Regional Daily Ideas Troika
Transcription
Regional Daily Ideas Troika
Regional Daily, 16 December 2014 5 Regional Daily Ideas Troika Top Stories Amata Corporation (AMATA TB) Property - Real Estate BUY THB16.50 TP: THB21.00 Mkt Cap : USD536m Pg2 We believe 4Q may be Amata’s peak quarter for 2014 but weak land sales YTD may lead to an unexciting core profit outlook. Maintain BUY, with a THB21.00 TP (27% upside) at a 15% discount to its NAV, which reflects a 2.3x 2015F P/BV (-0.5SD from its long-term mean). Analyst: Wanida Geisler (wanida.ge@rhbgroup.com) China Railway & Construction Sector OVERWEIGHT Pg3 The Star reported on 13 Dec that a consortium comprising China Railway Construction Corp (CRCC) (1186 HK, BUY, TP: HKD10.97) and CSR Corp is hopeful of winning the construction and equipment tender for the high-speed railway (HSR) between Kuala Lumpur and Singapore (KL-SGP line). Analyst: Winston Cao (winston.cao@rhbgroup.com) Bangchak Petroleum (BCP TB) Energy & Petrochemicals - Oil & Gas Services NEUTRAL THB32.00 TP: THB29.52 Mkt Cap : USD1,344m Pg4 We have revised down our 2015F crude oil price to USD80/bbl from USD95/bbl, which results in EPS declining by 14.8% to THB3.60. Maintain NEUTRAL with lower TP of THB29.52 (from THB32.88, 7.8% downside) based on 1x 2015 P/BV 2014F net profit unchanged. Analyst: Kannika Siamwalla CFA (kannika.si@rhbgroup.com) Pg5 Beneficiary Of a Strong USD Other Key Stories Malaysia Timber NEUTRAL Analyst: Hoe Lee Leng (hoe.lee.leng@rhbgroup.com) Malaysia Airports Holdings (MAHB MK) Transport – Aviation BUY MYR6.66 TP: MYR8.05 Pg6 Wins Doha Job Analyst: Ahmad Maghfur Usman (ahmad.maghfur.usman@rhbgroup.com) Singapore Singapore Real Estate See important disclosures at the end of this report Pg7 The Real Estate Pulsebeat: Nov 2014 homes sales – EC market was the clear winner Analyst: Ivan Looi (ivan.looi@sg.oskgroup.com) Powered by EFATM Platform 1 Company Update, 15 December 2014 Amata Corporation (AMATA TB) Buy (Maintained) Property - Real Estate Market Cap: USD536m Target Price: Price: THB21.00 THB16.50 Macro Risks Trading At Discount To NAV Growth Value Amata Corporation (AMATA TB) Price Close Relative to Stock Exchange of Thailand Index (RHS) 19.0 116 18.0 112 17.0 107 16.0 103 15.0 99 14.0 94 13.0 90 12.0 85 11.0 30 81 25 20 15 Oct-14 Aug-14 Jun-14 Apr-14 Feb-14 5 Dec-13 Vol m We believe 4Q may be Amata’s peak quarter for 2014 but weak land sales YTD may lead to an unexciting core profit outlook. Maintain BUY, with a THB21.00 TP (27% upside) at a 15% discount to its NAV, which reflects a 2.3x 2015F P/BV (-0.5SD from its long-term mean). Recovery could take place once overall capacity utilisation improves to >65% from 60% currently. The major earnings driver for 2015 could be the gains on the sale9M14 of assets intowere a REIT Slow recovery in land sales. Amata’s land sales at 331 rai and(~1,600 the listing of Amata VN. sq m) (-42.5% YoY). Whether this year’s land sales can reach its 1,000-rai target would be highly dependent on the signing of new contracts in 4Q14. It may announce its 2015 land sales target in end2014 or early 2015. Still, real recovery could take place once overall capacity utilisation increases to more than 65% from the current 60%. Despite the slow land sales, it recently raised the price of its land at the Nakorn estate to THB7.5m/rai in 2015 from the current THB7m/rai, although it kept the land price at its City estate at THB3.2m/rai. 10 Source: Bloomberg Avg Turnover (THB/USD) Cons. Upside (%) Upside (%) 52-wk Price low/high (THB) Free float (%) Share outstanding (m) Shareholders (%) Vikrom Kromadit Thai NVDR 60.0m/1.84m 8.5 27.3 11.9 - 18.1 70 1,067 20.2 8.2 Share Performance (%) Recurring income continues to grow at a double-digit rate. Amata’s recurring income consists of water, rental and service incomes. The 3year CAGR of this business is 20%, while recurring income for 9M14 grew 12% YoY despite the poor buyer sentiment. Asset monetisation programme over the next six months. It has delayed selling factory rental space of 150,000 sq m in its Nakorn estate to a newly set-up REIT worth THB4.5bn to 1Q15 from end-2014. Amata VN, its 44%-owned associate company, will be listed in 2Q15 and the proceeds used to fund the development of its new industrial estate, Amata City Long Thanh. Our earnings estimates for 2014-15 have yet to include any gain from the asset sale. Expect an unexciting core earnings outlook. Amata believes its 2014 performance will peak in 4Q, when it may record the highest proceeds from land sales and transfers. We note that 60% of Amata’s backlog (worth THB4.6bn) should be realised as revenue in 4Q14. However, because of the weak land sales to date, its core earnings outlook is likely to be unexciting. The major earnings driver for 2015 may be gains on the sale of assets into a REIT and the listing of Amata VN. Its long-term focus is on expanding regionally into Vietnam and Myanmar. YTD 1m 3m 6m 12m 19.6 1.2 (2.4) (1.2) 10.0 Forecasts and Valuations (4.1) Total turnover (THBm) Dec-11 Dec-12 Dec-13 Dec-14F Dec-15F 3,647 5,613 7,262 5,942 6,537 Reported net profit (THBm) 901 1,501 1,515 1,111 1,201 Recurring net profit (THBm) 901 1,290 1,515 1,111 1,201 Recurring net profit growth (%) 37.8 43.2 17.4 (26.7) 8.1 Recurring EPS (THB) 0.84 1.21 1.42 1.04 1.13 Wanida Geisler 66 2862 9748 DPS (THB) 0.34 0.55 0.50 0.36 0.39 wanida.ge@rhbgroup.com Recurring P/E (x) 19.5 13.6 11.6 15.9 14.7 P/B (x) 2.23 2.39 2.12 1.96 1.80 2.0 3.3 3.0 2.2 2.4 13.5 19.7 19.3 12.9 12.8 Absolute Relative (0.5) 2.4 (0.9) (8.2) Shariah compliant Dividend Yield (%) Return on average equity (%) Return on average assets (%) Net debt to equity (%) Our vs consensus EPS (adjusted) (%) 5.1 7.2 7.0 4.9 5.1 42.2 51.4 48.9 43.9 42.5 (8.7) (13.4) Source: Company data, RHB See important disclosures at the end of this report Powered by EFATM Platform 2 3 . 3 0 . 1 0 0 . 2 0 0 . 0 0 0 Sector News Flash, 15 December 2014 China Railway & Construction Sector Overweight (Maintained) Macro Risks More Overseas Contract Wins Growth Value China Railway Group’s share price movement Price Close Recommendations & Target Price 6.55 na 7.00 What’s new? Frontrunner for KL-SGP tender. The Star reported on 13 Dec that a consortium comprising China Railway Construction Corp (CRCC) (1186 HK, BUY, TP: HKD10.97) and CSR Corp (1766 HK, NEUTRAL, TP: HKD7.47) is hopeful of winning the construction and equipment tender for the high-speed railway (HSR) between Kuala Lumpur and Singapore (KL-SGP line). The investment for the line – the first HSR line in SouthEast Asia – could reach CNY68bn. 5.00 4.00 3.00 2.00 Neutral Sell Mar-11 Trading Buy Take Prof it Jun-12 Not Rated Oct-13 Wins new job in Argentina. CSR also announced today that it has secured a new railway locomotive contract worth CNY1.7bn for Argentina’s Belgrano railway line. This is the third new contract win for the company since it ventured into Argentina in 2006. Source: Bloomberg China Railway Construction Corp’s share price movement Maintain OVERWEIGHT on the sector. We see three major catalysts that may continue to drive the re-rating of the sector: 11.0 na 12.5 Recommendations & Target Price 11.5 10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 Buy Neutral 2.5 Dec-09 Mar-11 Our view Price Close Sell Trading Buy Take Prof it Jun-12 i. Positive domestic railway FAI prospects. We expect China’s domestic railway fixed asset investments (FAI) to keep increasing in 2015 and hit a historic new high of CNY950bn. ii. China’s active expansion in overseas investments. The Central Government will announce the detailed plan of the “One Belt One Road” initiative around the end of 2014. iii. Valuations remain attractive. The sector is still trading at 1-1.5SD below its past 5-year historical mean. Sector re-rating is likely to continue, driven by the above-mentioned increasing demand, domestically and overseas. Not Rated Oct-13 Source: Bloomberg China CNR’s share price movement Price Close Recommendations & Target Price 8.47 na 8.30 7.80 7.30 6.80 6.30 5.80 5.30 4.80 Buy Neutral May-14 Sell Jul-14 Trading Buy Sep-14 Take Prof it Not Rated Nov-14 Source: Bloomberg Winston Cao +852 2103 9414 winston.cao@rhbgroup.com CRG still our Top Pick and the only stock now trading. CSR Corp, China CNR (6199 HK, BUY, TP: HKD8.47) and CSR subsidiary Zhuzhou CSR (3898 HK, NR) remain suspended from trading due to the potential merger between two companies – and will not likely resume trading before end-2014, according to announcements made by both companies. As CRCC is also suspended from trading due to a potential A-share private placement, China Railway Group (CRG) (390 HK, BUY, TP: HKD6.55) is the only stock in the sector that is not suspended. We remain bullish on CRG as it is the direct beneficiary of China’s domestic and overseas infrastructure FAI. We also prefer CRG over its direct peer CRCC, as we: i) forecast a faster 19% EPS CAGR for FY13-16F vs 15% for CRCC, and ii) see its balance sheet improving more than CRCC’s. Note that CRG's share price is now approaching our current TP (which is under review) after rallying 57% YTD. Company Name Ticker Price (HKD) Target P/E (x) (HKD) Dec-14F P/E (x) Dec-15F Rating China Railway Group 390 HK 6.04 6.55 9.2 7.4 BUY China Railway Construction 1186 HK 9.44 10.97 7.8 6.4 BUY China State Construction Int'l 3311 HK 11.20 14.63 12.0 8.4 BUY China CNR 6199 HK 7.66 8.47 11.6 10.9 BUY CSR Corp 1766 HK 7.89 7.47 14.5 12.7 NEUTRAL China Communications Construction 1800 HK 8.55 5.82 8.6 8.1 NEUTRAL Source: Company data, RHB See important disclosures at the end of this report 3 1 3 3 6.00 Buy 1.00 Dec-09 Powered by EFATM Platform 3 Company Update, 15 December 2014 Bangchak Petroleum (BCP TB) Neutral (Maintained) Energy & Petrochemicals - Oil & Gas Services Market Cap: USD1,344m Target Price: Price: THB29.52 THB32.00 Macro Risks Downwards Earnings And TP Revision Growth Value Bangchak Petroleum (BCP TB) Price Close Relative to Stock Exchange of Thailand Index (RHS) 38.0 104 36.0 100 34.0 95 32.0 91 30.0 87 28.0 83 26.0 78 24.0 25 74 0 0 . 2 0 0 We have revised down our 2015F crude oil price to USD80/bbl from . 0 USD95/bbl, which results in EPS declining by 14.8% to THB3.60 from 0 our previous forecast. Maintain NEUTRAL with lower TP of THB29.52 0 (from THB32.88, 7.8% downside) based on 1x 2015 P/BV. We leave 2014F net profit unchanged as earnings preview nears. Yet, stock loss could be as high as ~THB1.8bn for 4Q14, assuming no hedging gains. 20 15 Oct-14 Aug-14 Jun-14 Apr-14 Feb-14 5 Dec-13 Vol m 10 Source: Bloomberg Avg Turnover (THB/USD) Cons. Upside (%) Upside (%) 52-wk Price low/high (THB) Free float (%) Share outstanding (m) Shareholders (%) PTT Ministry of Finance Thai NDVR 170m/5.23m 20.9 -7.8 25.5 - 37.3 63 1,377 27.2 10.0 5.2 Share Performance (%) YTD 1m 3m 6m 12m Absolute 14.3 (6.6) (5.2) 8.5 (1.5) Relative (3.3) (4.3) (1.7) 3.7 (14.1) Crude oil price expectations. We expect crude oil prices to close at around USD60-65/barrel (bbl) for end-2014. We also forecast for higher crude oil prices for 2015 and 2016, at USD80/bbl (from USD95/bbl previously) and USD95/bbl respectively. As a result of this outlook, the refinery and petrochemical stocks under our coverage should see abysmal earnings for 4Q14 and to improve from 1Q15 onwards. Share prices that have been badly beaten down should also slowly improve. Worst case scenario analysis. We have assumed a 2015 stock loss of THB2.3bn, spreads falling 20% and a re-rating of Bangchak Petroleum under our worst case scenario. Our TP under these assumptions is THB25.89/share, ie 0.9x 2015 P/BV. Earnings and TP revision: We have cut down our 2015 crude oil price forecast to USD80/bbl from USD95/bbl. This crude oil price revision results in Bangchak Petroleum’s 2015F EPS declining by 14.8% to THB3.60 from our previous forecast. We leave 2014F net profit unchanged as earnings preview nears. However, stock loss could be as high as around THB1.8bn for 4Q14, assuming no hedging gains. We have not factored into our assumptions any stock gains/losses going forward. We lower our TP for Bangchak Petroleum to THB29.52/share (from THB32.88/share) based on 1x 2015 P/BV. We maintain our NEUTRAL recommendation. Forecasts and Valuations Dec-11 Dec-12 Dec-13F Dec-14F Dec-15F 158,610 165,246 186,514 267,343 272,600 Reported net profit (THBm) 5,610 4,273 4,653 4,265 4,965 Recurring net profit (THBm) 6,916 2,635 4,753 4,265 4,965 Recurring net profit growth (%) 157.3 (61.9) 80.3 (10.3) 16.4 Recurring EPS (THB) 5.02 1.91 3.45 3.10 3.60 DPS (THB) 1.58 1.24 1.35 1.24 1.44 6.4 16.7 9.3 10.3 8.9 P/B (x) 1.48 1.37 1.27 1.18 1.09 P/CF (x) 22.5 4.8 11.9 4.5 5.8 5.0 3.9 4.2 3.9 4.5 Total turnover (THBm) Recurring P/E (x) Shariah compliant 2 . 2 0 . 2 Kannika Siamwalla, CFA 66 2862 9744 Dividend Yield (%) kannika.si@rhbgroup.com EV/EBITDA (x) 6.49 9.78 7.53 5.43 5.15 Return on average equity (%) 21.4 13.8 13.9 11.8 12.8 Net debt to equity (%) 48.7 34.0 38.8 25.5 16.3 0.0 0.0 0.0 Our vs consensus EPS (adjusted) (%) Source: Company data, RHB See important disclosures at the end of this report Powered by EFATM Platform 4 Sector Update, 15 December 2014 Timber Neutral (Maintained) Macro Risks Beneficiary Of a Strong USD Growth Value Malaysian log exports - YTD 2014 Japan, 4.5% Others, 8.8% Taiwan, 11.6% Korea, 0.9% Thailand, 0.7% China, 9.5% India, 64.0% Source: ITTO CPO price chart Jan-90 Jul Jan-91 Jul Jan-92 Jul Jan-93 Jul Jan-94 Jul Jan-95 Jul Jan-96 Jul Jan-97 Jul Jan-98 Jul Jan-99 Jul Jan-00 Jul Jan-01 Jul Jan-02 Jul Jan-03 Jul Jan-04 Jul Jan-05 Jul Jan-06 Jul Jan-07 Jul Jan-08 Jul Jan-09 Jul Jan-10 Jul Jan-11 Jul Jan-12 Jul Jan-13 Jul Jan-14 Jul-14 Source: Bloomberg Japan consumer and business spending Source: Japan’s Ministry of Finance Hoe Lee Leng +603 9207 7605 hoe.lee.leng@rhbgroup.com 2 2 2 While we continue to like the still-promising prospects of the log subdivision, this is offset by the sombre outlook for the plywood segment as the Japanese economy has fallen back into a recession on top of weaker CPO prices. One bright spot, however, is the positive impact of a stronger USD on timber exports, given that costs are mostly in MYR. Maintain NEUTRAL on the sector. 4,200 4,000 3,800 3,600 3,400 3,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Prices of Malaysian tropical logs have risen by 18% YoY. This was partly due to the impact of the ban on log exports from Myanmar, which was implemented from 1 Apr 2014, and stronger demand from India (as Sarawak’s log exports to the South Asian nation rose to 64% of total exports from 61% in 2013). We maintain our assumptions of a 6-8% per annum increase in log prices for 2014 and 4-6% for 2015-2016, to be conservative. In the longer term, investors should look out for the impact of the recent new timber licensing policy in Sarawak, which enforces sustainable certifications as well as the crackdown on illegal logging in the state. The economic recovery in Japan has seemingly reversed. This is on the East Asian nation technically falling back into a recession in 3Q14. Housing starts have reflected this, with a further decline of 7.1% YoY in 9M14 from the -3.4% recorded in 1H14. The Japanese Government intends to address this issue by: i) delaying the second consumption tax hike (to 10% from 8%) to Apr 2017 (from Oct 2015), ii) implementing some strategies to revive home sales, and iii) calling for a snap election, which was held on 14 Dec. This should translate to lacklustre plywood prices in the medium term. Plywood prices have not moved much, as a result. We are leaving our average plywood price assumptions at +2-3% YoY for 2014-2016. Saving grace is the strengthening USD. The saving grace for the timber industry is now the exchange rate. While weaker consumer spending in Japan – a result of a weakening JPY against the USD – has affected plywood sales volumes, this is more than offset by the impact of the strengthening of the USD against the MYR. Timber companies export their products in USD while their costs are mostly in MYR. While we continue to assume exchange rates of MYR3.15-3.20/USD, we estimate every MYR0.10/USD change in the exchange rate affects timber companies’ earnings by 10-17% per annum. We maintain our NEUTRAL stance on the timber sector. We maintain our target 2015F P/Es of 10-12x for the timber divisions and 16x for the plantation businesses. We have one BUY recommendation, Ta Ann (TAH MK, TP: MYR4.40). We are NEUTRAL on WTK Holdings (WTKH MK, TP: MYR1.25) and recommend SELL on Jaya Tiasa (JT MK, TP: MYR1.70). Company Name P/E (x) P/B (x) Yield (%) Dec-15F Dec-15F Dec-15F MYR1.70 16.2 1.0 1.2 MYR3.65 MYR4.40 11.6 1.2 2.7 BUY MYR1.06 MYR1.25 8.5 0.3 2.4 NEUTRAL Price Target Jaya Tiasa Holdings MYR1.95 Ta Ann Holdings WTK Holdings Rating SELL Source: Company data, RHB See important disclosures at the end of this report Powered by EFATM Platform 5 2 Company Update, 15 December 2014 Malaysia Airports Holdings (MAHB MK) Transport - Aviation Market Cap: USD2,618m Buy (Maintained) Target Price: Price: MYR8.05 MYR6.66 Macro Risks Wins Doha Job Growth Value Malaysian Airports (MAHB MK) Price Close Relative to FTSE Bursa Malaysia KLCI Index (RHS) 10.00 114 9.50 108 9.00 103 8.50 97 8.00 92 7.50 86 7.00 80 6.50 75 6.00 25 69 0 0 . 2 0 0 The Doha job win will add MYR6m annually in earnings for FY15-20. . 0 Maintain BUY as Malaysia Airport’s recent perpetual sukuk issue 0 nudges up FY15/FY16 “accounting” earnings by 24%/11% but 0 marginally raises our DCF-derived TP to MYR8.05 (vs MYR8.04, 20.9% upside). While Nov 2014 traffic dropped, it was not as bad as expected. YTD Nov 2014 traffic growth stands at 5.2% vs our FY target of 4.37%. 20 15 Oct-14 Aug-14 Jun-14 Apr-14 Feb-14 5 Dec-13 Vol m 10 Source: Bloomberg Avg Turnover (MYR/USD) Cons. Upside (%) Upside (%) 52-wk Price low/high (MYR) Free float (%) Share outstanding (m) Shareholders (%) Khazanah Nasional Permodalan Nasional Employees Provident Fund 7.82m/2.36m 12.8 20.9 6.43 - 9.78 33 1,374 36.6 13.0 11.3 Share Performance (%) YTD 1m 3m 6m 12m Absolute (26.0) (2.6) (14.3) (13.5) (26.0) Relative (19.4) 1.4 (8.3) (6.6) (21.1) Wins second job from Doha Airport. Malaysia Airports’ joint-venture (JV) company Malaysia Airports Consultancy Services Middle East LLC (MACS ME) won a letter of award from the New Doha International Airport Steering Committee to provide airport special systems repair & maintenance services at Hamad International Airport. MACS ME is 51%owned by Watad Group Enterprises LLC (Malaysia Airports: 49%). The 3-year MYR192.1m contract comes with a 2-year extension option. This is the group’s second contract win from the airport. We assume the job fetches a 20% net margin, which effectively translates into MYR6m annual contribution to earnings (on its stake) over the next five years. November numbers down. Malaysia Airport’s Nov 2014 traffic dropped by 2.6% YoY (YTD: +5.2%), ie better than management expected. We expect December traffic to drop by a similar quantum YoY, with ending 2014 passenger traffic to grow at 4.37% (from our earlier 4%). We expect FY15 and FY16 traffic growth to be unchanged at 6% and 5% respectively, as the shaky consumer sentiment on the goods and services tax (GST) implementation could cap the upside to growth. We also lower our 2014 aircraft traffic growth estimate to 7.2% YoY from 12%. Our FY15F/FY16F at 5%/4% growth respectively are unchanged. Perpetual sukuk. Malaysia Airport’s recently issued MYR1bn perpetual sukuk (yield at 5.75%, AA2 rating, 10-year non-callable) will remove the need for fundraising via bank borrowings, where interest expense will hit its income statement. It will be treated as an equity from an accounting perspective and its interest payments will not hit earnings (as deductions will be on statement on changes of equity). We have adjusted our model accordingly, as we earlier assumed no perpetual sukuk would be raised. Maintain BUY. Adjustments on earnings for FY14: -7% (due to lower aircraft traffic), FY15: +24% and FY16: +11% (largely due to reduced “accounting” interest expense from the perpetual sukuk and Doha job win). Our DCF-derived TP (WACC of 8.3%) only nudges up to MYR8.05 (from MYR8.04) as, theoretically, interest expense is unchanged on DCF computation. We maintain our BUY call. Forecasts and Valuations Dec-12 Dec-13 2,163 2,463 2,776 3,084 3,272 Reported net profit (MYRm) 331 306 38 87 160 Recurring net profit (MYRm) 402 331 84 87 160 Recurring net profit growth (%) 1.5 (17.8) (74.6) 3.3 84.7 Recurring EPS (MYR) 0.33 0.27 0.06 0.06 0.12 DPS (MYR) 0.14 0.12 0.11 0.14 0.14 20 25 109 106 57 P/B (x) 1.85 1.75 1.65 1.44 1.45 P/CF (x) 12.5 9.2 9.4 9.6 9.4 2.0 1.9 1.7 2.1 2.2 12.3 14.4 14.4 10.6 10.2 Total turnover (MYRm) Shariah compliant Ahmad Maghfur Usman +603 9207 7654 ahmad.maghfur.usman@rhbgroup.com Recurring P/E (x) Dividend Yield (%) EV/EBITDA (x) Return on average equity (%) Net debt to equity (%) Our vs consensus EPS (adjusted) (%) See important disclosures at the end of this report 2 . 2 0 . 2 Source: Company data, RHB Dec-14F Dec-15F Dec-16F 8.4 6.8 0.7 1.5 2.5 57.4 77.9 63.6 36.6 35.3 (42.5) (59.9) (51.8) Powered by EFATM Platform 6 Sector News Flash, 16 December 2014 Singapore Real Estate 1 1 1 The Real Estate Pulsebeat: Nov 2014 homes sales – EC market was the clear winner 1 Rental pulsebeat: 2Q/3Q14 SGD psf/mth/Index QoQ (%) YoY (%) Office Grade A Retail Orchard Rd 10.60 34.20 3.4 0.0 11.0 3.3 Biz Park (City Fringe) Multi-user factory (B1) median rent 5.50 1.9 3.8 2.15 (2.2) (2.3) Warehouse median rent Residential median rent 2.05 3.74 0.0 (1.1) (1.3) (2.2) SRX Rental Index (Nov) 121.7 (0.8) (5.3) Source: OSK-DMG, URA, HDB, CBRE New home sales for Nov 14 at 412 (excl. EC) were down 46.1% MoM and 67.6% YoY. Year-to-date, 7,296 units (excl. EC) have been registered sold, down 52.1% YoY and a far cry from the peaks levels (over 22k) attained in 2012. Price pulsebeat: 2Q/3Q14 Office Grade A Retail Orchard Rd SGD psf/Index 2,750 7,200 QoQ (%) YoY (%) 0.0 12.2 0.0 2.9 Multi-user factory (B1) 637 (1.8) 3.4 Warehouse median URA Residential PPI HDB Resale SRX Price Index (Nov) 857 207.9 192.5 167.5 3.2 (0.7) (1.6) (1.1) (11.3) (3.9) (6.0) (3.4) Source: OSK-DMG, URA, HDB, CBRE Residential price & rental indices (4Q98 = 100) 250 207.9 200 160.6 150 Top-selling projects. Lake Life EC exceeded 97% sold over its first weekend launch – locking in a median selling price of SGD869 psf. As mentioned in our Journey to the West – “Sutra” seekers in Jurong Lake District piece, this was expected as Lake Life is strategically located within the Jurong Lake District, which was highlighted by our Prime Minister during the National Day Rally 2014; the region will be revitalized in years to come. In addition, projects like Bellewaters, Bellewoods, Tre Residences and LakeVille came in as the top five-selling projects in Nov. Developers released more units before the holiday season. Developers launched 859 units (excl. EC) in Nov 14 (up 32.4% MoM but down 40.3% YoY) and above the year-to-date average of 697. Including ECs, the total number of launched units shot up to 2,617 in Nov 14 (up 303.2% MoM and 12.9% YoY). Consistent with the past few years, developers are ramping up supply before the holiday season in Dec. For Nov, including ECs, the high-end segment accounted for 19% of the launches. Mass-market accounted for 71% (mostly ECs), and mid-market accounted for the remaining 10%. Lifeless property market. We expect the EC market to do better than the private non-landed/landed market in the last month of 2014 and project new homes sales (incl. ECs) to hit 8,500-9,500 units (YTD Nov 14: 8,716). We reiterate that the three-party Catch-22 situation amongst homebuyers, developers and authorities will still persist. Homebuyers are holding back in anticipation of the surge in physical completions in 2015-16 (Figure 19) and prospective price declines. Developers are dragging launches, with an eye on government stepping in to reverse some of its anti-speculation measures. From the authorities’ perspective, without a significant drop in property prices, it will be difficult to justify any easing of cooling measures, when prices are in general only slightly off their peaks in 3Q13 (down 3.9%). Our top pick are still regionally diversified developers such as KPLD (BUY, TP:SGD3.88) and CAPL (Buy, TP SGD3.54). 100 50 4Q98 3Q99 2Q00 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 3Q11 2Q12 1Q13 4Q13 3Q14 0 Residential Price Index Residential Rental Index Source: URA Ivan Looi +65 6232 3841 ivan.looi@sg.oskgroup.com Singapore Research +65 6533 0781 research@sg.oskgroup.com See important disclosures at the end of this report Top-selling project in Nov 14: Lake Life sold 533 units out of 546 units launched last month (cumulative 97.6% sold) Powered by EFATM Platform 7 RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. It is intended for circulation to the clients of RHB and its related companies. Any recommendation contained in this report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. 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DMG & Partners Research Guide to Investment Ratings Kuala Lumpur Hong Kong Singapore Malaysia Tel : +(60) 3 9280 2185 Fax : +(60) 3 9284 8693 19 Des Voeux Road Central, Hong Kong Tel : +(852) 2525 1118 Fax : +(852) 2810 0908 Tel : +(65) 6533 1818 Fax : +(65) 6532 6211 Buy: Share price may exceed 10% over the next 12 months Trading Buy:Malaysia Share price may exceed 15% over theRHB nextOSK 3 months, however longer-term outlook remains uncertain Research Office Securities Hong Kong Ltd. (formerly known DMG & Partners Neutral: Share mayInstitute fall within months as 12 OSK Securities Securities Pte. Ltd. RHB price Research Sdn the Bhdrange of +/- 10% over the next Take Profit: Target price has been attained. Look to accumulate at lower levels Hong Kong Ltd.) Level 11, Tower One, RHB Centre 10 Collyer Quay Sell: Share price may more than 10% over the next 12 months Jalanfall TunbyRazak 12th Floor #09-08 Ocean Financial Centre Lumpur World-Wide House Singapore 049315 Not Rated: Stock isKuala not within regular research coverage DISCLAIMERS Phnom Penh This research is issuedJakarta by DMG & Partners Research Pte Ltd and it is forShanghai general distribution only. It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular PT RHB OSK and Securities Indonesia (formerlyfinancial known asadviser RHB OSK (China) Advisory Ltd. into any RHBtransaction OSK Indochina Securities Limited (formerly investments consult an independent before makingInvestment any investments or Co. entering in relation to any securities or PT OSKmentioned Nusadana in this report. (formerly known as OSK (China) Investment known as OSK Indochina Securities Limited) investment instruments Securities Indonesia) Plaza CIMB Niaga Advisory Co. Ltd.) Suite 4005, CITIC Square No. 1-3, Street 271 Sangkat Toeuk Thla, Khan Sen Sok Tel : +(6221) 2598 6888 Tel : +(8621) 6288 9611 Fax: +(855) 23 969 171 The information contained herein has been obtained from sources 1168 we believed to be reliable but we do not make any representation or warranty nor 14th Floor Nanjing West Road Phnom Penh accept any responsibility or liability as to its accuracy, completeness orShanghai correctness. are subject to change Jl. Jend. Sudirman Kav.25 20041Opinions and views expressed in this report Cambodia without notice. Jakarta Selatan 12920, Indonesia China Tel: +(855) 23 969 161 Fax : +(6221) 2598or6777 Faxof: +(8621) 6288 9633or sell any securities. 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