost doubled to RM24.7 million as compared to RM13.7 million in preceding quarter.

Dividend
The Group declared a tax exempt dividend of 6 sen per share comprising an interim dividend of 2 sen and a special interim dividend of 4 sen. The entitlement date for the dividend is on 22 November 2010.

Recommendation
Downgrade to hold – Due to lower sales growth performance and concern over the surge of the cost of raw materials used, we have reduced our EPS forecast for FY2011 by approximately 3% to 7.05 sen from 7.27 sen previously. Nevertheless, we maintain our target price at 63 sen which was derived based on the P/E ratio of 10 times with a 14% discount on next 12 month EPS forecast (approximately 7.13 sen). This translate into a 9% downside risk, thus, we downgrade this stock to hold from buy.

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 of its shares which makes it difficult to enter and exit.

OCBC: Starhill Global REIT: 3Q10 in line; valuations still compelling.

Starhill Global REIT: 3Q10 in line; valuations still compelling.

Starhill Global REIT reported 3Q10 revenue of S$45.2m, up 38.7% YoY and 21.6% QoQ. Revenue was boosted by the Australia and Malaysia acquisitions made over 1H10. Starhill declared 1.00 S cent in 3Q10 DPU, up 5.3% YoY and 9.9% QoQ. The results were in line, with revenue and NPI within 1% of our estimates. DPU was 4% higher than our 0.96 S cent estimate. Portfolio occupancy performance was mixed. Starhill is leveraged at 31.0% debt-to-assets as of 30 Sep; it has already refinanced the S$570m in debt that matured in Sep, with the next maturity only in FY12. Our DDM-derived fair value estimate edges up slightly from S$0.65 to S$0.66 (6.7% discount rate, 0.5% terminal growth rate); this is equivalent to a fairly reasonable (in our opinion) 0.73x price-to-book. With an estimated total return of 14.5%, maintain BUY.

3Q10 in line. Starhill Global REIT reported 3Q10 revenue of S$45.2m, up 38.7% YoY and 21.6% QoQ. Revenue was boosted by the acquisitions of David Jones Building in Perth, Australia (acquired on 20 Jan 2010) and Starhill Gallery & Lot 10 in Kuala Lumpur, Malaysia (acquired on 28 Jun 2010). This was partially offset by lower revenue from the office component of Starhill’s Singapore assets. Net property income of S$35.8m was up 37.0% YoY and 23.9% QoQ. Starhill declared 1.00 S cent in 3Q10 DPU, up 5.3% YoY and 9.9% QoQ. It also made its second distribution payment on the convertible preferred units issued in relation to the Malaysia acquisitions. The results were in line, with revenue and NPI within 1% of our estimates. DPU was 4% higher than our 0.96 S cent estimate.

Portfolio performance dips slightly. Office and retail occupancy at Ngee Ann City (NAC) dipped slightly to 94.9% and 99.8% respectively, down 70 basis points and 20 bps compared to 30 Jun. Wisma Atria (WA)’s retail occupancy declined 30 basis points from 30 Jun to 98.2%. Conversely, WA’s office occupancy rose 430 bps to 85.7% versus 30 Jun. Elsewhere, occupancies were stable at 100% for Starhill’s China and Australia assets. The Japan assets reversed their 700-bp increase in occupancy three months ago, with occupancy falling 1180 bps to 83.8% at 30 Sep due to an early lease termination. Starhill is leveraged at 31.0% debt-to-assets as of 30 Sep; it has already refinanced the S$570m in debt that matured in Sep, with the next maturity due only in FY12.

Valuations still compelling. Starhill offers an estimated FY10F and FY11F yields of 6.3% and 6.7%, and trades at a significant 33% discount to book value. We believe this discount is unjustified considering Starhill’s high-quality assets, healthy balance sheet and its strong sponsor. Our favored picks in the REIT sector are the “forgotten” but still credible REITs (strong sponsors and strong balance sheets) that offer high absolute yields and that trade at (or below) NAV. Starhill certainly delivers on these fronts and is one of our top picks for the S-REIT sector. Our DDM-derived fair value estimate edges up slightly from S$0.65 to S$0.66 (6.7% discount rate, 0.5% terminal growth rate); this is equivalent to a fairly reasonable (in our opinion) 0.73x price-to-book. With an estimated total return of 14.5%, maintain BUY. Key risks to our view include macro-economic headwinds, foreign exchange risk and changing regulatory and taxation regimes.

DBS: Starhill Global REIT Stable performer

BUY S$0.61 @ 26/10/2010
Price Target : S$ 0.76 (Prev S$ 0.73)

At a Glance
• DPU of 1.0 Scts in line
• Recovering office occupancy at Wisma Atria positive sign
• BUY, TP revised to S$0.76 offers 31% total return

Comment on Results
DPU of 1.0 Scts in line. Starhill Global REIT (SGREIT) reported a strong growth in topline and net property income to S$45.2m (+38.7% yoy, 22% qoq) and S$35.8m (37% yoy, 24%qoq), boosted by an expanded portfolio - from recently completed acquisitions: (i) David Jones in Australia and (ii) Lot 10 and Starhill Gallery in Malaysia. NPI was also slightly eroded from higher A&P, leasing commissions expensed by SGREIT. Distributable income to unitholders of S$19.4 (net of S$2.5m to CPU holders) translates to a DPU of 1.0 Scts.

Wisma Atria office occupancy levels rebounds - positive sign. While its retail portfolio continue to remain stable, SGREIT’s office revenues continue to remain weak at S$5.7m (-5%yoy, -4% qoq). However, we notice a pick-up in occupancy levels to 85.7% as of Sept 2010 (vs 81.4% in 2Q10) at Wisma Atria as positive sign and we understand that the manager is in negotiations with a couple more prospective tenants to take up further space, which should filter through to earnings in the coming quarter. The expected improved office leasing environment (projecting office occupancy to head up to 95% in FY11) should somewhat offset the projected negative rental renewals come 2011, mitigating downside earnings risk from its office portfolio in the coming quarters.

Recommendation
Valuations attractive, BUY, TP S$0.76. Trading at 0.7x P/BV, and offering forward FY11-12 yields of c7.3%, we see relative value in SGREIT compared to other SREIT peers who trade at 1.05x P/BV, and offer a weighted average yield of 6.0%. Our TP is raised to S$0.76 as we roll forward our valuation to FY11.

DBS: FSL Trust DPU could be maintained at this level

First Ship Lease Trust
DPU could be maintained at this level
HOLD S$0.47
Upgrade from FULLY VALUED
Price Target : S$ 0.45 (Prev. S$0.40)

At a Glance
• 3Q10 DPU maintained at 0.95UScts
• Utilization of vessels trading on spot product tanker market stays low, contribution could remain muted
• Fleet valuation improves further to US$700m, value-toloan covenant concerns in check
• Upgrade to HOLD with revised TP of S$0.45

Comment on Results
3Q10 DPU was maintained at similar levels to 2Q10. Revenue of US$23.4m was down 5% y-o-y but was up 4% q-o-q (excluding the US$6m one-off security deposit received in 2Q) owing to the effects of spot market employment of the 2 product tankers which came off-hire prematurely earlier this year. As a result of higher voyage and operating costs associated with running the product tankers and absence of one-off income, net operating cash, however, declined 18% q-o-q and 20% y-o-y to US$14.1m.

Outlook and Recommendation
The product tankers were deployed in the spot voyage markets in 3Q10, but utilization rates and net bareboat equivalent income came in below our expectations. The 2 vessels generated US$0.4m in bareboat charter equivalent revenue, compared to the US$3.8m revenue per quarter applicable during the original charter. With tanker rates unlikely to perform in the near term, we choose to remain conservative on our assumptions of contribution from these vessels and reduce our FY11 DPU assumption by 7% to 3.9UScts, or about 1.0Uscts per quarter DPU for FY11.

Meanwhile, the charter-free valuation of the FSLT’s fleet improved further by about 2% q-o-q to US$700m. This puts the current value-to-loan ratio at 152%, and implies about 160% coverage at the end of waiver period in June 2010, above the requirement of 145%. We expect DPU payouts to remain at current level in the near term and given that we haven’t seen any knock-on effect from other charterers following the default by Groda, we foresee more stability and upgrade our call to HOLD at a higher TP of S$0.45 (based on 12% FY11 target yield).

CIMB: Triangle consolidation for KLCI?

Triangle consolidation for KLCI? It was sideways action for the KLCI last week. The index may be in a triangle consolidation, a pattern that is valid as long the index does not go below its support trendline at 1,480 and 21-day SMA at 1,478. If the support caves in, the index could accelerate down towards the 1,440-1,450 levels.

CIMB: STI continues its consolidation

STI continues its consolidation. The STI continued its consolidation last week and is holding just above the immediate support trend line. The main support trend line is at 3,080 while the immediate support is at 3,155. The daily MACD indicator is holding just above its support trendline and it would be interesting to see whether the support can hold. The 50-day SMA is at 3,063.

RHB: Malaysian Airline System Structural Issues Cap Yield Growth

Malaysian Airline System
Share Price : RM2.31
Fair Value : RM1.91
Recom : Underperform (Maintained)

Structural Issues Cap Yield Growth

Structural issues cap yield growth. Despite the strong recovery in the global aviation sector, a strong rebound in yields has so far eluded MAS largely due to two key structural issues, namely: (1) MAS’s inability to immediately roll out higher-yielding product offering, predominantly those in the front end, as the delivery of newer aircraft is still pending; and (2) MAS’s main hub, i.e. Kuala Lumpur, is not quite a natural market for higher-yielding business travelers.

♦ Cash calls only if it exercises new aircraft order options. Based on its existing confirmed aircraft orders with an estimated cost of RM15.6bn, i.e. B787-800 x 35, A330-300/F x 17 and A380-800 x 6, MAS does not see the need to make another round of cash calls. However, if MAS is to exercise its options for additional B787-800 x 20 and A330-300/F x 12 with an estimated cost of RM7.8bn, it does not rule out the possibility of some form of fund raising exercise down the road.

♦ Firefly Jet not a great idea, we think. MAS confirmed news reports that it is considering the idea of re-deploying its 37 older generation B737-400 to its low-cost operation under Firefly. If MAS is to proceed with the plan, the jet services, likely to be branded as “Firefly Jet”, will operate out of the LCCT of the KLIA, and not SAAS Airport in Subang. We do not find the Firefly Jet model compelling largely because: (1) It is without the very key advantage of Firefly, namely, operating out of a city airport; and (2) It will be in direct competition with AirAsia.

♦ Forecasts. Relatively unchanged as our forecasts have reflected MAS’s relatively muted yield outlook over the short term.

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

♦ Maintain Underperform. We believe the airline sector is poised for improved prospects over the medium term in line with the recovery in the global economy. However, we remain cautious on MAS as: (1) It is still saddled with fuel hedges at high prices; (2) Its quarterly operating results remain volatile with losses during the latest two quarters; and (3) There may be cash calls down the road, assuming MAS is to exercise its options for additional new aircraft. Indicative fair value is relatively unchanged at RM1.91 based on 14x FY12/11 EPS, in line with its nearest comparable issue Singapore Airlines Ltd.

DBS:First Ship Lease Trust

First Ship Lease Trust’s 3Q10 DPU maintained at 0.95UScts. Utilization of vessels trading on spot product tanker market stays low, thus, contribution could remain muted. Fleet valuation improves further to US$700m, value-to-loan covenant concerns in check. Upgrade to HOLD with revised TP of S$0.45 (Prev. S$0.40).

SIAS: PST Sailing Smoothly

Pacific Shipping Trust
Invest
Intrinsic Value US$0.43
Prev Closing US$0.34

Sailing Smoothly
Update: Pacific Shipping Trust (PST) released its 3Q 2010 results on 20 October 2010. The figures were largely within our estimates; with revenue and earnings representing 74.5% and 75.9% of our FY10F respectively.

Fundamental Drivers:
• Income to be distributed rose 2% YoY owing to a slightly higher profit after tax. Distribution per unit stands at 0.832 US cents, implying an annualized dividend yield of 9.9% based on the current price of US$0.335.
• Owing to the purchase of two Capesize dry bulk carriers and two multi-purpose vessels, PST’s distributable income is likely to remain at 70% till the end of 2012, as the company is likely to use part of the retained income to pay for the vessels. Cash position has also fell from US$22.2m in 2Q 2010 to US$9.3m in 3Q 2010 due to a partial payment for the two bulk carriers.
• Management commented that they are adopting a balancing act between good charterer, reasonable IRR and acceptable asset prices as they venture into new opportunities. We like this move as the company will not be IRR driven and thus, take in excessive risk.
• The containership industry is recovering with favorable freight rates and higher utilization rates. We remain upbeat about the industry’s prospect.

Value Catalyst: The new vessels are poised to increase the total contracted revenue by US$304m. We have updated our DDM model and using a conservative discount rate of 11% with 1% terminal growth rate, our model suggests a value of US$0.430 per share. Recommend Invest.

DBS: Cambridge Industrial Trust Attractive 9% yield

Cambridge Industrial Trust
BUY S$0.55
Upgrade from HOLD
Price Target : 12-Month S$ 0.58 (Prev S$ 0.54)

Attractive 9% yield
• S$50.4m cash call to fund property purchases
• Improved financial metrics, slight accretion to DPU
• 300 bps spread above Sreit sector average yield of 6.0% is attractive, Upgrade to BUY, TP revised to S$0.58

S$50.4m cash call to fund growth opportunities. Cambridge REIT (“CIT”) announced an equity fund raising (“EFR”) of S$50.4m via (i) private placement of 56.5m units (fully subscribed) and a preferential offering of up to 38.5m units, at S$0.531 per unit (fixed at 4.9% VWAP to price on 19 Oct).

Target yields of properties to be >8.0%. Proceeds will be used to fund the purchase of 4 properties of which 1 is a development project - CIT’s first undertaking. Post EFR, CIT will have stronger financial metrics (gearing of 36.4% after scheduled loan repayment in Nov’10), and reduced concentration of lease expiry in FY13-14 to 56.9%.

Enhancement plans unveiled, to boost DPU. CIT also unveiled AEI plans for 2 of its properties at a cost of S$13.1m, where incremental NPI yield is expected to be in excess of 15%. With the share placement and AEI works, we raised our forward FY11 DPU estimates to 2%.

3Q10 DPU of 1.18 Scts in line. Lower 3Q10 revenue and net property income (“NPI”) of S$18.2m (-2.6% yoy) and S$15.9m (- 2.6% yoy) respectively were due to ongoing divestment program. Performance in 4Q10 should be lifted by contribution from its new acquisitions completed in recent weeks.

TP revised to S$0.58, Upgrade to BUY. We see relative value in Cambridge REIT given its high FY11-12 yield of 8.9-9.2%, which is a 300 bps above the average Sreit peers. Income visibility and stability is strong, given that most of its properties are sale-andleaseback properties. Upgrade to BUY and raised TP to S$0.58.

DBS: FCOT Waiting for the right time

Frasers Commmercial Trust
HOLD S$0.165
Price Target : 12-Month S$ 0.19 (Prev S$ 0.16)

Waiting for the right time
• DPU of 0.31Sct (+55%yoy,+24%qoq) in line
• Singapore operations stable; Japan remains a drag
• Maintain HOLD with revised TP of $0.19

4Q10 results in line. Gross revenue and net property income was 14% and 16% higher yoy at $29.3m and $23.2m respectively due a full quarter's contribution from Alexandra Technopark and improved performance at Keypoint with higher occupancy of c81%. On a sequential basis, 4Q10 topline was flattish, dragged down by its Japan property - Cosmo Plaza - which posted a 22% qoq decline in rental income, although NPI rose a marginal 2.3% qoq, helped by lower property expenses. Distributable income net of CPPU dividend amounted to $9.5m (DPU: 0.31Scts), up 24% qoq, thanks to the stronger AUD. The group revalued its properties up by $36.3m or 1.9% at latest cap rates of 4-5% for its properties in Singapore and lowered gearing to 39.6%.

Operations a mixed bag. Occupancy of Cosmo Plaza Osaka dropped to 25.6% with the expiry of lease of a major tenant in Aug 2010. This will continue to be a drag on earnings. Management attributed the non-traditional business location a hurdle to attract tenants. Successful divestment of this asset would improve FCOT’s book NAV and gearing. Meanwhile, Central Park and Caroline Chisholm Centre in Australia should enjoy some reversion upside from rent reviews with step-up clauses in 2011. In Spore, boost in rental income will come from higher occupancy at Keypoint.

Financing could provide earnings uplift in the medium term. Management is also looking at refinancing its debt due in 2012 (100%), given the current attractive interest rate environment, and smoothening out the lumpy loan maturity profile. We believe the group could likely achieve lower than current interest cost of 4.1% upon refinancing and boost bottomline in the medium term. This had not been factored into our existing forecast.

Maintain Hold. While yields of c6.7 – 7.1% is attractive relative to other office peers, re-rating catalyst from further clarity of management portfolio restructuring plans, appears lacking. We are revising our DCF-backed TP to $0.19 as we roll our numbers forward into FY11. Retain Hold call.

DBS: Ascendas India Trust Hit by stronger S$ exchange

Ascendas India Trust
HOLD S$1.04 STI : 3,173.57
Downgrade from BUY
Price Target : 12-Month S$ 1.08

Hit by stronger S$ exchange
• Stable 2H10 outlook
• Development projects on track; pre-leasing activities slightly behind schedule in our view
• Downgrade to HOLD given limited upside to S$1.08 TP

2Q11 DPU of 1.70 Scts in line. Topline and net property income (“NPI”) were in line with expectations at S$29.6m (-3% yoy, -4% qoq) and S$18.2m (-5%yoy,-4% qoq) respectively; the declines due to a stronger S$:Rp exchange rate. As such, distributable income came in 8% lower at S$13.2m, translating to a DPU of 1.70Scts.

2H10 outlook is stable. Earnings in Rp remained stable with rental revenues inching upwards but offset by lower maintenance and operations income. A further 19% of its space is to be renewed in 2HFY11. While its operations in Bangalore and Hyderabad are expected to continue to see positive reversions, they are expecting to see moderate pressure in Chennai (ITPC) given the large competing supply situation there. As such, we moderate our rental growth assumptions from +2% to flat in 2H10, resulting in a slight reduction in our forward estimates.

1.7m sqft of development projects on track, pre-leasing activities slight behind schedule, in our view. 2 out of 3 buildings (Zenith in ITPC & Park Square Retail Mall in ITPB, +1.19m sq ft) will be completing soon. Pre-commitments are at 20% and 47% respectively, slightly slow for Zenith in our view. Negotiations are on-going and we remain confident that a-itrust will be able to fill the remaining space in the coming quarters. However, the slower than expected take-up will mean that earnings growth from these completions will likely be felt only from 2H FY12.

Downgrade to HOLD, TP S$1.08. While we like a-itrust as a premier space provider in India, we see limited upside to our price objective from current levels. As such, we downgrade to HOLD. Aitrust offers FY11-12F yields of c 6.7-7.7%.

Upside surprise. Upside surprise will hinge on acquisitions that the trust could undertake given its low gearing of 22%, which is not factored in our estimates.

Phillip: Cambridge Industrial Trust Accretion From 2011

Cambridge Industrial Trust
– Hold (Unchanged)
Closing Price S$0.55
52w k High (10/14/2010) 0.57
52w k Low (11/30/2009) 0.39
Target Price S$0.61 (+10.9%

• 3Q10 revenue of $18.2 million, net property income of $15.9 million, distributable income of $10.8 million
• 3Q10 DPU of 1.187 cents; comprising advanced distribution of 0.68c (paid) and 0.507c (payable on 30 Nov)
• Announced acquisition of 2 more properties and 2 potential properties
• Equity fund raising to raise $50.4 million
• Maintain hold, raise target price to $0.61

Cambridge registered 3Q10 revenue of $18.2 million (-2.6% y-y, -0.5% q-q), net property income of $15.9 million (-2.6% y-y, -0.9 q-q) and distributable income of $10.8 million (-3.6% y-y, 0.0% q-q). DPU for the quarter was 1.187 cents (-11.7% y-y, -4.1% q-q). Revenue came down due to the loss of rental income from the divested properties. Since 4Q09, Cambridge has divested approximately $65 million worth of assets. It has another $30 million of assets earmarked for sale. DPU was also diluted due to the issuance of 83.7 million new units in the share placement exercise. Although the REIT is divesting properties, it is on the other hand on the lookout for acquisition opportunities. Cambridge recently concluded the purchase of 2 properties at a consideration of $37.1 million, funded partly from the share placement proceeds. Additionally, Cambridge announced acquisitions of another 2 more properties and 2 potential properties for total consideration of $74.3 million.




Along with the acquisitions, Cambridge is conducting an equity fund raising to partly fund the acquisitions. The equity fund raising will be carried out in 2 tranches to raise total gross proceeds of $50.4 million. The entire net proceeds will be used to fund the acquisitions while the balance $25.7 million will be funded by debt and internal cash



Besides enhancing yield through acquisition, the other way is through asset enhancement initiative (AEI). Cambridge completed an AEI project in July which gives an incremental net property income yield of 20%. There are three other AEI projects in the pipeline which are projected to yield 10-16%.

The gearing of the REIT is 39.2% and is targeted to reduce to 36.8% in Nov when Cambridge pays down another $35 million. The gearing is expected to drop further to 36.4% after the equity fund raising and acquisitions.

DPU has declined since 4Q09 when the asset divestment program first started. Within the last 21 months, there were also two rounds of private share placement with the issuance of 155 million new units. These 2 factors resulted in erosion of the DPU. 4Q10E will see further compression as there are still $30 million worth of assets to divest and also dilution from another 95 million new units. We think this year is a year of consolidation and repositioning for the REIT.

However as evidenced by the replenishment of assets, we believe Cambridge will start posting growth in FY2011E. We especially think the AEI is a great way to enhance yield. We are incorporating the changes into our forecast. We are estimating 4Q10E DPU to be 0.968 cents, which brings full year DPU to 4.67 cents. DPU should start accreting from FY11E and should begin an uptrend from 1Q11E. We are projecting FY11E DPU of 4.89 cents, which translate to 8.9% dividend yield. We are rolling forward our valuation to FY11E and based on a DDM model, we have derived a target price of $0.61. At our target price, Cambridge would offer a yield of 8% based on our FY11E DPU of 4.89 cents and we think that is a better reflection of the REIT given our projected rebound in DPU. Maintain Hold.

Phillip: FCOT all round improvement

Frasers Commercial Trust
HOLD (Unchanged)
Last Price 0.165
52w k High (1/13/2010) 0.17
52w k Low (12/1/2009) 0.13
Target Price S$0.18 (+9.1%)

• 4Q10 revenue of $29.3 million, net property income of $23.2 million, distributable income of $9.5 million
• 4Q10 DPU of 0.31 cents
• Full year revenue up 21%, DPU up 29%
• Maintain Hold, target price $0.18

Spot-on DPU forecast
FCOT recorded 4Q10 revenue of $29.3 million (+14.1% y-y, +0.2% q-q), net property income of $23.2 million (+16.4% y-y, +2.3% q-q) and distributable income available to unitholders of $9.5 million (+54.6% y-y, +23.0% q-q). 4Q10 DPU was 0.31 cents (+55.0% y-y, +24.0% q-q). Full year results for the period 1 Oct 2009 to 30 Sep 2010 also improved correspondingly. Full year revenue was $117.9 million (+21.0% y-y) and DPU for the full year was 1.12 cents (+29.0% y-y) which was spot-on with our own forecast.

Favourable AUD, stabilization effect of Alexandra Technopark
The improved y-y performance is mainly attributed to the contribution from Alexandra Technopark, which was acquired in Aug 2009, as well as favorable exchange rate of the AUD. Revenue breakdown by country is Singapore: 51.7%, Australia: 35.2%, Japan: 13.1%.

All round improvement; Japan still the drag
Generally occupancy improved for the Singapore and Australia portfolio except for the Japan portfolio. Portfolio occupancy for 4Q10 was 90.8%. Occupancy by country is Singapore: 96.1%, Australia: 98.8%, Japan: 55.5%. Cosmo Plaza continues to be the drag on overall occupancy. Excluding Cosmo Plaza, Japan portfolio occupancy would be 93.5%.

Portfolio asset value registered $40 million valuation gain. The Singapore and Australia properties were revalued upwards by $54.8 million, however this gain was offset by a downward revaluation of $18 million from the Japan properties. Gearing is 39.6% with total debt of $828.4 million. Loan maturity is in the 2nd half of 2012.

We think the property portfolio has delivered a consistent set of results, ex Cosmo Plaza. Like we had mentioned in all our previous reports, FCOT needs time to reposition its portfolio and we had seen the transformation taking place. The problems plaguing FCOT are not new, however we do not expect to see a resolution soon. Namely Cosmo Plaza and AWPF.

Although the AWPF has gained slightly in asset value, it is not giving out dividend thus contributing nothing to FCOT revenue. We maintain that the successful divestment of these two would be a positive for FCOT, paving the way for the REIT to resume its expansion plan. For FY11E, we are forecasting a DPU of 1.19 cents which translate to a yield of 7.21%. We are rolling forward our valuation into FY11E and derive a target price of $0.18 based on our DDM model. Maintain Hold recommendation

HLG: Testing the 1500 pts

We still expect the FBM KLCI to consolidate upwards in the near term to retest 1500 and 1525 pts despite external woes. Healthy volume above one billion/day amid active rotational buying interests amongst the blue-chips and lower liners, coupled with speculation of an early general election following UMNO’s president Najib’s call to the party members to get ready for the 13th general election last Saturday could spur the FBM KLCI.