Money Talk: Wheelock Properties, Cambridge Industrial Trust, Keppel Land

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. Wheelock Properties

Broker: CIMB

Wheelock and its concerted parties have announced a mandatory conditional cash offer for Hotel Properties Limited (HPL) at S$3.50 per share share.

We view this positively as it appears to be an opportunistic move on cheap valuations, will strategically pave the way for future collaborations to unlock value, and does not alter Wheelock's position as a prime privatisation candidate in the longer term.

HPL and Wheelock have long been friendly parties and own complementary assets along Orchard Road. Wheelock Place was refurbished in 2012 and will benefit from potential joint efforts to spruce up the area.

We expect the share price to react positively on this news and upgrade to an Add rating with a slightly higher target price of $1.98.

2. Cambridge Industrial Trust

Broker: OSK-DMG

Cambridge Industrial Trust announced its first-quarter results on Wednesday morning, with gross revenues up 6.1 per cent over a year ago at $23.5 million. This boosted Q1 distribution per unit to 1.251 cents, 1.4 per cent higher year-on-year, in-line with consensus.

Annualised 2014 DPU of 5 cents comes in 4 per cent below our estimates at 5.2 cents. However, ongoing asset enhancement projects coming onstream over the next few quarters, on top of new income contribution from its 2 latest acquisitions (total $73 million) should lift current DPU run-rate towards our forecasts.

Maintain our 2014 DPU forecast of 5.2 cents which gives an implied yield of 7.1 per cent at current levels. Reiterate Buy with target price of $0.81.

3. Keppel Land

Broker: OCBC

Keppel Land reported first-quarter net profit of S$87.7m, decreasing 9.2 per cent year-on-year mostly due to the absence of a tax write-back recognized in the same period last year.

We judge this set of results to be mostly in line with expectations and year-to-date net profit now constitutes 19.7 per cent of our full year forecast. The group sold 54 homes in Singapore over Q1, mostly from The Glades, which is now 23 per cent sold (about 170 out of 726 units).

The run rate over Q1 so far represents 14.5 per cent of the 370 total units sold in 2013, in line with expectations for a fairly muted 2014 in terms of Singapore home sales given the weak outlook.

In China, 570 home units were sold over the quarter, down 33 per cent year-on-year versus the 850 units sold in Q1, though management highlights that the achieved sales value was actually 5.9 per cent higher to a change in mix to higher-end projects.

Maintain Buy with an unchanged fair value estimate of $4.09.

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