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World Indices

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15 Apr 2015

Key Idea

Key Singapore Indices

STI

Morning Call

Soilbuild REIT: Resilient performance Soilbuild Business Space REIT (Soilbuild REIT) reported its 1Q15 results which met our expectations. Gross revenue jumped 10.5% YoY to S$18.6m and DPU was up 4.5% to 1.633 S cents, underpinned by additional rental revenue from three new acquisitions in 2Q14 and 4Q14. Operationally, Soilbuild REIT maintained its portfolio occupancy rate of 100% (as at 31 Mar 2015), while positive rental reversions of 9.3% for lease renewals were achieved in 1Q15. Notwithstanding the healthy 100% tenant retention rate in 1Q15, management cautioned that this is unlikely to be sustained for the rest of the year due to macroeconomic headwinds and supply concerns. In terms of capital management, Soilbuild REIT has hedged 81.9% of its total debt, and its aggregate leverage stands at 38.5%. We maintain our BUY rating and S$0.93 fair value on Soilbuild REIT, as the stock still offers an attractive FY15F distribution yield of 7.7%.

More reports:  First REIT: Stable start to FY15  Singapore Press Holdings: Cost pressures well managed

Market Statistics (SG) STI 52-week range

3,150

3,526

No. of gainers No. of losers

318 227

No. of unchanged

194

3-mth S$ SIBOR 3-mth US$ SIBOR Crude futures (US$)

 Keppel T&T's 1QFY15 revenue was 1.6% lower YoY at S$47.9m but PATMI rose 2.3% to S$15.8m due to higher share of results from associated companies.  QT Vascular has received FDA approval for the second generation of thee Chocolate (R) PTCA balloon catheter.

Economic Statistics S$/US$ Yen/US$

News Headlines

1.4 119.4

0.0 0.1

1.0 0.2

0.0 0.0

53.6

0.3

Research Team (65) 6531 9800 e-mail: [email protected]

 Otto Marine’s shipyard has delivered four new-build vessels worth a total contract value of USD36.6m.  Huationg Global has secured a new civil engineering contract from Singapore’s HDB worth S$19.5m, which raises its order book to ~S$130.6m.  ST Engineering's Aerospace arm secured new contracts worth S$298m in 1Q15, which involves projects ranging from aircraft maintenance to pilot training.  Nordic Group has entered into a sale and purchase agreement to acquire Austin Energy (Asia) for S$26m.  Communication Design International announced the cessation of Mr Zheng Jiabin as the executive director and CEO of the company.

Sources: MasNet, Bloomberg, Business Times, Straits Times and other media

XXX Holdings: Xxxx xxx Please refer to important disclosures at the back of this document.

 Xxxx  Xxxx

MCI (P) 006/06/2014

OCBC Investment Research Market Pulse 15 Apr 2015

Soilbuild REIT: Resilient performance

distribution yield of 7.7%. (Wong Teck Ching Andy)

 1Q15 DPU grew 4.5% YoY  100% occupancy rate  FY15F distribution yield of 7.7% 1Q15 results within our expectations Soilbuild Business Space REIT (Soilbuild REIT) reported its 1Q15 results which met our expectations. Gross revenue jumped 10.5% YoY to S$18.6m, underpinned by additional rental revenue from three new properties acquired in 2Q14 and 4Q14. This formed 24.8% of our FY15 forecast. DPU was up 4.5% YoY to 1.633 S cents and constituted 25.3% of our full-year estimate. Operationally, Soilbuild REIT maintained its portfolio occupancy rate of 100% (as at 31 Mar 2015), while positive rental reversions of 9.3% for lease renewals were achieved in 1Q15. Although 18.4% of Soilbuild REIT’s NLA is expiring in FY15, this is an improvement from the 29.7% figure at the start of the year, which reflects management’s proactive renegotiation efforts.

First REIT: Stable start to FY15  1Q15 DPU rose 3.5% YoY  Robust results from Siloam Hospitals  Indonesia the focal point 1Q15 results in-line with our expectations First REIT (FREIT) posted its 1Q15 results which turned out to be in-line with our expectations. Gross revenue jumped 10.1% YoY to S$24.7m, driven by stable organic growth and a fullquarter of contribution from Siloam Sriwijaya which was acquired in Dec 2014. This formed 24.6% of our S$100.5m FY15 forecast. NPI grew 9.3% to S$24.2m, a slightly slower pace than topline as higher property operating expenses were incurred due to Sarang Hospital, property tax, insurance and building audit fees. DPU for the quarter came in at 2.06 S cents. This represented a YoY growth of 3.5% and constituted 24.8% of our full-year projection.

Industry headwinds may weigh on occupancy rate Notwithstanding the healthy 100% tenant retention rate in 1Q15, management cautioned that this is unlikely to be sustained for the rest of the year. We believe this can be attributed largely to macroeconomic headwinds and increased competitive pressures from the large upcoming supply of factory space in Singapore. The bulk of Soilbuild REIT’s remaining lease expires in FY15 and comes from its West Park BizCentral and Tuas Connection properties.

Siloam Hospitals reported strong results Siloam International Hospitals, which is the operator of FREIT’s Indonesian hospitals and a subsidiary of FREIT’s sponsor Lippo Karawaci, recently reported a robust set of FY14 results at the end of last month. Gross operating revenue increased by 33% to IDR3,341b, while EBITDA accelerated 56% to IDR466b. This was underpinned by continued traction in demand for quality healthcare services throughout Indonesia. Operationally, Siloam International Hospitals registered a solid 34% and 24% jump in its inpatient admissions and outpatient visits, respectively.

Maintain BUY In terms of capital management, Soilbuild REIT has hedged 81.9% of its total debt. Its average all-in interest cost stands at 3.28%, as at 31 Mar 2015, a slight uptick of 9 bps versus end-2014. Current aggregate leverage ratio has also increased from 35.4% (as at 31 Dec 2014) to 38.5%, as this includes the interest free loan from its sponsor and deferred payment in relation to the Solaris upfront land premium to be paid to JTC. On the acquisition front, management plans to complete the purchase of 72 Loyang Way by end 2Q15 (total acquisition cost of S$98.1m), and we believe this would be financed by both debt and equity. Pending the finalisation of the funding structure, we have not incorporated this acquisition in our model. Maintain BUY and S$0.93 fair value on Soilbuild REIT, as the stock still offers an attractive FY15F

Maintain BUY Looking ahead, we expect FREIT to maintain its core focus on the Indonesian healthcare market, given the favourable demand and supply dynamics, rising middle-class population and healthy pipeline of potential acquisition targets from Siloam International Hospitals. FREIT will also explore asset enhancement initiatives over the next few years for the following assets: Siloam Hospitals Surabaya, Siloam Hospitals Kebon Jeruk, and Imperial Aryaduta Hotel & Country Club. Given this in-line set of results, we maintain our projections on FREIT. The stock is currently trading at 5.8% FY15F distribution yield.

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OCBC Investment Research Market Pulse 15 Apr 2015

Maintain BUY and S$1.50 fair value estimate on FREIT. (Wong Teck Ching Andy)

fair value estimate of S$3.85, but would keep a close eye on more visibility for a turnaround in the group’s core media business which could be a key positive catalyst ahead. (Carmen Lee)

Singapore Press Holdings: Cost pressures well managed  Results within expectations  Cost pressures well defended  Signs of stabilizing ad outlook 2QFY15 results mostly in line Singapore Press Holdings (SPH) reported a 2QFY15 PATMI of S$69.6m, down 14.4% mostly due to the absence of divestment gains recognized in 2QFY14; but partially offset by higher income from investments, a stronger share of results of JV/associates and a higher operating profit of S$68.0m over 2QFY15 which increased 27.1% YoY. Topline for the quarter dipped 3.0% YoY to S$270.3m mainly as media revenues continue to slip (down 7.1% to S$202.8m), with advertisement and circulation revenues both falling 8.0% and 7.7%, respectively. The impact of the weaker media numbers, however, was partially negated with contributions from the newly-opened Seletar Mall and revenues from the property segment increased 17.2% to S$60.6m. We judge these results to be broadly within expectations, and 1HFY15 revenues and operating profit now makes up 47.1% and 48.8% of our full year forecast, respectively. In addition, the board declared an interim dividend of 7.0 S-cents per share, which is similarly within expectations and unchanged from that in the same period last year. Cost pressures were well managed We like that SPH has successfully managed costside pressures over the quarter; and staff costs, material and production costs, and operating other expenses all similarly fell 6.3%, 17.0% and 21.6% YoY, respectively. The group’s staff headcount was kept mostly flat at 4,310 as at end 2QFY15 versus 4,316 at 2QFY14. Newsprint prices continued to inch down to S$573/MT versus S$586/MT in 4QFY14, and average monthly consumption also fell to 6,811 MT from 7,847 MT. While display and classified ad revenues in 2QFY15 fell 8.2% and 8.4% YoY, respectively, management indicated that they are seeing signs of the ad spend outlook stabilizing and that the Singapore Adex benchmark registered a YoY uptick in the month of Feb-15 after four consecutive declines. We opt to maintain our HOLD rating with an unchanged

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OCBC Investment Research Market Pulse 15 Apr 2015

Calendar of key events 13-Apr-15

14-Apr-15

16-Apr-15

17-Apr-15

Keppel Land 1Q15

Keppel Corp 1Q15

CN Mar Property Prices (18th Apr)

Keppel T&T 1Q15

CN Mar Retail Sales

Qian Hu 1Q15

SG Mar Electronic Exports

SPH REIT 2QFY15

SPH 2Q15

CN 1Q GDP

US Mar Housing Starts

SG Mar Non-oil Domestic Exports

M1 1Q15

SG 1Q GDP

SG Feb Retail Sales

Soilbuild REIT 1Q15

CN Mar Foreign Direct Investment

US Mar Industrial Production

Keppel Infrastructure Trust 1Q15

First REIT 1Q15

Keppel REIT 1Q15

15-Apr-15

US Mar CPI

US Mar Retail Sales

20-Apr-15

21-Apr-15

22-Apr-15

23-Apr-15

24-Apr-15

MLT 4QFY15

Mapletree Industrial Trust 4QFY15 results release

MIT 4QFY15 results

Sheng Siong 1Q15 results

Great Eastern 1Q15

Sabana Shariah 1Q15

CMT 1Q15

Mapletree Commercial FY15

China Aviation Oil 1Q15

Sheng Siong 1Q15

MLT 4QFY15

SGX 3Q15

MGCCT 4QFY15

SG Mar Industrial Production

US Mar Industrial Production

Cambridge Industrial Trust 1Q15

A-REIT 4QFY15

US Mar Durable Goods Orders

Cache Logistics Trust 1Q15

Ascott Residence Trust 1Q15

Frasers Centrepoint Trust 2QFY15

Frasers Com Trust 2QFY15

US Mar Existing Home Sales

SG Mar CPI US Mar New Home Sales

27-Apr-15

28-Apr-15

29-Apr-15

30-Apr-15

01-May-15

DBS 1Q15

Utd Overseas Ins 1Q15

Parkway Life REIT 1Q15

OCBC 1Q15

CN Apr Mfg PMI

US 1Q GDP

Venture 1QFY15

Sembcorp Marine 1Q15 Raffles Medical 1Q15

UOB 1Q15 Cosco 1Q15 YZJ 1Q15 SG Mar Bank Loans & Advances US Apr FOMC Rate Decision

04-May-15

05-May-15

06-May-15

07-May-15

08-May-15

Tigerair 4QFY15

CN Apr Exports

Noble 1Q15

CN Apr CPI(9th May)

Sembcorp Industries 1Q15

CN Apr Money Supply (10th May)

OSIM 1Q15

CN Apr New Yuan Loans (10th May) SG 1Q GDP

11-May-15

12-May-15

13-May-15

14-May-15

15-May-15

CSE Global 1QFY15

SIAEC FY15

Comfort Delgro 1QFY15

NOL 1QFY15

SG Mar Retail Sales

CWT FY15

CN Apr Retail Sales

SIA 4QFY15 HTL Int 1Q15 CN Apr Foreign Direct Investment

Notes:

Sourced from Bloomberg All US Tech results dates have been adjusted to Singapore dates. US Initial jobless claims are released every Friday. MBA mortgage applications are released every Wednesday.

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OCBC Investment Research Market Pulse 15 Apr 2015

SHAREHOLDING DECLARATION: For shareholding disclosure on individual companies, please refer to the latest reports of these companies.

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RATINGS AND RECOMMENDATIONS: - OCBC Investment Research’s (OIR) technical comments and recommendations are short-term and trading oriented. - OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. - As a guide, OIR’s BUY rating indicates a total return in excess of 10% based on the current price; a HOLD rating indicates total returns within +10% and -5%; a SELL rating indicates total returns less than -5%.

Co.Reg.no.: 198301152E

Carmen Lee Head of Research For OCBC Investment Research Pte Ltd

Published by OCBC Investment Research Pte Ltd

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