STOCKS NEWS SINGAPORE-OCBC downgrades hospitality sector to 'neutral'

Mon Dec 17, 2012 10:17pm EST

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OCBC Investment Research downgraded Singapore's hospitality sector to 'neutral' from 'overweight', citing a slowdown in the sector, but Ascott Residence Trust remains a top pick for its global exposure.

Hotel bookings up to next year's Chinese New Year in February are still weak, OCBC said in a note. It expects 2013 to see fewer MICE (meetings, incentives, conventions and exhibitions) events.

"Hoteliers have also expressed concern over the upcoming competition that will result from the growth in hotel room supply, as new hotels typically provide substantial room rate discounts in the first few months of operation," the brokerage said.

OCBC has a 'buy' rating on Ascott with a target price of S$1.37, due to its exposure to growth regions such as Europe and developing Asia in the serviced residence industry.

By 0306 GMT, Ascott units were unchanged at S$1.305, but have surged 38 percent against a 34 percent rise in the FTSE ST Real Estate Industrial Trust.

However, the brokerage has 'hold' ratings on CDL Hospitality Trusts and Far East Hospitality Trust, with target prices of S$1.91 and S$1.02 respectively.

1106 (0306 GMT)

(Reporting by Charmian Kok in Singapore; Editing by Anupama Dwivedi; charmian.kok@thomsonreuters.com)

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10:36 STOCKS NEWS SINGAPORE-CIMB ups United Engineers target price

CIMB Research raised its target price for construction and property company United Engineers to S$3.59 from S$3.13 and kept its 'outperform' rating, taking into account its acquisition of an office asset in downtown Singapore.

By 0225 GMT, United Engineers was up 5.5 percent at S$3.26, having surged 73 percent since the start of the year, compared with the FTSE ST Industrials Index's 26.5 percent rise.

United Engineers said on Monday it will buy an office asset, 79 Anson Road, for S$410 million.

"Though the pricing is steep, we view the acquisition as a small positive, entrenching its strategy of building a stable base of recurring income," said CIMB, noting that United Engineers is expected to renew expiring leases at the asset at higher rents.

CIMB estimates United Engineers could have a portfolio of investment properties worth more than S$2 billion by 2014, and divestments or a spin-off into a real estate investment trust is increasingly likely over the next two years.

1027 (0227 GMT)

(Reporting by Charmian Kok in Singapore; Editing by Anupama Dwivedi; charmian.kok@thomsonreuters.com)

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9:41 STOCKS NEWS SINGAPORE-CIMB ups Ho Bee target price

CIMB Research raised its target price on property developer Ho Bee Investment Ltd to S$2.21 from S$1.93 and kept its 'outperform' rating, citing a possible upward revaluation of its assets.

Ho Bee shares were up 1.1 percent at S$1.885, and have jumped 83.9 percent since the start of the year, compared with a 36.6 percent rise in the FTSE ST Financial index.

Ho Bee is trading at a 30 percent discount to its book value, but CIMB noted that "the discount gap is attractive as its book value is set to rise next year," when its commercial property, the Metropolis is revalued.

"Demand for investment assets and quality office properties with large floor plates places Metropolis in good stead for a potential divestment in 2013," said CIMB.

The launch of China projects will also boost profits from developments sales, CIMB said, expecting a sell-through rate of 50 percent to 60 percent for initial launches.

0932 (0132 GMT)

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