Saturday, July 23, 2011

ART: 2Q11 DPU up 25% YoY (OCBC)

Ascott Residence Trust: 2Q11 DPU up 25% YoY

Summary: Ascott Residence Trust (ART) announced a 2Q11 distribution of S$26.3m, up 127% YoY. This translated to DPU of 2.33 S-cents, which increased 25% over 2Q10. 2Q11 results came in above our expectations as the distribution income make up 30% of our FY11 forecast. We also saw revenue improve 65% YoY to S$73.1m in 2Q11 mainly due to the contributions from 28 properties acquired in Oct 10. REVPAU increased 17% to $147 in 2Q11, coming mostly from Singapore and UK. Occupancy remained stable on a YoY basis at 81%. Gross margin expansion to 56% in 2Q11 further boosted the gross profit growth to 98%, fueled by higher margins on master leases, higher rental rates and better cost management. Revaluation gains of S$82.8m were also recognized after independent valuations were carried out.

We will meet with management later today for an update; meanwhile we put our BUY rating and fair value estimate of $1.30 UNDER REVIEW

Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:22/07/11

First REIT: 2Q11 DPU of 1.58 S cents (OCBC)

First REIT: 2Q11 DPU of 1.58 S cents

Summary: First REIT (FREIT) reported its 2Q11 results this morning which were within expectations. Gross revenue surged 75.3% YoY but declined 9.3% QoQ to S$13.2m. The YoY increase was due to contributions from its two Indonesian hospitals acquired in Dec 2010; whereas the sequential decline was due to a one-off recognition of deferred revenue from the Adam Road hospital (after its divestment) in 1Q11. Income available for distribution jumped 86.5% YoY but was flat QoQ at S$9.9m. However, DPU of 1.58 S cents represented a 17.7% YoY decline (flat sequentially) due to an enlarged unit base from the effects of the 5-for-4 rights issue in Dec 2010. This distribution would be payable on 29 Aug 2011 and equates to an annualised yield of 7.7%. For 1H11, gross revenue increased 76.1% to S$26.4m and constituted 50.4% of our full-year projection. DPU fell 17.3% to 3.16 S cents, forming 51.1% of our FY11 forecast.

Looking ahead, FREIT would remain on the lookout for yield-accretive healthcare-related assets in the region. We believe that new acquisitions would likely come from its sponsor Lippo Karawaci (Lippo) as FREIT has a first right of refusal on Lippo’s properties. Our BUY rating and S$0.835 fair value estimate is UNDER REVIEW pending an analyst briefing this afternoon

Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:22/07/11

MLT: 2Q11 DPU up 6.7% YoY to 1.60 S cents (OCBC)

Mapletree Logistics Trust: 2Q11 DPU up 6.7% YoY to 1.60 S cents

Summary: Mapletree Logistics Trust (MLT) reported 2Q11 gross revenue of S$65.8m, representing a 26.6% YoY and 5.8% QoQ increase. This was attributed largely to income from the 14 properties acquired during FY10 and the four properties acquired in FY11. DPU for the period rose 6.7% YoY and 3.2% QoQ to 1.60 S cents (payable on 29 Aug 2011), which translates into an annualised yield of 6.8%. For 1H11, gross revenue increased 23.9% YoY to S$128.1m, forming 45.1% of our FY11 revenue forecast. DPU of 3.15 S cents was 5.0% higher than a year ago and made up 46.8% of our full-year estimate. Occupancy rate for MLT’s portfolio of properties was 98.9% in 2Q11, comparable to the 98.3% achieved in 1Q11. Average occupancy rate is expected to remain stable moving forward. The group experienced positive rental reversions across countries during the quarter with the greatest contribution coming from Hong Kong.

MLT also announced that it would be distributing the net gain of S$2.1m (0.09 S cent on a per unit basis) from the divestments of 9 Tampines Street 92 and 39 Tampines Street 92 (completed on 7 Jul 2011) over the next three quarters beginning from 3Q11. Maintain BUY and RNAV-derived fair value estimate of S$1.01

Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:22/07/11

Suntec REIT: 2Q11 DPU of 2.532 S-cents (OCBC)

Suntec REIT: 2Q11 DPU of 2.532 S-cents

Summary: Suntec REIT (Suntec) reported a distribution income of S$56.2m for 2Q11, up 22.3% YoY, mainly due to the inclusion of MBFC’s contributions. Gross revenue, however, decreased 1.8% YoY on the back on softer retail and office numbers during the quarter. The 2Q11 DPU stands at 2.532 S-cents, cumulating to a total DPU of 4.92 S-cents for 1H11. Based on the last price of S$1.535 per unit, this translates to annualized yield of 6.6%. Versus 1Q11, we saw occupancy rates at Suntec City retail track down marginally to 97.1% from 97.9% and Chijmes up to 100% against 97.8%, with the remaining assets at stable levels. We continue to see retail rents fall for Suntec City and Chijmes given negative reversions during the quarter.

We are overall positive on the office sector recovery and believe the income contributions from MBFC would continue to boost earnings. Retail performance, however, may soften further with the strong retail supply at Orchard and suburban centers expected. Maintain HOLD with a fair value of S$1.59.

Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:22/07/11

CMA: Bumper revaluation gains (OCBC)

CapitaMalls Asia: Bumper revaluation gains

Summary: CapitaMalls Asia (CMA) reported 2Q11 PATMI of S$164.9m, up 100.8% YoY versus restated 2Q10 PATMI of S$82.1m. Adjusting for revaluation gains and development profits, we estimate 2Q11 PATMI (S$22.6m) to be up 37% YoY versus 2Q10 PATMI. This came in marginally below our expectations largely due to the front-loaded expenses from mall openings. From a vintage breakdown perspective, we saw NPI yields increase across all vintages; in particular, malls that opened in 2009 clocked an increase in annualized yield from 3.4% (1H10) to 5.3% (1H11), indicating a faster NPI ramp-up for newer malls, in our view.

We continue to see value in CMA shares given expected tailwinds from China’s continued consumption growth and view concerns regarding a Chinese hard-landing to be overwrought at this juncture. We update assumptions and maintain a BUY rating at a fair value of S$2.09 (S$2.15 previously).

Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:22/07/11

Q2 DPU for Ascott trust jumps 25% to 2.33 cents

Business Times - 23 Jul 2011

Q2 DPU for Ascott trust jumps 25% to 2.33 cents


UNITHOLDERS of Ascott Residence Trust (ART) enjoyed a double-digit jump in payouts for the second quarter of fiscal 2011 compared with last year, with the 28 service residence properties that it injected into its portfolio last October acting as a sales booster.

Distribution per unit (DPU) for the three months ended June 30 came to 2.33 cents - 24.6 per cent higher than the 1.87 cents per unit it paid out a year ago. The payout is 15.9 per cent higher than what ART had forecast, and stems from the higher gross profit from its Singapore properties and lower finance costs.

The better-than-expected payout builds on the 2.14 cents in DPU accrued in the first quarter - a 28.9 per cent jump from a year ago - and brings DPU for the first half to 4.47 cents. This is 27 per cent higher than the 3.53 cents paid out for each unit over the same period last year.

Overall, distributable income for the April-June period more than doubled to $26.3 million from $11.6 million last year.

Said Lim Jit Poh, chairman of ART's manager Ascott Residence Trust Management Ltd: 'The yield accretive acquisition of the 28 Asia and Europe properties last year has boosted performance . . . We will continue to seek opportunities to expand the portfolio through yield accretive acquisitions.' These acquisitions may be made in countries it already has a presence in, or new emerging markets.

ART bought the 28 properties from its sponsor, The Ascott Ltd, for $969.6 million last year. These properties helped ART nail a 64.5 per cent increase in revenue to $73.1 million from $44.4 million a year earlier.

In its financial statement, ART said that ongoing asset enhancement initiatives in China, Vietnam and the UK will be completed this year, and are expected to increase returns to its portfolio. Forecast DPU for FY 2011 is unchanged at 7.74 cents, said Ascott Residence Trust Management.

ART's net asset value per unit as at June 30 was $1.33, compared with $1.28 at end-December last year. Independent valuations of the group's portfolio carried out as at June 30 revalued its holdings to $2.63 billion, resulting in a revaluation surplus of $82.8 million. Its international portfolio comprises 64 properties across 12 countries in Europe and Asia.

Yesterday, ART's units closed 1.3 per cent higher at $1.21

Publish date:23/07/11

First Reit achieves post-rights Q2 DPU of 1.58 cents

Business Times - 23 Jul 2011

First Reit achieves post-rights Q2 DPU of 1.58 cents


SINGAPORE'S first healthcare real estate investment trust, First Reit, yesterday announced a distribution per unit (DPU) of 1.58 cents for the second quarter of this year, down from 1.92 cents a year ago but up 85.9 per cent from an adjusted 0.85 cent.

The adjusted DPU of 0.85 cent took into consideration a rights issue last December - which raised the number of issued units from 276 million to 625 million - and excluded the contribution from its Adam Road property which was divested in Q1 2011.

First Reit's Q2 2011 DPU translated to 6.37 cents on an annualised basis, giving a distribution yield of 7.6 per cent based on yesterday's closing price of 83.5 cents.

Acquisition of two Indonesian hospitals - Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang - last December boosted First Reit's gross revenue to $13.2 million, up 75.3 per cent year- on-year. Distributable income jumped 86.5 per cent to $9.9 million.

The Reit sold its Adam Road investment property, Adam Road Hospital, for $33 million. The gain on divestment is estimated at $8.7 million. Subject to confirmation from the Inland Revenue Authority of Singapore on the tax treatment, First Reit plans to distribute the gain, wholly or partially, to unitholders in the coming quarters.

First Reit is currently conducting regulatory due diligence for the proposed US$13 million purchase of Sarang Hospital in South Korea. It is also in preliminary discussions with its sponsor PT Lippo Karawaci Tbk to acquire two of its new hospitals in East Kalimantan, Indonesia.

Ronnie Tan, CEO of First Reit's manager Bowsprit Capital Corporation, said the Reit has a first right of refusal for properties owned by Lippo Karawaci, which has announced plans to develop 25 hospitals in Indonesia in the next five years.

Publish date:23/07/11

Fortune Reit's Q2 DPU rises 3.1%

Business Times - 23 Jul 2011

Fortune Reit's Q2 DPU rises 3.1%


FORTUNE Real Estate Investment Trust's (Fortune Reit) second-quarter distribution per unit (DPU) rose 3.1 per cent year on year to 6.07 HK cents. This implies an annualised distribution yield of 6.1 per cent as at yesterday's closing price of HK$4.

Consolidating total distributions year-to-date, Fortune Reit's DPU jumped 4.3 per cent to 12.8 HK cents as compared to 12.27 HK cents reported a year ago.

Income available for distribution during the quarter also grew by 3.7 per cent year on year to HK$102.03 million (S$15.8 million) from HK$98.4 million a year ago.

Underpinned by strong growth in Hong Kong's retail sector, the retail Reit also saw an improvement in net property income which rose 8.2 per cent year on year to HK$158.5 million for the second quarter ended June 30.

The stronger numbers were attributed to a pick-up in rental rates as well as improved overall occupancies across properties in the Reit's portfolio.

Occupancy rates have held up well over the period with Fortune Reit reporting a portfolio occupancy of 98.1 per cent as at June 30, 2011, as compared with 96.2 per cent registered a year ago. Notably, portfolio passing rent also climbed 10.2 per cent year on year to HK$30.3 per square foot as at June 30.

As at end-June, the Reit also saw higher values ascribed to its properties as its 14 retail malls were appraised at a valuation of HK$15.7 billion, which is 18 per cent higher than the valuation of HK$13.3 billion as at Dec 31, 2010. This triggered a revaluation gain of HK$2.4 billion for the period.

Due to an increase in the value of its investment properties, Fortune Reit's gearing has correspondingly fallen to 18.1 per cent as at June 30, 2011, from 21.0 per cent as at Dec 31, 2010.

According to Fortune Reit, with a cash balance of HK$592.4 million and a committed undrawn revolving credit facility of about HK$850 million as at the end of Q2, it possesses 'sufficient financial resources' to satisfy both financial and working capital commitments.

Unitholders will receive their interim distribution on Aug 29.

On future plans, the Reit's manager, ARA Asset Management (Fortune) Limited, said that it will seek to drive organic growth and execute asset enhancement initiatives (AEIs) across Fortune Reit's portfolio to unlock the potential of the properties.

Already, the AEIs at City One Plaza of City One Shatin Property are 'under planning and progressing well' with works expected to commence in Q3.

Fortune Reit gained two HK cents yesterday to close at HK$4.

Publish date:23/07/11

Eurozone takes significant steps to solve debt crisis

Business Times - 23 Jul 2011

Eurozone takes significant steps to solve debt crisis


THE eurozone still faces major fiscal and economic problems, but it has taken significant steps towards tackling the debt crisis.

Greece will get some relief, and the monetary union bailout fund, the European Financial Stability Facility, will take on a larger role, dealing both with possible market disruptions and longer-term financial issues.

This will help head off contagion in other indebted countries. And in exchange for these serious concessions from Germany, euro members have agreed on the principle of a rather mild- contribution from Greece's private creditors.

The plan still has holes that must be filled in. But the summit has shown that euro governments are able to agree - even after weeks of exposing their divisions in a self-destructive manner.

In recent weeks, the European Central Bank had hinted that it would use the nuclear option of dropping its support for Greek banks if the plan led to even the smallest 'selective' default. But now the ECB has got what it really wanted: stronger and firmer commitments by governments to shoulder more responsibility, and not leave the bank to clean up the mess.

Some Greek bonds may be subject to selective defaults, but governments will ultimately pick up the tab for the country's banks funding, and the EFSF contribute to their recapitalisation.

The ECB has also managed to get euro governments to promise that they will not consider private sector involvement ever again.

Euro leaders have left open the question of the EFSF's future size. Extending the fund's remit will require parliamentary approvals, and it remains to be seen whether its 440 billion euros (S$764.97 billion) potential firepower will be enough for its new missions. A large chunk is already committed to help Ireland and Portugal.

According to euro leaders' estimates, the plan could end up cutting Greece's debt load by 24 percentage points of gross domestic product. But debt was forecast to peak at more than 170 per cent of GDP in 2012, so Athens will continue to struggle under a heavy debt load. Other euro countries will also struggle for years as they adjust their finances and try to boost growth. But weaker states now know they can count on a firmer support. And that should help persuade markets not to bet against the eurozone's new-found resolve.

Publish date:23/07/11

Relief over Greek solution lifts local banks' shares

Business Times - 23 Jul 2011

Relief over Greek solution lifts local banks' shares

Analysts positive on all 3 banks' prospects, citing strong local and regional economies



THE three local banks rose again yesterday in line with market relief over a Greek deal.

United Overseas Bank (UOB) rose 0.85 per cent or 17 cents to a 52-week high of $20.16 on heavy turnover of 3.39 million shares. Its all-time high was $23.7252 on May 30, 2007.

DBS and OCBC closed higher by 0.8 per cent and 1.13 per cent to $15.10 and $9.88 respectively. Turnover for DBS and OCBC was 6.35 million and 5.92 million shares respectively.

Analysts have been positive about the prospects of the three banks, citing the strong local and regional economies.

They expect loans growth to be buoyant and broad-based despite more uncertainty in the US and Europe compared to three months ago.

Bank loans to businesses here grew 4.3 per cent in May, the fastest pace in over three years, signalling that corporate borrowing stayed robust in spite of increased anxiety.

Total Sing-dollar bank loans, including consumer loans, rose 3.5 per cent in May to $363.3 billion. Over the year to end-May, bank loans grew 24.2 per cent.

On Monday, HSBC said Singapore bank stock prices have remained range-bound for the past 18 months.

'We expect these stocks to break out of their trading ranges in the next 3-6 months as the market gains clarity on 2011 and shifts its focus to 2012,' it said.

HSBC said valuation multiples are attractive, with the sector trading at 1.3 times 2012 estimated book value and 11 times 2012 estimated earnings per share. 'Furthermore, downside is limited with a sector-average 5 per cent 2012 estimated dividend yield.'

HSBC analysts predict that UOB will maintain its lead as Singapore's most profitable bank.

Bank of America/Merrill Lynch in a July 20 note added UOB to its Asia-Pacific list of best stocks to buy in the region.

'We believe UOB is leading in volume. After lagging its peers in loan growth in FY10, UOB has seen a surge in lending in 1Q11 led by both its domestic and regional operations,' it said.

'At the same time, the group has indicated its strategy of realising the full potential of its regional platform by growing its profit contribution from corporates in the region from 30 per cent to 50 per cent by 2015. Similarly, the group intends to reap a similar share from its wealth management business in the region encompassing mass affluent and high net worth individuals,' said Bank of America/Merrill Lynch.

CIMB in its July 18 note said it remains positive about Singapore banks as it believes that the benefits of volume will show through in Q2 and margins will eventually tick up next year.

Valuations at 1.2-1.5 times price to book value are also attractive, it said.

'Such valuation support ensured that Singapore banks outperformed recently when markets turned shaky,' said CIMB, whose top pick is DBS, followed by OCBC. It said it has an underperform on UOB.

CIMB acknowledged that UOB is the best play on the buoyancy of Asean economies but said it is 'wary on UOB's book value downside from its European securities portfolio'.

It added: 'Evidently, the market is wary on similar issues as UOB's recent bout of underperformance came when Europe started to roil.'

DBS will release its second- quarter results on July 28, OCBC on Aug 4 and UOB on Aug 12.

Publish date:23/07/11

Lifeline for Greece lifts mood in the markets

Business Times - 23 Jul 2011

Lifeline for Greece lifts mood in the markets

Deal staves off threat of contagion, buys time and boosts bonds, equities and euro



A HUGE cloud of uncertainty was dispelled as Europe bailed Greece out of its debt crisis and simultaneously prevented the contagion from spreading to other European economies.

The deal lifted equities across the world, especially in the banking sector, boosted the euro and shored up Greek, Portuguese, Spanish, Irish and Italian bonds.

Uncertainty remains, however, as short covering by pessimistic bears was behind a sizeable proportion of the gains, dealers said.

The key to the European deal of 109 billion euros (S$189 billion) official aid and a further 50 billion euros from European and other banks is a more flexible role of? the European Financial Stability Facility (EFSF), the eurozone's 440 billion euros rescue fund. The EFSF? will be given broader powers to help prevent the debt crisis spreading to Italy and Spain.

Under the 16-point Thursday night agreement, the fund will be able to intervene on the secondary markets to buy up the bonds of struggling debtor countries from private investors. It can also take pre-emptive or 'precautionary' action to prevent a potential debt crisis by agreeing lines of credit, and supplying loans to struggling eurozone countries that need to underpin their banks. The cost of its? borrowings for Greece, Ireland and Portugal will be cut to 3.5 per cent, and maturities of loans doubled to 15 years. This move should have immediate benefits for those three countries - and lasting effects on the eurozone's fiscal cohesion, European finance ministers claimed.

The agreement also allows Greece to roll over maturing debt and pay a lower interest rate on its loans. Private sector banks will roll over Greek debt, with private investors accepting a reduction of 21 per cent on the market value of their debts. The investors will incur losses, but they will be much lower than recent depressed? market prices.

Investors will have the option to exchange existing Greek debt into four instruments. Three will be fully collateralised by AAA-rated zero-coupon securities and have a 30-year maturity, and the fourth will be for 15 years and partially collateralised by funds held in an escrow account.

The Institute of International Finance (IIF), which has led the negotiations for private investors, estimated that 90 per cent of creditors will sign up. Deutsche Bank, HSBC, BNP Paribas, Allianz and AXA are among the firms prepared to agree to the new terms.

Following the agreement, two-year Greek debt, which were trading on extraordinary yields of 40 per cent a few days ago, were being priced on yields of around 26 per cent. Italian and Spanish bonds climbed for a fourth day, with the yields on 10-year debt falling to 5.25 per cent and 5.62 per cent, respectively. Both exceeded 6 per cent a few days ago. The euro was little changed at US$1.4410 yesterday after jumping as much as 1.6 per cent on Thursday.

Despite optimism in the markets some fear that there could be a future? reversal in volatile conditions.

Willem Buiter, chief economist at Citigroup, stressed that the size of the EFSF, also known as the 'bad bank', will have to be raised urgently to fund crisis-ridden? nations and banks. He suggested that unless there is a firm undertaking a renewed crisis could take hold in September or even in the coming weeks.

The official statement of European finance ministers lacks detail in key areas such as private sector involvement for Greece and collateral requirements,? Barclays Bank contended.? Jonathan Loynes, chief European economist at Capital Economics Ltd in London, was sceptical, saying that the pact still didn't 'make a significant dent' in Greece's debt. He doubted that the latest? package alone would? prevent? a renewed debt crisis in Europe. Fitch and other rating agencies also? hinted that the rescue was a technical default for Greece. In this event? Greece would become the first Western developed world country to default in more than 60 years.

Michael Weber, head of Global Credit Research at Credit Suisse, noted that markets had soared because European policymakers' proposals went 'beyond what probably most participants were looking for'.

He agreed with Mr Buiter? that the 'firepower' of the EFSF remains too small to provide fully credible guarantees for large debtor countries such as Spain or Italy.

'Renewed speculative attacks on their bonds cannot be fully excluded, especially if there is insufficient progress on the fiscal front or if economic growth were to remain very weak,' he added.

Publish date:23/07/11




置富产业信托(Fortune REIT)主席赵国雄认为,香港住宅区的邻里商场有很强的抗跌性,不管经济好坏都会有生意做。






 ∷担骸霸诰煤玫氖焙颍嗣腔峄ū冉隙嗲痪退闶窃诰盟ネ耸保嗣腔峒跎僭谟槔址矫娴目В粼诩依镒龇梗残枰虿撕腿沼闷罚虼耍突岬礁浇墓何锷坛」何铩!?p>  除了打算通过收购新项目来扩大产业信托的资产组合,促进信托的回报率外,置富产业也通过资产提升计划,逐步为旗下的资产增值。




















Source/转贴/Extract/Excerpts: 联合早报
Publish date:23/07/11

1.21:1 新元兑美元再创新高

1.21:1 新元兑美元再创新高












Source/转贴/Extract/Excerpts: 联合早报
Publish date:23/07/11

希腊利好消息带动亚洲股市 海指创三个月来新高

希腊利好消息带动亚洲股市 海指创三个月来新高







  日兴资产管理公司(Nikko Asset Manage-ment Co.)驻新加坡首席投资师黄树南表示,欧洲看来已避免希腊债贷问题持续升温,这足以让处于现水平的市场来个强力回弹。  






Source/转贴/Extract/Excerpts: 联合早报
Publish date:23/07/11



新加坡电信公司(SingTel)昨日宣布成立价值达18亿9000万元的商业信托NetLink Trust,注入该信托的资产和业务是:新一代全国宽网(NGNBN)网络公司开蓪网络私人有限公司(OpenNet)使用的管道(ducts)和沟井(manholes),七座电信转驳站,以及新电信有关这些资产的提供管道与沟井服务的业务。
  负责经营NetLink Trust的信托经理将是新源基础建设信托(CitySpring)的独资子公司——CityNet基础设施管理公司(CityNet Infrastructure Management)。新电信将是NetLink Trust商业信托的最初和唯一的单位信托持有者。CityNet将有以独立董事占大多数的董事会,而新电信有权委任不超过30%的CityNet董事。


  设立这个商业信托,是新电信履行当初在有关新一代全国宽网合约里的承诺。在2008年,新电信持有30%股权的开蓪网络公司成功获选为新一代全国宽网的网络公司(network company)。

  新电信向新加坡资讯通信发展管理局(IDA)承诺,要把有关的基础设施资产转入一家与它完全分开的机构,以遵守资信局对网络接达的有效开放的要求。新电信也承诺在2014年4月以前,把在该机构(意即NetLink Trust)的股权从目前的100%减少到25%以下,这事也还必须得到有关当局的批准。


  显而易见,如果NetLink Trust要挂牌上市,则还需要得到新交所的批准。



  NetLink Trust的顾客包括电信公司,例如新电信和开蓪网络。它的收入将主要来自提供有关设施让客户使用的收费以及经营和维护服务的收费。

新电信和CityNet也签署服务和租赁合约,新电信将为它目前在NetLink Trust的管道里的铜和光纤电缆,支付每年约2000万元的租费,为期25年,并可更新另外25年。
  开蓪网络则将为它在NetLink Trust的管道里的光缆,支付固定费用和可变动费用给新电信,固定费用部分预期每年为2000万元。新电信将为租用在有关七座电信转驳站的空间,每年支付约1200万元费用。

  新电信也指出,联号公司NetLink Trust的业绩将计入新电信的业绩里。新电信在经营和维持NetLink Trust方面,将承担额外的成本,有关成本预期每年不超过2000万元(包括每年支付给CityNet的约210万元管理费)。

Source/转贴/Extract/Excerpts: 联合早报
Publish date:23/07/11

Top Republican breaks off debt talks with Obama

On Saturday 23 July 2011, 7:54 SGT

By Andy Sullivan and Matt Spetalnick

WASHINGTON (Reuters) - U.S. House Speaker John Boehner broke off talks with President Barack Obama on Friday on a deficit-reduction deal to prevent a devastating default and said he would try to hammer out an agreement through the Senate.

In a dramatic turn of events with the deadline to raise the U.S. debt ceiling just 11 days away, a stern-faced Obama expressed frustration at the Republican leader's move, saying it was "hard to understand why Speaker Boehner would walk away from this kind of deal."

Boehner, in a letter to fellow lawmakers, said he and Obama were unable to reach agreement on a broad deficit reduction package they had been negotiating and that the two "had different visions for our country."

A deep divide over tax revenue was at the heart of the collapse in negotiations, which derailed an effort to craft a sweeping $3 trillion deficit-cutting plan that now seems beyond reach. Both sides blamed the other for the impasse.

With the Aug. 2 deadline fast approaching for Congress to increase the $14.3 trillion debt ceiling, Boehner said he would begin talks with Senate leaders to "in an effort to find a path forward." An aide said a deal needs to be set by Monday.


"We have now run out of time," Obama told reporters. He insisted he had made an "extraordinarily fair" offer to Boehner but when the Republican stopped returning his calls on Friday it became clear that he would not accept it.

The president said he was summoning Democratic and Republican leaders to the White House on Saturday in a last-ditch effort to find a path forward on raising the debt limit.

Failure to act could push the United States back into recession and unleash global financial chaos.

Obama warned that failure to reach an agreement on the debt ceiling would also increase the chance of a harmful downgrade in America's top-notch credit rating.

Putting the onus on Obama, Boehner said: "The president is emphatic that taxes have to be raised. As a former small businessman, I know tax increases destroy jobs.

Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion in assets, told Reuters: "If not reversed within the next few days through crisis negotiations, this breakdown will be highly detrimental to the already-fragile health of both the US and global economies."

The rancorous breakdown in talks came after Obama earlier on Friday said he was prepared to make "tough choices" for a sweeping deficit-reduction deal to avert a default, despite Democrats warning him not to make too many concessions.

The Democratic president at the time appealed for compromise by both parties as he and Boehner, the top Republican in Congress, pursued a plan for up to $3 trillion in spending cuts.

Obama had faced increasingly vocal complaints from his own Democrats on a deal-in-the-making that could mean painful curbs in popular health and retirement programs but no immediate increase in taxes.

Republicans have refused to accept a deal for raising the debt limit if it includes revenue increases.

Attention now turns to the Senate, where negotiations are likely to resume on a convoluted plan put forth by Republican Senate leader Mitch McConnell that intended as a fallback option if all else failed.

Publish date:23/07/11

MAS raps GLP

by Arthur Sim
04:45 AM Jul 23, 2011
SINGAPORE - The Monetary Authority of Singapore (MAS) has let Global Logistics Properties (GLP) off with a light slap on the wrist for a lapse in judgement it made 10 months ago when it lodged its IPO prospectus.

MAS said it has decided after an investigation that it will not take regulatory action against GLP in relation to the omission of information concerning a non-competition arrangement between GLP and ProLogis Inc.

MAS said in statement yesterday that, while GLP did not breach the Securities and Futures Act (SFA), "it should not have chosen a narrow and technical assessment of the materiality of the non-competition arrangement".

It also said that GLP should have been more prudent and disclosed the arrangement in its prospectus. "We have reminded GLP of its responsibility as a public-listed entity to exercise greater prudence when assessing its disclosure obligations in future," MAS said.

GLP is a Government of Singapore Investment Corp (GIC)-linked company, which listed on the Singapore Exchange in October in 2010. It raised about S$3.9 billion to become the second-largest IPO.

When it became known that it had failed to disclose a non-competition deal with Prologis from which it had acquired US$1.3 billion (S$1.57 billion) of property assets in China, eyebrows were raised because Prologis would have been a potential competitor.

At the time, GLP maintained that its prospectus "had not qualified that ProLogis is restricted from competing against the company in China under the non-competition arrangement". It added: "In this regard, the company had in its prospectus already treated ProLogis as an existing potential competitor in the same manner as its other potential competitors."

GLP also did not disclose that it was restricted from developing facilities in Japan for a certain period.

MAS stepped in to investigate if GLP had breached the SFA after the omissions were revealed by the media. In its statement, MAS said it had "carefully assessed the circumstances of the case, including whether the omission significantly altered the information mix available to investors."

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:23/07/11

Asian rates can only rise

The Star Online > Business
Saturday July 23, 2011

Asian rates can only rise


Policy measures are becoming increasingly complicated in the region as governments seek to balance between growing their economies and containing further domestic price increases

WITH Malaysia’s headline inflation, as measured by the consumer price index (CPI), accelerating to its highest level in 27 months in June, most economists bet that the country’s central bank would resume its rate normalisation process by calling for an overnight policy rate (OPR) hike at the next monetary policy committee (MPC) meeting scheduled for early September.

Early this month, Bank Negara had refrained from raising the OPR, keeping it unchanged at 3%, at the MPC meeting. The move surprised the market that had been expecting a rate hike by the central bank then to somewhat manage inflation and reduce financial imbalances in the system. The central bank had instead chosen to raise the statutory reserve requirement (SRR) ratio by 100 basis points to 4% to manage the significant build-up of liquidity in the country’s financial system.

Concerns about the country’s economic growth prospects due to heightened uncertainties arising from global developments were cited as the central bank’s rationale for not raising the OPR. In its statement, Bank Negara noted that Malaysia’s gross domestic product growth in the second quarter of this year had slowed as a result of slower trade, supply chain disruptions and lower public sector spending. Worry about the country’s growth prospects had hence outweighed policymakers’ worry about rising inflation.

Last month, Malaysia’s CPI accelerated to 3.5% year-on-year (y-o-y) from 3.3% y-o-y in May due to higher energy, transportation and food prices. The appetising news is, June’s inflation could probably have peaked, and the months ahead would likely see inflationary pressure receding – at least that’s what many economists are telling us. And at the same time, concerns about faltering economic growth in the quarter ahead would likely ebb, as growth momentum is seen to be regaining some strength through the second half despite the ongoing external uncertainties.

Most economists, therefore, think it makes sense to expect Bank Negara to raise the OPR by another 25 basis point to 3.25% by September. This is based on Bloomberg’s survey of 10 economists who support a hawkish view.

Bank Negara least predictable

Over the week, Bloomberg reported Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz as saying it was “important to place priority on inflation because, unattended, it would result in damaging growth prospects”.

“We have to evaluate the conditions and going forward, we don’t want to have second-round effects that result in high inflation as that will erode purchasing power and that will eventually contribute to lower growth,” she told the newswire, while attesting that Malaysia’s second-half growth would be stronger than the first half, bringing the full-year growth to 5% to 6%.

Zeti was also quoted as saying that the current benchmark policy rate of 3% was still considered “quite low”, pointing out the central bank’s rate normalisation effort had not inhibited the country’s growth as demand for credit was still strong.

Economists say Zeti’s words only provided further hints of a rate hike ahead, which they think is warranted as part of an effort to narrow the negative real interest rate differential between the OPR and inflation.

Still, it can be difficult to predict Bank Negara’s move at times.

According to a survey done by Credit Suisse, more than 25% of the time, the consensus view would get it wrong on Bank Negara’s policy rate decision. The score put Malaysia’s central bank as the least predictable in the region as far as policy rate decisions are concerned.

“The central bank surprised both with its decision not to raise hikes when inflation was soaring in 2008 as well as to raise rates in April 2010 and then again in May this year,” the report said, adding that Bank Negara had also been the least active central bank in the region in terms of changing policy rates, with the country’s OPR having changed just nine times over the last five years and moving within a tight range of 125 basis points (2.25% to 3.5%) during what was deemed to be the most volatile period for the domestic economy due to the global economic crisis.

The survey was done based on data compiled for the last five to six years. It included central banks from Indonesia, Thailand, Taiwan, India, South Korea and the Philippines, but excluded China, Hong Kong and Singapore. This is because China’s central bank does not have a published meeting schedule, while Hong Kong and Singapore do not operate an interest-rate policy.

Although Asian economies have yet to wean itself off reliance on exports to the United States and Europe, they are expected to be able to sustain a healthy growth momentum over the medium term.

According to International Monetary Fund (IMF) 2011 estimates released last month, developing economies in Asia would grow 8.4%, outpacing the growth of 2.5% for the United States and 2% for the eurozone.

The Washington-based global lender said recently that it expected China to continue driving global economic development. Although there are signs of the dragon economy slowing down, IMF said the country would likely be able to maintain a robust growth rate at an estimated 9.6% this year.

Economists expect to see further policy tightening in China to prevent the economy from over-heating. While the country’s economy had been growing strongly compared with the rest of the world, it saw its inflation rate last month rising to a troubling 6.4%. The key challenge for China, therefore, remained in balancing the need to contain rising inflation and sustaining strong growth momentum through transformation of its economy.

That’s a common challenge for other economies in Asia as well, says Royal Bank of Scotland’s global head of research and strategy David Simmonds.

He explains to StarBizWeek that it is not the lack of growth that Asian economies should be worried about. Despite the ongoing uncertainties in the western developed, London-based Simmonds says he believes that the economies in Asia could continue to grow healthily on the back of growing intra-regional trade.

While acceding that Asia will not be totally insulated from the economic ills in the western developed economies, he says the region would be less exposed to those problems as the region has become increasingly efficient in terms of allocation of its resources. In addition, Asian economies in general have healthier financial systems.

“Policy-making, though, has become increasingly complicated for Asia,” Simmonds says, pointing to the risk of inflation that could diminish the wealth of the people. The focus in this region has to be about getting growth and inflation balanced, while the challenge for the United States and European Union really is about getting growth,” he explains, adding that he believes Asia would continue to see further rate hikes in the months ahead, while rates in western developed economies would remain low for a prolonged period,” he says

Source/转贴/Extract/Excerpts: The Star Online
Publish date:23/07/11

MAS: Azmil quit talk mere speculation

The Star Online > Business
Saturday July 23, 2011

MAS: Azmil quit talk mere speculation


PETALING JAYA: Malaysia Airlines (MAS) has dismissed as mere speculation talk that its managing director and chief executive officer, Tengku Datuk Azmil Zahruddin, may step down.

“This is mere speculation,” said a MAS spokesperson in an SMS reply to queries from StarBizWeek on whether or not there was basis to the rumour that a change at MAS’ top seat was imminent. “With regards to rumours of Azmil leaving MAS as MD and CEO, this is just speculation,” the spokesperson said, adding: “He has another year’s run on his term.”

A month ago, market talk surfaced that Azmil might step down from his post. Azmil joined the board of MAS in August 2004 and a year later was appointed executive director. In 2006, he was appointed chief financial officer. He took over as MD/CEO after Datuk Seri Idris Jala left to join the Government in August 2009. Azmil’s contract with MAS runs till August 2012.

The airline’s recent sharp drop in earnings for the first quarter this year had raised questions on why the airline was still in the red when other airlines operating in similarly challenging environment were able to report a profit. This, says an observer, may have led to such rumours of resignation at the top.

Boardwise though, there was a significant development over the week. MAS announced that Tan Sri Munir Majid would stand down as chairman at the end of the month when his current term expires. He has held that position since August 2004.

A week before that, there was a significant change at senior management level when MAS senior general manager (sales and marketing) Datuk Bernard Francis resigned.

His resignation happened five months before his contract was to expire.

Francis, who had been with the carrier for nearly six years, handed in his resignation letter on July 3. On July 5, Azmil, who is now the commercial director, sent an e-mail to the management team informing them about Francis’ departure and that a restructuring was on the cards.

Source/转贴/Extract/Excerpts: The Star Online
Publish date:23/07/11

Friday, July 22, 2011

令吉寫2.9715 亞洲貨幣全面上揚

令吉寫2.9715 亞洲貨幣全面上揚
















Source/转贴/Extract/Excerpts: Oriental Daily
Publish date:23/07/11

2011-0720-57金錢爆(美國立春 歐洲冬至??)

Source/转贴/Extract/Excerpts: youtube
Publish date:20/07/11

Suntec Reit DPU for Q2 edges up

Business Times - 22 Jul 2011

Suntec Reit DPU for Q2 edges up

Income available for distribution jumps 22.3% to $56.2m


SUNTEC Real Estate Investment Trust's income available for distribution rose 22.3 per cent to $56.2 million for the second quarter ended June 30.

However, distribution per unit (DPU) for Q2 2011 came in only marginally higher at 2.532 cents as compared with the 2.528 cents recorded during the same period a year ago. This gives an annualised yield of 6.6 per cent based on yesterday's closing price of $1.535.

Coupled with distributions in the first quarter of 2011, Suntec Reit's H1 2011 DPU now stands at 4.92 cents.

ARA Trust Management (Suntec) Ltd, the manager of Suntec Reit, said yesterday that the gross revenue for the second quarter of $61.3 million came in 1.8 per cent lower year on year due to weaker office and retail revenues.

Gross revenue for H1 2011 stands at $122.3 million, down about 2 per cent year on year.

Correspondingly, Q2 2011 and H1 2011 net property income for the Reit came in 1.1 per cent and 1.7 per cent lower year on year at $46.9 million and $93.6 million respectively.

But overall committed occupancy remains stellar as at end June. The committed occupancy of Suntec City Office Towers stood at a high of 99.5 per cent while the Park Mall office maintained full occupancy take-up.

Similarly, amongst the Reit's retail properties, committed occupancy stayed stable at 97.1 per cent for Suntec City Mall and 100 per cent for both Park Mall and Chijmes.

For jointly controlled properties, One Raffles Quay attained full occupancy status while MBFC Properties' committed occupancy numbers came in at 97.4 per cent.

The overall committed occupancy for Suntec Reit's office and retail portfolio stood at 99.1 per cent and 97.7 per cent respectively as at June 30.

Suntec Reit's shares were last traded at $1.535.

Publish date:22/07/11

CMA Q2 profit surges; HK listing towards year-end

Business Times - 22 Jul 2011

CMA Q2 profit surges; HK listing towards year-end

Higher revaluation gains boost results; revenue falls after divestment


CAPITAMALLS Asia is looking at finalising its dual listing on the Hong Kong bourse towards year end.

The group is also improving its dividend payout to shareholders this year after record strong gains in its Q2 and first-half earnings on the back of higher revaluation gains on its properties.

This was achieved despite lower revenue following the divestment of three malls in Malaysia to CapitaMalls Malaysia Trust (CMMT) and Clarke Quay in Singapore to CapitaMall Trust (CMT).

CMA is rewarding shareholders with an interim dividend of 1.5 cents per share and expects to pay another dividend of at least the same quantum for the full year, taking total payout for 2011 to at least 3 cents per share. CMA had paid 2 cents for 2010 and one cent for 2009.

On the stockmarket yesterday, CMA ended 0.5 cent lower at $1.45. It was floated in November 2009 at $2.12.

For the second quarter ended June 30, 2011, net profit doubled to $164.9 million from $82.1 million (restated) in the same year-ago period.

First-half net profit increased 45.7 per cent from $146.9 million in H1 2010 (restated) to $214 million in H1 2011. The group booked a higher revaluation gain of $143.3 million in H1 2011, compared with $19.5 mllion in H1 2010.

ION Orchard in Singapore was valued at $2.68 billion as at end-June 2011, an increase of 2.72 per cent from $2.609 billion at end-December 2010. ION's latest valuation works out to $4,288 per square foot on its net lettable area of 624,937 sq ft. CMA has a 50 per cent share in ION; the other half is owned by Hong Kong's Sun Hung Kai. All eyes in the market are on when CMA divests its stake in ION to its Singapore-listed sponsored real estate investment trust (Reit), CMT.

ION's latest valuation was based on a capitalisation rate of 5.25 per cent and reflects a property yield of 5.4-5.5 per cent.

CMA's CEO Lim Beng Chee indicated that when the group would divest ION or any of its other malls would depend on when acquisition opportunities arise for which the divestment proceeds can be reployed to generate at least the same if not higher returns than the divested assets.

Three quarters or $107.6 million of the $143.3 million net revaluation gain in H1 was from operating malls. The rest was from three malls in China which are under development.

CMA's portfolio (including properties held by its sponsored Reits) comprises 70 operating malls in China, Singapore, Japan, Malaysia and India. In addition it has 25 malls under development. The total portfolio of 95 malls have a property value of about $25.6 billion and combined gross floor area of about 75 million sq ft.

The group announced four acquisitions in H1 2011 - New Minzhong Leyuan Mall in Wuhan (by CapitaRetail China Trust), the proposed purchase of East Coast Mall in Kuantan by CMMT, CMT's purchase of Iluma in the Bugis area and CMA's 50 per cent stake in the Jurong Gateway retail and office project in Singapore.

The first half has also seen the opening of two malls so far this year - Minhang Plaza in Shanghai and The Celebration Mall in Udaipur, India.

Another three properties are slated for opening in H2 this year - CapitaMall Xuefu in Harbin, CapitaMall Crystal in Beijing, and Hongkou Plaza in Shanghai. Another eight are set to be rolled out next year including CapitaMall Rizhao, whose target opening date has been postponed from later this year to the second quarter of 2012 to allow its tenants to capture some of the summer crowd.

Other malls that are scheduled to open next year include JCube in Jurong East and a mall in the one-north area in Singapore as well as malls in Wuhan, Xian, Beijing and Chengdu.

CMA remains in net cash position.

CMA's cash and cash equivalents fell 9.6 per cent from $1.32 billion at end-Dec 2010 to $1.19 billion at end-June 2011. Inclusive of undrawn credit facilities of about $1.1 billion, CMA has total liquidity of $2.3 billion.

About $1 billion is committed to be disbursed in H2 2011 for projects like Jurong Gateway as well as a mixed development project in Bedok.

CMA has 50 per cent stakes in each project.

For Q2 2011, CMA's group revenue slipped 13.9 per cent year on year to $62.8 million, while H1 2011 revenue declined 23.4 per cent to $113 million.

Net asset value per share rose from $1.50 at end-2010 to $1.52 at end-June 2011. Earnings per share (EPS) rose from 2.1 cents in Q2 2010 (restated) to 4.2 cents in Q2 2011. First-half EPS increased from 3.8 cents (restated) to 5.5 cents.

Publish date:22/07/11

Strong Sing $ pushes MAS into the red

Business Times - 22 Jul 2011

Strong Sing $ pushes MAS into the red

It posts record loss of $10.9b for year ended March 31


(SINGAPORE) The Monetary Authority of Singapore (MAS) posted a record net loss of $10.9 billion for the year ended March 31, 2011, as the strong Singapore dollar more than offset investment gains of $12.3 billion in the period.

This put MAS in the red for only the second time in its 40-year history - the first being the net loss of $9.2 billion reported two years ago, at the height of the global financial crisis.

Back then, weaker investment returns were a chief cause, but this time round, larger translation losses were what tipped MAS into a loss, said managing director Ravi Menon.

'With recovery in asset markets over the past two years, MAS' portfolio, excluding exchange rate effects, has more than recovered from effects of the global financial crisis,' Mr Menon said. The loss is hence the result of 'a reporting convention', Mr Menon pointed out. If MAS reported its financial results in foreign currencies such as the US dollar or SDRs, as some central banks do, it would reflect a 'healthy profit', he noted.

Stronger global growth drove an upturn across many asset classes, resulting in income and net capital gains of $12.3 billion from MAS' diversified investments.

The Singapore dollar rose 10 per cent against the US dollar and 5.5 per cent against the euro in the course of the year ended March 31, Mr Menon said. It strengthened to a record $1.2119 against the US dollar yesterday.

The strong Sing dollar's impact on reserves must be viewed in the context of what reserves are used for and what the stronger Sing dollar achieves, Mr Menon said at MAS' annual report media briefing yesterday.

It is the foreign currency value of the reserves that matters, since MAS' foreign reserves are primarily meant to 'support the Singapore dollar in times of stress, and finance imports in times of crisis', he explained. 'The international purchasing power of our reserves is unaffected by the strength of the Singapore dollar,' Mr Menon said.

Also, the stronger Singapore dollar has helped to partly shield Singaporeans from global inflation. Domestic prices of oil-related items rose only 10 per cent in FY2010, compared to the 20 per cent hike in global oil prices, while the rate at which food prices here rose was also half that of Singapore's major trading partners.

With persistent inflation risks and moderating growth, market economists' consensus is now for the central bank to maintain its current policy stance of a gradual appreciation of the Sing dollar's nominal effective exchange rate, when the October policy review comes round. MAS manages the currency within an undisclosed band, against a basket of currencies of Singapore's major trading partners.

As at the end of March, MAS held $299.8 billion in assets, with foreign financial assets making up $287.7 billion.

Publish date:22/07/11

Inflation back on radar, risks to growth rise

Business Times - 22 Jul 2011

Inflation back on radar, risks to growth rise

MAS raises inflation forecast to 4-5% for the year; growth may touch lower end of 5-7% forecast


(SINGAPORE) The Monetary Authority of Singapore (MAS) yesterday raised its inflation forecast for this year and warned of significant risks in the world economy that could jeopardise Singapore's growth.

MAS now expects inflation of 4-5 per cent for the whole of this year, compared to its earlier forecast of 3-4 per cent, due to an unexpected surge in accommodation and private road transport costs, MAS managing director Ravi Menon told reporters at a briefing yesterday.

He also warned that Singapore's economic growth for 2011 could fall at the lower end of the official forecast range of 5-7 per cent due to ongoing uncertainties in the global economy, especially the sovereign debt crisis in Europe.

The Trade and Industry Ministry and MAS are reviewing the growth forecast for 2011, Mr Menon said. 'For now, our sense is that the 5-7 per cent forecast range remains intact. But if the pick-up from the downturn in Q2 is weaker than currently expected, growth could come in at the lower half of the range.'

The central bank's monetary policy stance set in April of allowing the Singapore dollar to strengthen gradually against the currencies of its major trading partners 'remains appropriate', he added.

Its forecast for 'core' inflation, which excludes accommodation and private road transport costs, remains unchanged at 2-3 per cent for the whole of 2011, Mr Menon said.

But MAS faces a 'tough decision' at its next monetary policy meeting in October, DBS economist Irvin Seah said. If it chooses to strengthen the Sing dollar even more to fight inflation, that would likely hurt economic growth.

'With growth momentum slowing and inflation rising, this poses a policy dilemma for the central bank,' Mr Seah noted.

But the persistent inflation pressure 'suggests little chance of MAS easing' its current stance, Citigroup economist Kit Wei Zheng said.

The pace of inflation, as measured by changes in the consumer price index (CPI), eased from 5.5 per cent in January to 4.5 per cent in May.

But accommodation and private road transport costs - which make up 20 per cent and 11.7 per cent, respectively, of the CPI basket that is used to track price changes - have remained stubbornly high. Accommodation costs surged 9.4 per cent over the year to May, while private road transport costs increased by 9.2 per cent over the same period, Department of Statistics data show.

An unexpected surge in the number of tenancy contracts being renewed at higher rental rates is driving accommodation costs up - a phenomenon that could persist into the second half of this year, Mr Menon said. The cost of certificates of entitlement (COE) to own cars has also risen more quickly than expected, reflecting rising incomes and sharp cuts in COE quotas.

'I mentioned two months ago in a speech that headline CPI inflation had probably peaked. This remains technically correct but less clearly so in substance,' Mr Menon said. 'Inflation has indeed eased from 5.5 per cent in January to 4.5 per cent in April and May. But inflation is expected to creep back up to slightly above 5 per cent for the next couple of months before slowly trending down towards the end of the year.'

Core inflation, the measure that MAS focuses on when setting monetary policy, is much lower 'but stubborn', at 2.2 per cent in April and May, Mr Menon pointed out. 'We would like to see it a touch lower, closer to the historical average of 1.7 per cent.'

Strong employment and domestic spending as well as high commodity prices are keeping overall prices here high despite a stronger Sing dollar, he added.

So far this year, the Sing dollar has risen by over 5 per cent against the US dollar. On a trade-weighted basis, it has strengthened by over 3 per cent against the currencies of its major trading partners, according to Goldman Sachs estimates.

'The strong exchange rate has capped upward pressure on prices,' Mr Menon said. 'MAS will continue to keep a close watch on inflationary pressures and developments in our key export markets.'

Publish date:22/07/11

Suntec REIT: MBFC booster (DMG)

Suntec REIT: MBFC booster
(BUY, S$1.54, TP S$1.72)
2Q11 results in-line with expectations.
Suntec REIT (Suntec) reported 2Q11 DPU of 2.532S¢ (+6.0% QoQ; +0.2% YoY), which represents 26% of our FY11 estimate. Net property income declined by 1.1% YoY (+0.5% QoQ) mainly due to lower rental income from retail space. Suntec City Mall’s average passing rent fell for the 9th quarter out of the last 11 quarters due to negative rental reversion. Meanwhile, total income from JV rose 132% YoY to S$26.9m (+14.6% QoQ) on the back of strong contribution from MBFC, marginally offset by drop in ORQ contribution due to decline in income support. Maintain BUY with slightly higher TP of S$1.72 derived based on DDM (COE: 8.8%; TGR: 2.3%). Our TP was raised due to half-year rollover of our DDM valuation, marginally offset by higher COE (prev 8.4%) and lower terminal growth rate (prev 2.9%).

DPU expected to decline in 2H11.
Given bulk of the leases at ORQ will only be up for renewal in 2015 (86.3% of NLA for renewal), we expect the positive rental reversion will not be sufficient to make up for the income support loss at ORQ in 2H11 and FY12.

Retail rental growth remains sluggish due to new supply in city centre.
Suntec City Mall continued to experience negative rental reversion and saw its average passing rent fell 1.1% QoQ (-5.0% YoY) to S$10.16 psf pm. We believe the declining passing rent is predominantly due to upcoming supply of 1.2m sqft of retail space in Downtown Core and Orchard areas between 2H11 and 2015.

Positive office rental reversion beginning 1Q12.
New leases secured in 2Q11 at Suntec City Office rose 0.7% QoQ to S$9.28 psf (+30% YoY). Buoyed by the sharp rise in prime office spot rents which rose 27.5% YoY in 2Q11 (+2.3% QoQ), we believe Suntec City Office will be able to experience positive rental reversion beginning 1Q12.

Source/转贴/Extract/Excerpts: DMG & Partners Research
Publish date:22/07/11

AirAsia: ANA joint venture (ecm)

12-month upside potential
Target price 3.56
Current price (as at 21 July) 3.67
52-week range (RM) 1.40 – 3.67
ANA joint venture
AirAsia has formalised a 49:51 joint venture with All Nippon Airways to establish a low cost airline in Japan which is expected to commence operations in August 2012. While we are positive on this news, it is premature to impute any earnings upgrade at this juncture. As AirAsia has already achieved our target price, we downgrade it from buy to HOLD. While we expect the impending listing of its associates and affiliate to be positive newsflow in the near term, persistent high fuel cost remains a concern
although there is sign of moderation.

_ AirAsia has executed a shareholders agreement with All Nippon Airways Co., Ltd (ANA) of Japan yesterday to formalize a joint venture to establish a low cost airline in Japan which will be name as AirAsia Japan Co., Ltd. (AirAsia Japan).

_ In compliance with Japanese Aviation laws on foreign shareholding, AirAsia will hold a 33% voting shares and 16% non-voting shares in AirAsia Japan while ANA will hold the balance 51%.

_ AirAsia Japan will require an initial capitalization of JPY 1bn (RM38m) and the JV will be further capitalised gradually over time. AirAsia’s share of initial equity injection amounts to about RM18.6m which will be funded by internal funds.

_ Subject to the procurement of an Air Operators Certificate (AOC) from Japan Civil Aviation Bureau, AirAsia Japan is expected to commence flight operation in August 2012 with an initial fleet of 3-4 A320 aircrafts in the first year. It will be operating from Terminal 2 of Narita International Airport, Tokyo.

_ AirAsia Japan will serve the Japanese domestic market and the North East Asia countries such as South Korea, Taiwan and China.

_ We are positive of this news as it will further strengthen AirAsia’s foothold as Asia largest low cost carrier. Through its AirAsia X affiliate, AirAsia currently operates long haul flights to Haneda Airport, Tokyo.

_ We view Japan as a lucrative market for AirAsia given its large population of 127m while the greater region of North East Asia has a population of 500m. In 2010, there were 14.7m Japanese travelling abroad with 5.1m visitors from the North East Asia.

_ Although Japan is a matured aviation market, the proliferation of low cost carriers is still at infancy stage.

_ The presence of ANA, Japan’s largest airline, as a JV partner will allows AirAsia Japan to capitalise on the former’s clout in Japan aviation industry. ANA will play contributing role as a partner in setting the foundation of schedule flights such as transfer of slots and pursue new traffic rights.

_ While management guided that AirAsia Japan is expected to be profitable from its first year of operation, we maintain our estimate at this juncture until there is better clarity on aircraft procurement, AOC approval, and flight commencement.

Valuation and recommendation
_ Target price is unchanged at RM3.56 based on mid-CY12 valuation of 10x PE. _ As AirAsia has already achieved our target price, we downgrade it from buy to HOLD.

_ While we expect the impending listing of its associates and affiliate to be positive newsflow in the near term, persistent high fuel cost remains a concern although there is sign of moderation.

Source/转贴/Extract/Excerpts: ECM Libra Capital
Publish date:22/07/11

AirAsia: Konnichiwa Japan (CIMB)

AirAsia Bhd
RM3.67 Target: RM4.70
Konnichiwa Japan
. AirAsia Japan becomes reality
AirAsia lives up to its name. AirAsia confirmed yesterday that it will be setting up a joint venture in Japan with All Nippon Airways (ANA). We reiterate our positive view of this JV as per our 18 July in-depth report [PDF] as Japan is a huge untapped market with a very low LCC penetration rate. After establishing three successful airlines in
Southeast Asia, AirAsia has two more Asean JVs in the pipeline and now AirAsia Japan. As the largest airline in Japan, ANA is a good partner for AirAsia while AirAsia brings invaluable experience in the LCC industry as well as its mega orderbook of 286 A320/320neos. We maintain our OUTPERFORM rating and upgrade our target price to RM4.70 (10x CY12 core P/E) from RM4.20 (9x). The potential re-rating catalysts are associate listings and the take-off of new JV airlines.

The news
AirAsia and ANA announced in a joint media release yesterday that they will team up to form a new Japanese LCC. Here are the key points from the official releases.
• The new JV will be called AirAsia Japan and will be established next month. In September/October, AirAsia Japan will apply for the Air Operators' Certificate (AOC). The first flight is expected to take off in August 2012, subject to regulatory approvals.

• AirAsia expects the JV to be profitable in the first year of operations. AirAsia Japan intends to operate 3-4 A320s in its first year.

• AirAsia Japan will serve the Japanese domestic market and the north Asian countries of South Korea, Taiwan and China. The north Asian region has a limited open skies policy where three airports in South Korea, eight airports in Japan and 22 airports in China permit unlimited frequencies between each other. Flights may also be deployed to northern Philippines and eastern Russia.

• AirAsia will hold 33% voting shares and 16% non-voting shares in AirAsia Japan while ANA will hold the balance 51%. With a 49% economic interest, AirAsia will be able to equity account the JV.

• The initial base of AirAsia Japan will be Terminal 2 of Tokyo’s Narita International Airport whereas ANA will operate from Terminal 1. Narita Airport is seeking to increase capacity with the introduction of a new terminal and is expected to attract many LCCs and foreign airlines.

• The JV will require an initial capitalisation of ¥1bn (US$13m/RM38m). More capital will be injected at a later stage as and when necessary.

• ANA will transfer airport slots and pursue new traffic rights for the JV.
Four key points in announcement. Four aspects of the announcement deserve special mention. First, AirAsia was confident enough to state in its investor relations brief that AirAsia Japan is expected to be profitable in the first year of operations. We see this as an extremely strong indication of the potential of the Japanese and north Asian markets. Second, we expected AirAsia to take only 30% stake in the JV but it is, instead taking 49% effective equity interest in the airline. This means that AirAsia will be able to equity account a bigger portion of the Japanese JV’s earnings than originally expected. Third, the existence of a limited open skies between Japan, South Korea and China is a positive surprise for us as it means that AirAsia Japan can fly to these countries if commercially viable. Also, the mention of northern Philippines and eastern Russia indicates that AirAsia Japan’s ambit appears to be wider than we originally expected. Last, ANA’s plan to transfer of some airport landing and takeoff slots to AirAsia Japan is a positive surprise and indicates ANA’s commitment to the success of the JV.

What was not mentioned in the media and IR releases. The potential for long-haul flights from Japan to the US or even to Australia was not mentioned in the press or investor relations releases. We would not discount this possibility in the future.

Second, Peach Airlines, which is 33.4% owned by ANA, is scheduled to begin operations in March 2012 from its base in Kansai Airport, Osaka. There was no mention of Peach Airlines in the media release. We think that Peach Airlines will not be allowed to base any aircraft in the Tokyo airports of Narita or Haneda, which are to be reserved for AirAsia Japan. In our opinion, a non-competition agreement may eventually be signed between Peach Airlines and AirAsia Japan.

Japan Airlines and Jetstar to announce JV soon? There is speculation that JAL and Jetstar will also soon announce their own LCC JV. We think that there will be greater urgency now that the ANA-AirAsia JV is already formalised. However, with the Japanese LCC market still in its infancy, the pie should be big enough for everyone. For details on the Japanese aviation market, investors can access the 20-page AirAsia report that we released on 18 July. [PDF]

Valuation and recommendation
AirAsia to benefit from entry into Japan. We believe that AirAsia will benefit from its JV in Japan with ANA because the LCC sector is underpenetrated in Japan and has huge potential for growth. Past constraints on LCC expansion in Japan stemming from government policies to protect JAL and access restrictions to slots at Tokyo’s two airports have been or will be dismantled. The glut of pilots in Japan arising from JAL’s restructuring and aggressive route cuts also free up manpower resources for the newcomers. Meanwhile, ANA will benefit from AirAsia’s substantial experience in marketing and operating a low-cost aviation business, and also AirAsia’s massive order book of 86 undelivered A320s and the recent order for 200 A320neos.

Maintain OUTPERFORM but upgrade our target price to RM4.70. Our new target price of RM4.70 is based on a higher CY12 core P/E multiple of 10x. Our previous target of RM4.20 was based on 9x CY12 P/E. The multiple of 10x is reasonable as it represents the average multiple for Asian full-service carriers and the average of AirAsia’s forward P/E since listing. It is also in the 10-11x range for the LCC pioneers, Ryanair and Southwest Airlines.

Our definition of core EPS includes AirAsia’s share of associate contributions. Our 2012 core EPS is 46.7 sen, comprising 35.8 sen from the Malaysian business, 8.3 sen from the Thai business and 2.6 sen from the Indonesian business. We have not changed our earnings forecasts in this report, and have yet to incorporate the impact of AirAsia Japan into our numbers. Potential re-rating catalysts include successful 4Q associate IPOs and its impending entry into the lucrative north Asia aviation markets.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:22/07/11

Suntec: Preparing for asset rejuvenation (CIMB)

Suntec REIT
NEUTRAL Maintained
S$1.54 Target: S$1.61
Preparing for asset rejuvenation
• Slightly above.
2Q11 DPU of 2.53 S cts was slightly above our and consensus estimates, forming 27% of our FY11 forecast. 1H11 DPU formed 52% of our fullyear estimate. The outperformance came mainly from lower-than-expected interest costs. Rentals and occupancy for Suntec City Mall continued to weaken though we believe that this could be in preparation for any potential asset enhancement initiatives to rejuvenate the mall. Likewise observations by other office landlords, leasing momentum appears to have slowed though occupancy within its office portfolio remains strong. We tweak our FY11-12 DPU estimates by -2% to +2% for lower interest expense in FY11-12 and a lower income support assumption in FY12. Our DDM-based target price is, however, unchanged at S$1.61 (discount rate: 8.1%). We maintain our NEUTRAL call. Potential re-rating catalysts are strongerthan- expected rentals and AEIs at Suntec City Mall.

• Net property income (NPI) slipped 1% yoy
due to weaker performance from Suntec City Mall. Distributable income, however, rose 22% yoy from contributions from Marina Bay Financial Centre Phase 1 (MBFC 1), which was offset by lower income support from One Raffles Quay. 2Q11 DPU was, however, flat yoy due to a larger unit base from a unit issuance to partly fund the acquisition of MBFC 1.

• Slower office leasing momentum.
Suntec City’s office occupancy remained stable in 2Q11 at 99.5% with negative rental reversions appearing to have stabilised on a qoq basis. As the pace of office leasing momentum is likely to have slowed, achieved rents climbed only 1% (vs. 1Q11: 13%) from S$9.22 psf to S$9.28 psf, notwithstanding the minimal remaining office leases expiring in FY11. Management, however, notes continued demand for office space from tenants within the IT, oil & gas, legal and shipping industries.

• Preparing for rejuvenation of Suntec City Mall.
Committed retail passing rents (S$10.16 psf, -1% qoq) drifted lower for the fifth quarter in 2Q11. Occupancy has also slipped by 0.8% pts to 97.1% though management has successfully renewed and lowered lease expiries to about 12% (1Q11: 19%) by retail portfolio (by NLA) in 2Q11. With a weakening portfolio, we anticipate plans for AEIs to rejuvenate the mall with any AEIs likely to be debt-funded.

Suntec’s aggregate leverage is 40.5%,
inclusive of debt held at ORQ and MBFC 1 (38.5% excluding debt held at the JVs). While gearing is relatively high, management appears comfortable with a mid-term gearing target of 45%. Barring a major AEI at Suntec City Mall, AEI plans are likely to be debt-funded. Meanwhile, all-in financing costs remain low at 2.8%. More than 60% of its borrowings are currently hedged into fixed-rate borrowings.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:22/07/11

MLT: Acquisition-fuelled growth (CIMB)

Mapletree Logistics Trust
S$0.94 Target: S$1.05
Acquisition-fuelled growth
• In line; maintain OUTPERFORM.
At 25% of our full-year forecast, MLT’s 2Q11 DPU of 1.60 Scts (+6.6% yoy) met our and consensus estimates. 1H11 DPU of 3.15 Scts works out to 48% of our full-year estimate. There were no major surprises. The positives were occupancy improvements and upward rental reversions, which offset higher operating costs stemming from repairs in Japan and property conversion in Singapore. Management is actively looking for acquisition opportunities and has identified a local property with redevelopment potential. We incorporate the change in year-end in FY3/12 but keep our S$500m acquisition assumption, DPU estimates and DDM-based target price of S$1.05 (8.6% discount rate) pending the analyst briefing. MLT continues to offer an attractive yield of 7%. We maintain our OUTPERFORM call, with the catalysts being accretive acquisitions and AEIs.

• Net property income (NPI) up 25% yoy and 4% qoq.
2Q11 topline rose 27% yoy, thanks to contributions from newly-acquired assets, partially offset by the FX impact
from a stronger S$ though the DPU impact was mitigated by FX hedges. The portfolio also benefited from positive rental reversions and a 0.6% pt improvement in occupancy, driven mainly by Singapore assets. NPI however grew by a more muted 25% yoy due to higher property expenses arising from repairs in Japan and the conversion of a local property in 2Q11. Distributable profit increase 26% yoy but DPU was up by a lower 7% due to an enlarged unit base after its equity fundraising in Oct 10. Management also divested two local properties in the quarter and plans to distribute net gains of S$2.1m (0.09 Scts/unit) over the next three quarters.

• Property acquisition and redevelopments.
Management continues its search for acquisition opportunities, with a focus on South Korea, Singapore, Japan, China and Malaysia. It also seeks to extract greater yields from its portfolio through conversion and redevelopments. It is in the midst of seeking authorities’ approval for the redevelopment of a local property with underutilised plot ratios.

• 41% asset leverage.
Asset leverage was at 41% as at end-2Q11, still below management’s medium-term target of 40-50%. Management successfully rolled forward S$102m debt (7% of total debt) maturing in 2011 and is in advance negotiations to refinance/extend debt maturing in 2012 (31% of total debt).

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:22/07/11

CapitaMalls Asia :Three steps forward, two steps back (CIMB)

CapitaMalls Asia Ltd
NEUTRAL Maintained
S$1.45 Target: S$1.66
Three steps forward, two steps back
• Exaggerated by revaluations; staying NEUTRAL.
CMA’s 2Q11 core net profit was below expectations, at 20% of our full-year estimate and 18% of consensus. 1H11 core profits formed 42% of our full-year forecast. Once again, the shortfall came from higher start-up costs for new malls, which wiped out the positive impact of 22% yoy NPI growth for its China malls. Start-up costs could be a recurring theme in the next 12-18 months as more malls are scheduled to open. We adjust our FY11-13 EPS by +8%/-15% on changes in operating costs assumptions. This reduces our target price from S$1.70 to S$1.66, still based on a 20% discount to RNAV. The results affirm our view that the inflexion point for CMA’s NPI will come only in 2012-13. We remain NEUTRAL on the stock and prefer CapLand.

• Costs could stay elevated in the near- to mid-term.
The 14% drop in 2Q11 revenue was expected given last year’s asset divestments. Despite a S$142m revaluation gain, the highlight was higher administrative expenses due to start-up costs for new malls. We believe that this could be a recurring theme for the next 6- 18 months as CMA targets to open more malls and its China portfolio is largely immature. ROEs for Singapore and China remain sub-optimal at 7-8% for 2Q11 and are likely to stay depressed. An interim dividend of 1.5 cts was proposed and management guided for a stable payout of 3ct per year. However, the quality of earnings in the near- to mid-term remains in question.

• A question of time.
Management conceded that the uptick in NPI will come but probably only by 2012-13 when its earlier batch of China malls moves into the 2nd / 3rd rental cycles. We like the group’s consistent delivery of higher yield on costs yoy for its flagship malls, although it is still at sub-optimal levels on a portfolio basis (Figure 4). Over 64% of its malls by property value (only 36% completed currently) are scheduled to be completed from now till end 2013.

• No near-term catalysts despite share price underperformance.
CMA is trading at 0.9x P/BV and has been the biggest laggard YTD. We see limited catalysts given the rising interest rates in China (cap rates unlikely to compress fast enough), stilldepressed ROEs and challenges in making accretive acquisitions. A reversal in these could serve as share price triggers. CMA indicated that it will divest ION to CMT only if the funds can be redeployed into accretive assets.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:22/07/11

First REIT : In the pink of health (CIMB)

First REIT (FIRT SP; S$0.84)
• In the pink of health.
First REIT grew gross revenue by a whopping 75.3% yoy with contribution from its acquisitions in December last year. Distributable income grew 86.5% yoy to S$9.9m. DPU as stated in its press release was 1.58cts, or 6.37 cts annualised (7.8% yield at S$0.82).

• You have a date.
1st August, 5pm onwards, book close for determination of eligibility for distribution which will be paid on 29th August. Ex-date will be 28th July 2011.

• Special dividend.
Depending on the tax treatment of the gain of its divestment of the Adam Road property, unit holders may also get a special dividend either wholly or partially in the coming quarters.

• Still room for growth.
Dr Ronnie Tan, Chief Executive Officer, “We are always on the lookout for quality, yield-accretive healthcare-related assets in the region to beef up our property portfolio. First REIT has a first right of refusal for properties owned by our sponsor PT Lippo Karawaci Tbk. Lippo Karawaci has announced plans to develop 25 hospitals in Indonesia in the next five years, and we are in preliminary discussions with our sponsor to acquire two of its new properties - Siloam Hospitals Jambi in East Sumatra and Siloam Hospitals Balikpapan in East Kalimantan.”

• No longer below book.
First REIT has come a long way and the Company’s hard work has paid off. From the days of treading below its book value, the stock now trades above its historical book value per share.

• Lippo Mapletree Indonesia Retail Trust (LMRT SP; S$0.615).
Type until blur? What is LMRT doing here? LMRT is the other yield instrument (6.8-7.2% CY11/CY12 yields on consensus forecast) available as a proxy on the growing Indonesian economy. Similar to First REIT, LMRT still trades below book which must be vexing to the manager. As First REIT has shown, if you have a well thought out growth strategy, your only job as the REIT manager is to ensure excellent execution and the equity market will do its job eventually. We would suggest keeping track of this REIT.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:22/07/11

Jim Rogers : the only long term solution is to face reality

Jim Rogers : the only long term solution is to face reality , we had the greatest credit bubble in the history of the world in the United States , we had gigantic excess for thirty forty years , we can't deny that , you can't just wake one day and say well OK I made a mistake too bad now let's start over the only way you gonna do that is face reality now and start over , admit people are bankrupt let people go bankrupt do not bailout people who fail let's start this whole situation over we can never pay off the debt that we have encored , we have to cut spending dramatically , we should cut spending not with an axe but with a chainsaw , I mean this is a serious that the United states is in and therefor the world

Source/转贴/Extract/Excerpts: youtube
Publish date:20/07/11

Regional Airlines: Go long selectively (DBSV)

Regional Airlines
Go long selectively
• YTD passenger carriage growth has generally been firm, especially for the Chinese and budget carriers while SIA and CX posted modest growth
• While higher jet fuel prices suggest that 1H earnings are likely to be softer y-o-y, we are bullish on 2H earnings as oil prices have since stabilised and fuel surcharges should kick in fully to help offset the higher costs. Load factors are likely to firm up as demand normalizes and capacity is adjusted on routes that were affected in 1H such as in MENA and Japan.
• Our Top Picks are i) Singapore Airlines (BUY, TP S$17) for its premium position and push for higher market share; it is trading cum dividend of S$1.20 and ii) Air
China (BUY, TP HK$10), which we favour as a play on China’s growing demand for air travel.

Firm operating numbers despite some demand shocks in 1H 2011. Combined passenger carriage for airlines under over coverage rose by a firm 7.9% y-o-y, which was well matched by a 7.8% increase in capacity, resulting in a slight improvement in load factor (PLF) to 78.1%. If not for the events in the MENA region and Japan, demand growth would likely have been even stronger. Specifically, PLFs for all three Chinese airlines and AirAsia improved, while SIA and Cathay Pacific saw more noticeable declines in PLFs.

2H earnings should be stronger than 1H on the back of potentially higher yields. We believe that firm load factors and carriage growth along with improvements in yield should help regional carriers post a stronger 2H. Jet fuel prices have stabilized in recent weeks to around US$125 to US$130/barrel and the successful pass through of fuel surcharges in 1H11 indicate that underlying travel demand remains robust and can support higher base ticket prices.

Selective BUYs within the sector. Our coverage (excluding MAS, which is projected to be loss-making) is trading at an average of 10.8x FY11 PE and 1.6x P/B versus 16% ROE, which seems fairly valued. In addition to our top picks - Singapore Airlines and Air China - we also have BUYs on Cathay Pacific (HK$22.70 TP) and China Southern Airlines (HK$5.80 TP), both of which offer good value at less than 7x FY11 PE and trading at just 1.2x and 1.3x FY11 P/B respectively against ROEs of over 17%.

Demand Outlook
IATA lowers Asia-Pac air travel growth for 2011 from 6.7% to 6.4% - a minor hiccup. The Asia Pacific air travel market remains one of the fastest growing and more robust sectors globally, with IATA lowering their growth forecast for 2011 by just 0.3ppt despite the situation in MENA, post-tsunami crisis in Japan and uncertainties in the North American and European economies. The continued firm growth can be attributed to accelerating budget and intra-Asia air travel patterns.

Demand growth for airlines that we cover has generally been quite firm in 1H11… China’s big three airlines posted passenger carriage growth of 9.2%-13.3% for 1H11 and more importantly, load factors for all three improved by 1.8ppt to 2.7ppt, underlining the strong demand growth in China’s aviation market. Meanwhile, the other notable network carriers like SIA and Cathay Pacific saw modest passenger carriage gains of 1.5%-3.6% over the same period, with load factors declining between 3.6ppt to 4.7ppt. Overall, combined passenger carriage for airlines under over coverage rose by a firm 7.9% y-o-y, which was well matched by a 7.8% increase in capacity, resulting in a slight improvement in load factor (PLF) to 78.1%.

Cost Outlook
… and higher fuel surcharges as jet fuel averaged US$126 per barrel YTD, up 45% y-o-y. Jet fuel price has increased substantially since the end of last year, to about US$129 per barrel currently, having eased off from a high of US$140 in April. In response, all airlines under our coverage, with the exception of Tiger Airways, raised fuel surcharges several times this year to help offset the additional costs though this does not seem to have affected demand significantly as evidenced in the firm demand numbers mentioned earlier.

US$ weakness has also been positive for Asian carriers, as it lowers aircraft purchasing and leasing costs, as well as fuel costs. Stronger Asian currencies generally have also helped drive tourism into other regions such as Europe and the US.

The rise and rise of LCCs
Intra-Asian tourism will boost LCC segment… The IMF’s forecast of 6.7% economic growth in Asia, bodes well for tourism growth in the region. LCCs currently account for only 8% of the Intra-Asian travel market (predominantly in SEAsia), but we expect the overall ‘pie’ to grow on the back of further liberalization. Promising LCC markets include Singapore and other ASEAN countries, and the proposed open skies in ASEAN by 2015 should further boost growth. Existing players ramp up. AirAsia, Jetstar and Tiger Airways are the main players in SE-Asia currently. AirAsia has recently placed orders for 200 Airbus aircraft for US$18bn to support its expansion plans. Both Jetstar and AirAsia have plans of expanding rapidly from the Singapore base as well. Jetstar is already operating out of Singapore and has unveiled a US$500m investment plan, which will take Jetstar’s fleet based in Singapore to 21 aircraft. AirAsia is also planning to set up in Singapore and could create a Singapore-based
subsidiary to further expand its route portfolio.

More players moving in to benefit from the LCC phenomenon… As revenue growth for non-Chinese full service airlines in more mature markets slows down and Asia- Pacific promises to be the next biggest LCC market, more and more flag carriers are stepping into the LCC space. In recent months, we have seen moves by Thai Airways, All Nippon Airways and SIA as well as other start-ups. AirAsia and ANA have announced the launch of their JV AirAsia Japan, based at Narita International Airport near Tokyo. ANA has also set up budget airline, Peach Aviation, earlier this year, based out of Kansai International Airport in West Japan. According to press reports, ANA’s rival Japan Airlines is also considering setting up an LCC with Jestar as partner. Meanwhile, SIA has announced intentions of setting up an independent long-haul budget airline by 2012 and has appointed SIA veteran Campbell Wilson to head the effort. Over in Thailand, Thai Airways has announced the launch of low-cost subsidiary Thai Wings to counter the growing threat from Thai AirAsia. Its proposed JV with Tiger Airways, Thai Tiger, though, may fail to get the required approvals.

…but competition is also intensifying in this fast-growing segment. With a series of new LCC ventures and tie-ups announced in 1H11, the sector has sparked renewed interest and the high growth potential for low cost air travel in Asia seems to be a foregone conclusion. However, whether the pie will grow large enough for all the players to operate successfully is open to debate and the increased competition in future could impact the profitability and sustainability of this segment.

More good news than bad news for Chinese Airlines
Impact from HSRs in China spread out over time. While it was reported that Air China cut its capacity on the Beijing- Shanghai city pair by 24% and China Eastern by 39% in the first week of the opening of the HSR, the impact on overall revenue for the Chinese carriers should be limited and offset by strong growth in other sectors. The impact of HSRs on Chinese carriers should be spread out over time as new lines come onstream gradually and as the carriers look to further develop their international route network.

On this point, CAAC Administrator Li Jiaxiang reportedly stated China would invest more than CNY1.5 trn in the aviation industry over the next five years and will promote
consolidation among airlines to improve their international competitiveness. Mr Li reportedly stated that the country would institute favourable tax policies to help domestic
airlines open new international passenger and cargo routes and it was also his view that the nation's three largest carriers - Air China, China Southern Airlines and China Eastern Airlines - were still too small in scale compared with global rivals. "Via government guidance and market operations, we must push ahead industry consolidation to form, as soon as possible, two or three airline companies with wide networks that are strongly competitive internationally," Mr Li said. While we think that the big three are unlikely to further consolidate amongst themselves, there could be opportunities for them to buy up other smaller players. Additionally, any government incentives or policies to help the Chinese carriers grow their international and cargo traffic will certainly be positive.

It was also reported that China will institute a more marketoriented jet fuel pricing mechanism starting August. Under the mechanism, jet fuel producers can negotiate and re-price jet fuel on the first day of each month, the NDRC said in an online statement. This at-cost price, usually offering jet fuel at a premium, should be no higher than the after-tax CIF price of the jet fuel imported from Singapore, said the statement. The move aims to improve the formation mechanism of the jet fuel's at-cost price, it said.

Currently, the country's jet fuel prices should obtain authorities' approval before being adjusted. The government has reduced its import tariff on jet fuel to zero starting July, according to the Ministry of Finance. The import tariff on aircraft fuel was previously set at 6%. This will help lower fuel costs for Chinese carriers.

Soft 1H earnings with improvement in 2H expected
Softer 1H11 earnings generally on higher jet fuel costs... Despite decent passenger carriage growth and firm load factors, we expect earnings in 1H11 to be soft on account of substantially higher jet fuel prices. Average jet fuel price YTD has increased by 45% y-o-y and with most carriers not hedging much of their fuel requirements (generally 30% or lower), the main relief is through imposing higher fuel surcharges which takes time to implement and will lag fuel price increase, particularly when fuel prices have climbed quickly in a short time. SIA and Cathay Pacific also saw their PLFs decline by 3.6ppt and 4.7ppt y-o-y respectively in 1H11, which indicate earnings are likely to be quite weak for these carriers. SIA already reported its Jan- Mar ’11 results (4Q FYE Mar ’11), with net profit declining 38% y-o-y.

…with Chinese carriers more resilient. On the other hand, the Chinese carriers reported 1Q earnings (China accounting standards) that were very firm. CEA’s operating earnings grew 17% y-o-y whilst Air China reported a 53% y-o-y improvement. Meanwhile, CSA nearly doubled its EBIT in 1Q, helped by higher carriage, loads and yields.

2H should improve. We believe that sustained firm load factors and carriage growth along with improvements in yield (see discussion below) should help regional carriers post a stronger 2H. Jet fuel prices have stabilized in recent weeks to around US$125 to US$130 per barrel but can always pose a threat to margins or even demand if it rises too quickly.

Yield, or rather fuel surcharge, is the key to healthy profitability. In order to offset the substantial increase in fuel costs (besides stronger carriage and/or load factors), yields would have to be higher. This can be achieved through a combination of higher fuel surcharges and/or higher base ticket prices. The table below shows the current fuel surcharges imposed by the regional carriers, which have seen several increases. Chinese carriers have raised fuel surcharges by between 44%-60% since the start of the year whilst Cathay Pacific has increased theirs by over 70% (from a lower base compared to SIA at the start of the year). SIA has increased its fuel surcharge by 36% - 46% since the start of the year, and even AirAsia has started imposing fuel surcharges.

The continued successful pass-through of fuel surcharges to consumers (as seen in demand still being fairly robust) should ensure a stronger 2H for regional airlines. Higher base ticket prices could also be a positive factor.

Valuations and Recommendations
While sector valuations are not expensive at a median of 9.5x FY11 PE, declining to 7.9x FY12 PE and 1.6x median P/V versus median ROE of 17%, we prefer to BUY selectively. We favour the well-established network carriers such as SIA and Cathay Pacific as well as China plays i.e. Air China and China Southern Airlines.

Our Top Picks are i) Singapore Airlines (BUY, TP S$17) for its premium position and push for higher market share; it is trading cum dividend of S$1.20 and ii) Air China (BUY, TP HK$10), which we favour as a play on China’s growing air travel demand.

Source/转贴/Extract/Excerpts: DBS Vickers Research
Publish date:22/07/11
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)

乔治·索罗斯(George Soros)



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,
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock