market strategists sg & us equity analysts · but 2015 should see several headwinds turn to...

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Market Strategists Kenneth Koh, Market & Equity Analyst

Soh Lin Sin, Macro | Equities Economist

Osama Bakhteyar, Macro | Equities Economist

SG & US Equity Analysts Wong Yong Kai, US Equities

Colin Tan, Telecoms | Technology

Caroline Tay, Real Estate

Benjamin Ong, Finance | Offshore Marine

Richard Leow, Transport & Logistics

Dehong Tan, REITs

Shane Goh, Consumer

By Phillip Securities Research Mr. Chan Wai Chee, CEO

Jaelyn Chin, Operations Exec

23rd Mar 15, 8.15am/11.15am Morning Call/Webinar



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Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



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Eurozone (Maintains Neutral-weight)

• The Eurozone’s economy is poised to show some positive

growth this year, supported by a budgetary policy.

• The recovery should shift toward domestic consumption as

the recovery progresses barring any economic shocks.

• An increasingly supportive credit cycle should help the

recovery with growth in money supply accelerating and

lending conditions improving on trend.

• Spain, Portugal, Estonia, and Finland are having elections

this year, following after the colorful results in Greece.

• There is a good chance that the policy consensus will be

debated.

The ECB’s achieving its inflation target will not be easy

because other Eurozone policymakers are less focused on

generating economic growth.

ECB cannot do anything about the underlying structural

problems in the eurozone. Only the politicians can do this.



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Eurozone’s institutional framework is incomplete. The Bloc’s

monetary policy (driven by troika) is not connected to fiscal

policy.

Most of the member states feature weak government

finances, an inefficient labor market and extensive

bureaucracy.

An immediate reduction in the taxation of labor, combined with

a subsequent and gradual increase in VAT, could boost

consumption and introduce new expectations for inflation.

But 2015 should see several headwinds turn to tailwinds —

including the lagged effect of a weakening euro, easing fiscal

austerity and more certainty in the banking sector.

Unit Trust that proxy Eurozone

Templeton - European

Schroder - European Equity Alpha

Schroder - ISF European Smaller Companies

ETFs that proxy Eurozone

DBX Tracker MSCI Europe - IH3

VGK Vanguard European Stock Index



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• Grexit: In Greece Syriza came out as a winner.

• We believe a Greek exit (Grexit) is a scenario that all

parties want to avoid and so is highly unlikely. But

assuming Grexit happens, there could be some serious

implications to that.

• Greece itself will be secluded from further funding by the

ECB, EU or IMF.

• Even if Syriza were to provoke such an outcome in the

coming months, we would expect strong financial stress in

the form of a bank run and another round of new elections

before an exit could happen.

• For Europe, even without a complete breakdown of the

euro, a Greek exit will leave the ECB holding billions of

dollars of Greek debt and very few options.

• The European Union accounts for about one-fifth of global

trade.

• A slowdown in Europe could lead to further shocks to the

world energy market and damage to global exports.



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Civmec (Buy, TP: 0.475, CP: 0.415)

1. Stock price tanked well below what fundamentals are.

2. Civmec sold off by 30+% over last week. Management has responded citing a large (but not substantial) shareholder selling for personal reasons. No change in fundamentals. Strong ROEs ~ 19%, little net debt.

3. Net earnings will take a hit this year due to investment into new markets and shifting project focus into infrastructure, but current prices make this undervalued as we wait for growth next year.

4. We revise our target price to 47.5 SGD based on a conservative 8.2x FY15 PE. Upgrade to BUY from REDUCE.

Key Financial Summary

Y/E June FY12 FY13 FY14 FY15E

Revenue (SGD '000) 328,654 405,924 433,677 491,291

adj. NPAT (SGD '000) 30,310 36,049 35,079 28,997

EPS. (SG cents) 6.05 7.20 7.00 5.79

P/E (X),adj. 19.3 9.6 10.6 7.1

P/B (X) 6.55 3.15 2.57 1.21

DPS (SGcents) 0.0 0.6 0.7 0.6

Div. Yield (%) 0.5% 1.0% 0.8% 1.5%

Source: Bloomberg, PSR est.

*Forward multiples and yields are based on current price; historical multiples and

yields are based on historical prices



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2 Technical gold reports released today

Technical Ideas: Gold, Downside bias

with long tailed upside risk (23 March

2013)

Key idea: "… short term cycle up?"

QUANT ideas: Trend-following series,

Optimizing an N-day breakout on the GLD

(23 March 2013)

Key Idea: "How to profit from the price

cycles…"



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Initiation: Sina Corp [SINA]

(USD 32.93, Non-Rated)

• $2.45b SOTP (liquid assets & net cash) vs $1.91b

market cap. 12.3% shares were repurchased since

2014 for $311m. 65% SOTP derived from Weibo

(微博 | listed on Nasdaq), aka China’s Twitter.

• Weibo is trading at $14/user vs Twitter’s $97/user.

• Competition from Tencent-backed WeChat (微信).

• Sina might trade up to SOTP (+28% upside), share

buybacks below SOTP, valuations of its equity stakes

fall, or cash balance depleted for M&A.

2,45256129

120147

1,583

417

1,000

1,500

2,000

2,500

3,000

Weibo Net Cash E-House Tian Ge Alibaba Youku SOTP

$'m Breakdown of Liquid Assets & Net Cash

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

020406080

100120140160180200

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Segm

en

t R

eve

nu

e ($

'm)

Weibo 3-Year Users Growth

Daily Active Users (DAU) Monthly Active Users (MAU) % q-o-q DAU growth

$0.23

$0.44 $0.51

$0.57

$0.93

$1.51

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Weibo vs Twitter Users Monetization

Weibo ARPU Twitter ARPU



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Presenting Analyst: Caroline Tay Phillip Securities Research

23 March 2015



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Initiation: CapitaRetail China Trust (CRCT)

(Accumulate: TP $1.7)

Portfolio of 10 shopping malls in China, primarily Beijing (~75% by NLA)

•Growth of the Chinese Consumer Story

•Beijing a huge beneficiary of the rapid urbanization in China

•Strong mall operator



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The big picture… The Chinese Consumer Growth Story

•China’s push towards economy driven by domestic consumption

•Pro-consumption government measures

Rapid

Urbanization Increasing disposable

income and consumption

expenditure per capita

Sustained job growth as

China moves towards

“better quality” growth

Recent easing

monetary policy

Growth of the Chinese consumers – discretionary spending driven by

rising disposable income



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The big picture… The Chinese Consumer Growth Story

Beijing: a huge beneficiary of rising urbanization.

Fastest growing Chinese city

Recent easing

monetary policy

22 19 11 11

2.60%

0

5

10

15

20

25

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Shanghai Beijing Tianjin Guangzhou

CAGR (1990-2013) of population in China's top 4 cities with largest urban population

Urban Population(RHS, mn)

CAGR 1990-2013

Fig 3

2000

2200

2400

2600

2800

3000

3200

3400

3600

6/3/14 9/3/14 12/3/14 3/3/15

SSE Composite Index (background)

NOV 2014: Cut in benchmarklending and deposit rates, first cuts since 2012

Early FEB 2015: Cut in Reserve Ratio Requirement (RRR) to 19.5%, first industry wide move since 2012

End FEB 2015:Cut in benchmark lending rates and deposit rates by 25bp each

Fig 6



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Company Analysis

•Strong shopper traffic driven by proactive tenant adjustment

18

22

26

30

34

38

6

7

8

9

10

11

12

13

14

2010 2011 2012 2013 2014

mill

ion

Shopper Traffic

WANGJING

QIBAO

SAIHAN

WUHU

XIZHIMEN

Fig 8

Excludes Malls on master leases,

AEI and recently acquired malls

Av tenant sales growth

outperformed general retail

sales growth

Wuhu (Red line): affected because

of government decision to change

surrounding land use from

residential to commercial.

Repositioning of mall expected to

take till end 2015

17.9%

14.6%

0%

5%

10%

15%

20%

25%

30%

2010 2011 2012 2013 2014

Tenant Sales yoy % Growth

Tenant Sales YOY

General Retail Sales YOY

Tenant Sales (5yr average)

Retail Sales (5yr average)

Fig 9



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Peer Comparison and Key Risks

Risks:

Chinese preference for online shopping

•Proliferation of e-commerce platforms such as Wechat and frequent marketing gimmicks such as

Alibaba’s hugely popular 11.11 Singles Day

Increased household savings amid falling consumer confidence

•Uncertainties over the economy and housing could lead to falling consumer sentiment and

tightening of purse strings

ACCUMULATE: (TP: $1.7, upside of 12.3%)

Name Mkt Cap (SGD, mn) Price (SGD) Dvd Yld:D-1 WACC Wt Dbt P/B Company Profile

CAPITARETAIL CHINA TRUST 1,329 1.59 6.14 33.41 0.99

SUNLIGHT REAL ESTATE INVEST (HKG:0435) 1,119 0.68 5.47 40.43 0.51 Office and retail properties in Hong Kong

YUEXIU REAL ESTATE INVESTMENT (HKG:0405) 2,161 0.76 6.82 48.19 0.73 Office, Retail, Commercial properties in Guangzhou

FORTUNE REIT (SGX:F25U) 2,857 1.49 5.00 40.04 0.71 18 private housing estate retail properties in Hong Kong

LINK REIT (HKG:0823) 20,094 8.37 3.73 12.23 1.02 Mainly retail properties in Hong Kong



15

Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



16

Market Strategists Kenneth Koh, Market & Equity Analyst

Soh Lin Sin, Macro | Equities Economist

Osama Bakhteyar, Macro | Equities Economist

SG & US Equity Analysts Wong Yong Kai, US Equities

Colin Tan, Telecoms | Technology

Caroline Tay, Real Estate

Benjamin Ong, Finance | Offshore Marine

Richard Leow, Transport & Logistics

Dehong Tan, REITs

Shane Goh, Consumer

By Phillip Securities Research Mr. Chan Wai Chee, CEO

Jaelyn Chin, Operations Exec

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