Buy, Sell, Hold....What analysts say

OUE-HT---> Credit Suisse

Initiate coverage on OUE-HT with OUTPERFORM. Target price of
S$1.04 implies 21% upside. OUE-HT has two Singapore assets—
the Mandarin Orchard Singapore (MOS) hotel and the adjacent
mall, Mandarin Gallery (MG), both located on Orchard Road,
making it a beneficiary of business, leisure and medical visitors.

OUE-HT trades at 7.6% FY14 yield. Our target price of S$1.04 implies a 6.3% target FY14 yield. Key risks include economic (and industry cyclicalities), land lease title (43 years left), competition
and acquisition risks.

GUOCOLEISURE ---> Lim & Tan Research

While Guocoleisure’s full year to June’13 profit
fell 43% to US$44mln, if we exclude one-time items
such as (a) one-off resolution of a royalty
settlement dispute; (b) write-back of deferred tax
as a result of 2 UK hotel properties’ internal
restructuring; (c) compensation from hotel lease
termination received in the current year, the
group’s recurring profit would have declined a
more moderate 12.2% to US$68.4mln.

 The lower recurring profit reflects weaker sales
from the gaming sector as the euro crisis affected
gaming demand, lower oil and gas royalty income
due to lower oil and gas prices as well as lower
production volumes while operating costs
increased due to labor cost inflation in UK and
additional staff hired to start up new initiatives in
their hotel operations.

 Following the conclusion of the Olympics in 2012
in UK, London hotels are experiencing a drop in
demand which combined with the need to absorb
a significant increase in new supply pre-Olympics
will present challenges to hoteliers in 2013 and
2014.

 However, the new appointment of a new CEO for
the hospitality business and the re-branding plans for
the hotels is expected to help the UK based business
to weather the down-cycle.

 Management will continue to focus on increasing the
player base for The Clermont Club and their ongoing initiatives for Molokai.

 Despite the lower profit, final dividend was
maintained at 2 cents a share, translating to a dividend
yield of 2.65% at 75.5 cents.

 NTA of the company was flat at US$0.84, translating
to S$1.07, giving a price to book of 0.7x.

 PE ratio at 75.5 cents a share is 18x due to the profit
decline.

 Net gearing is 31%.

 We do not have a rating on the stock.

PALM OIL ---> UOB KH

CPO price upside momentum to continue
Highlights
• OVERWEIGHT on the plantation sector as the recovery in CPO
prices will continue to drive share price performance.
• We like First Resources (FR) for its hands-on management team,
young age profile and efficiency.
• Bumitama Agri (BAL) is a favourite for its young age profile and
industry-best oil extraction rate.
• An integrated player like Wilmar International (Wilmar) should see
a smooth 2H13 on strong performance across all divisions.

CHINA MINZHONG, SINO GRANDNESS ---> Maybank KE.

Ø Indofood (which nows 44.1% of Minzhong) launched a MGO for the remaining shares of Minzhong on 2 Sep 2013 following Minzhong’s rebuttal on 1 Sep 2013. This effectively supersedes fraud concerns although they still exist and will provide a floor to the stock.

Ø Given the still huge uncertainties, accepting the offer would be the easiest thing to do. As analysts however, we want to stay in the game.

This will not be our last report as we will continue to dig into Glaucus’ accusations, Minzhong’s rebuttal, Glaucus’s rebuttal to Minzhong’s rebuttal and more rebuttals and rebuttals to the rebuttals to come.

Ø Officially, our rating is kept at UNDER REVIEW. For investors with a low risk threshold, take the offer and cash out and switch to Sino Grandness, but for investors with a higher risk appetite, we would like to remind them that Indofood’s offer price could look cheap after all uncertainties are removed.

UOB KH STRATEGY: We believe the FSSTI is likely to range-trade given the lack of earnings visibility next year and external concerns. Nevertheless, we think the FSSTI will be relatively more resilient than its Asean peers owing to strong fundamentals, such as a firm currency and low corporate borrowings.

The market is trading at 13.5x 2014F PE, a 17% discount to its long-term mean PE of 16.2x. Our strategy for the rest of this year would be to buy on weakness, particularly large caps with dividend yields and earnings visibility.

Investment themes include: a) rotation among highyield stocks, b) stocks with region- or sector-specific growth drivers, and c) quality laggards.

Our top picks in the big-cap space include Bumitama, CapitaLand, DBS, Keppel Corp, M1 and Suntec REIT. Compelling mid-caps include Courts, Halycon, Silverlake and Overseas Education.

SELLs include Genting Singapore, IHH and SMRT.

HIAP HOE --> OSK-DMG

Given the rising land costs and increasing risk of property prices softening in Singapore, Hiap Hoe has shied away from aggressively bidding for sites in the local market. For the next 1-2 years, earnings will be underpinned by progress billings from Waterscapes @ Cavenagh (75% sold) as well as the rental income and room
revenue generated from its mixed development at Zhongshan Park Balestier.

With its major capex completed and cashflow from its hotels streaming in, the company is now in a steady cash-generating position, and has deployed its capital for its overseas venture as well as hiking its interim dividend to 1.2cents.

We continue to like the stock for management’s execution track record and discipline in landbanking. Maintain BUY with a TP of SGD0.86, based on 35% discount to RNAV to SGD1.32/share. (Goh Han Peng)