STOCKS NEWS SINGAPORE-Deutsche prefers developers to REITs

Last Updated: Mon, Nov 05, 2012 05:50 hrs

Deutsche Bank has shifted its preference among Singapore's property stocks from real estate investment trusts to developers, and said it prefers those with strong development pipelines and land banks or commercial assets.

The FTSE ST Real Estate Investment Trust has jumped 32 percent since the start of the year, compared to 38 percent for the FTSE ST Real Estate Index.

The brokerage upgraded developers CapitaLand Ltd and Wing Tai Holdings Ltd to 'buy' from 'hold', with a target price of S$3.31 and S$1.77 respectively. It also upgraded City Developments Ltd to 'hold' from 'sell' and has a S$11.59 target price for the firm.

"Within residential, high-end exposure is preferred over low-to-mid-end exposure, given the narrowing gap between the segments and as this segment is less affected by recent policy moves," said Deutsche Bank in a report.

The brokerage added that high-end residential offers better scope for long-term recovery as values are still 10-20 percent below peak levels.

It raised its 2013 property price assumptions by 15 percent on average due to firmer rents and a stronger-than-expected residential market and now expects a 1-3 percent decline in low-to-mid end prices with a slight 3-4 percent growth in mid-to-high end home values.

"We were previously more defensively positioned, favouring stronger organic growth profiles such as CapitaMalls Asia and companies with balance sheet capacity to acquire," said Deutsche, which has downgraded CapitaMalls Asia Ltd to 'hold' from 'buy', with a target price of S$1.86.

Deutsche noted that ample liquidity after QE3, together with a stronger Singapore dollar, should continue to attract capital into Singapore's real estate.

1339 (0539 GMT) (Reporting by Charmian Kok in Singapore; Editing by G.Ram Mohan;


11:19 STOCKS NEWS SINGAPORE-DBS cuts target price for COSCO Corp

DBS Vickers cut its target price for shipbuilder COSCO Corp (Singapore) Ltd to S$0.80 from S$0.88 and kept its 'fully valued' rating, citing sluggish shipbuilding orders until 2014 and growing competition in the offshore space.

COSCO shares were unchanged at S$0.88 by 0258 GMT. They have gained 0.6 percent since the start of the year, compared with a 23 percent rise in the FTSE ST Industrials Index.

COSCO posted on Friday a 17 percent fall in its third-quarter net profit at S$26.6 million, and said it expects difficult operating conditions for the rest of the year.

DBS trimmed its 2012 net profit estimates for COSCO by 8.7 percent to account for lower income from scrap materials and higher interest expenses. It also cut its 2013 net profit forecast by 24.3 percent to reflect lower order win assumption of $2.5 billion, compared with $3 billion previous.

COSCO faces pressure to replenish its shipbuilding order book as existing orders for 35 vessels will be delivered by the end of 2013, but new orders are few given a bleak outlook in the shipping sector.

1106 (0306 GMT) (Reporting by Charmian Kok in Singapore; Editing by Gopakumar Warrier;


10:51 STOCKS NEWS SINGAPORE-StarHub up; Maybank upgrades stock after results

Maybank Kim Eng raised its rating on StarHub Ltd to 'buy' from 'sell,' impressed by the company's 27 percent rise in quarterly profit and said fourth-quarter results could also beat expectations as the negative impact of iPhones on margins could be fading.

The broker said that with third-quarter margins at 33.9 percent versus full-year outlook of 30 percent, Singapore's second-biggest telecom firm has "a good chance of doing better than expected." Maybank raised its target price to S$3.99 from S$3.06.

StarHub's shares were up 0.6 percent at S$3.67 in a weak market and have risen 26 percent so far this year, outpacing a 14 percent rise in the index. The stock has eased after hitting a record high of S$3.88 in early August.

HSBC also raised its rating on StarHub to 'neutral' from 'underweight,' partly helped by the company's better operating margins.

Maybank said StarHub's gearing fell to a record low of 0.46 times in the third quarter following its recent raising of S$220 million in medium-term notes, and this raises confidence in sustained dividend.

Ahead of the results, 13 brokers had a 'hold' rating on StarHub, with nine rating it a 'sell' or 'strong sell,' one had a 'buy' rating and one had a 'strong buy' recommendation.

StarHub earns all its revenue from Singapore. Quarterly net profit at smaller rival M1 Ltd fell 19.5 percent. Singapore Telecommunications Ltd reports results this month.

More from Sify: