Friday, June 21, 2013

6 reasons why CMA is bullish on 2013 and beyond

See what makes it so "well-positioned".

CMA ran down the reasons why it is in a solid position for growth in 2013, in a presentation during the recent SGX Sector Connect Seminar.

CMA first reasoned that more 75% of our malls are operational. 

It also said that the malls it had opened in 2012 will start to contribute to 2013 earnings. 

Also, the company is expecting significant profit recognition from Bedok Residences in 2013 and 2014.

CMA also expects its strong pipeline of 21 malls under development to contribute to future earnings. 

It is also positive that it can continue to maintain its leadership track record of building resilient necessity and suburban malls. 

Lastly, the company said that it has a fairly strong balance sheet to capitalize on future opportunities. 

Tuesday, June 11, 2013

Singapore REITs - As the dust settles, value emerges

S-REITs’ ability to grow distributions to compensate for rising bond yields/interest costs a key consideration. We believe that fears of the impact of rising bond yields on S-REITs are an over-reaction at this point as our economists do not expect QE to taper off anytime soon. Over the medium term, a rise in long bond yields is likely to be more gradual than abrupt and S-REITs’ continued ability to grow distributions (estimated at 4.0% y-o-y) is a compensating factor. Thus, we believe that the knee-jerk reaction seen in the S-REITs’ share prices (FSTREI index was down 10% YTD vs STI 5% dip in the past few weeks) is unwarranted. 

Impact of rising bond yields “more expected than real”.  We have assessed the impact of rising bond yields on our target prices, and the conclusions are: (i) Our analysis indicates that S-REIT yield spread of 3.9% based on current share prices have factored long bonds of >2.5%. Prior experience shows that S-REITs trade at a 350-390 bps spread when long bonds were above 2%. (ii) Impact from higher interest costs is managable at <3 b="">  Active capital management has resulted in most S-REITs locking in >50% of their debt costs for the next 1 - 2 years. We estimate a 0.5% increase in interest rates to have a <3 as="" b="" distributions="" impact="" managable.="" nbsp="" on="" see="" we="" which="">(iii) NAVs appear safe for now. Worries of cap rate expansion impacting S-REITs’ book values negatively are valid but we do not see it as a concern at this point. Other than for office, we note that higher valuations for S-REIT portfolios (retail, industrial sub-sectors) are underpinned by higher income, which we believe make S-REITs’ NAVs more resilient.   

Translation losses a potential risk. The INR, AUD and JPY weakened 2%, 7% and 27% against the S$ respectively since the start of 2013. Thus, S-REITs with exposures in these currencies might see earnings downside and NAV declines from translation losses. From the earnings front, we note that most S-REITs have taken hedges to minimize impact. 
S-REITs sell-off is over-done, Selective BUYs. We have been advocating a selective stance, and limit our picks to REITs which offer growth that is achievable and visible. We like Magic (BUY, TP S$1.22),MCT (BUY, TP S$1.53), FCOT (BUY TP $1.69) and Cache (BUY, TP S$1.47) for their better than peers’ growth prospects. We have also upgraded A-REIT (BUY, TP S$2.60) and MINT (BUY, TP S$1.63) from HOLD to BUYs on valuation grounds. 

Sunday, June 02, 2013


I was invited by Cerebos Pacific Limited to discover the power of medicinal mushrooms at The Vineyard @ Hortpark. High tea is served while we are being enlightened.

The first talk is by Miss Ketki Vinayachandra, a certified nutritionist & naturopath who shared with us tips on breathing techniques against stress.

The second talk is by Doctor Daniel Tsi, senior manager of regional research & development who spoke about the latest scientific researches on the benefits of medicinal mushrooms.

Cerebos Pacific Limited has developed BRAND'S MycoProtec Essence of Mushroom for those of us who are keen to boost our immunity and maintain a healthy disposition, and to help address both short-term and long-term health concerns.

BRAND'S MycoProtec Essence of Mushroom is a natural concentrate specially formulated with a unique blend of five rare, premium medicinal mushrooms: Lingzhi 灵芝, Cordyceps 冬虫夏草, Maitake 舞茸, Yamabushitake 头菇 and Shiitake 冬菇. It is Halal-certified and suitable for vegetarian, now available for a pack of 8x65ml bottles at S$27.90.

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