MIDAS (Lim&Tan)

S$0.385-MIDS

􀁺 We highlight key points by Patrick Chew CEO of Midas from his interview with the Edge:

a. while the high speed rail orders have come to a standstill in the near term due to investigations by the government, they will continue to receive orders for metro trains as well as export orders;

b. he believes that China’s high speed rail will be back to normal once the investigations are completed;

c. despite the on-going investigations, the company has not received any information regarding contract cancellations as rumored in the market;

d. despite the near term uncertainties, management continues to believe in the long term benefits of the railway industry in China and will go ahead with their original plans to construct the new plant in Henan, targeting to increase existing production capacity by another 40% to 70,000 tpa.

COMMENTS

1. While we agree with management’s view that the longer term prospects of the railway industry will remain intact given that its a key backbone of China’s economic development, the near term uncertainties regarding the on-going investigation will continue to weigh on sentiments. While metro train and export orders may help to mitigate the weakness from the high speed orders, we believe that for the stock to sustain its upward momentum again, all sectors would have to show strength again, much like what happened in 2009-2010. But with the stock retesting its March 2009 lows in terms of share price and valuations, we believe investors can start to monitor the stock again for investing opportunities again. But we are maintain Neutral for now pending the end of the investigations and for signs of a pick up in order momentum again.

UE E&C Ltd - Headwinds in the construction sector; initiate with HOLD. (OCBC)

Initiating Coverage HOLD

Current Price: S$0.335

Fair Value: S$0.41

Established construction and engineering player. UE E&C is a medium-sized construction and engineering group with three main divisions: (i) Construction (FY10: 85% of total revenue), (ii) Mechanical and Electrical (M&E) engineering (8%) and (iii) Others (7%), including property development and rental/supply of tiles and industrial equipment. Its operations are centered mainly in Singapore (FY10: 82% of total revenue), although it also has a sizeable presence in Brunei. The company is 68% owned by United Engineers Group Limited (UEL), one of Singapore's most established engineering, construction and facilities management companies.

Good track record. The company has track records of over 30 and 25 years in construction and M&E engineering industries respectively. It has undertaken a wide range of construction projects including mixed development, residential, clubs, institutions (e.g. hospitals, military compounds, etc) and public infrastructures (e.g. MRT extension). For its M&E engineering, it provides services such as air conditioning and mechanical ventilation systems, fire protection and alarm systems and sanitary systems. Recently, the company is expanding on its power equipment business although we believe revenue contribution from the power business will remain small.

Watch out for credit and liquidity risks. UE E&C, like other construction companies, is exposed to credit risks as it offers credit terms to its customers. If any of its customer defaults or delays on its payments, the company may face a shortterm liquidity squeeze. We note that its account receivable days have increased to 118 days (as of FY10) from 99 days (as of FY09). Given that UE E&C's business is highly concentrated in Singapore, weaker demand from Singapore's construction and engineering industries may affect the company's financial performance severely. Other risks include execution risks (i.e. project delays) and rising materials / labour costs.

Initiate with HOLD; fair value estimate of S$0.41. In our view, UE E&C is a well-managed company with an established track record in construction and M&E engineering industries. However, it appears to suffer from a lack of market attention, presumably because of its small market size and concerns whether a slowdown in Singapore's property market would spill over to the construction sector. In addition, the company's shares are also considerably less liquid compared to its listed peers. Therefore, we value UE E&C at 3x its forward EPS (33% discount to the industry average PER of 4.5x) to obtain a fair value estimate is S$0.41. As the stock looks fairly valued at the moment, we initiate coverage with HOLD.

租戶要走了，怎办？

很多房东都在租约届满后碰到很多头痛的问题，或一些损失，甚至茫无头绪不懂得如何面对。

其中，包括租户不愿意搬迁、租户漏夜搬走、租户欠债，或迫不得已要采取驱逐等法律行动。

这一切虽然房东都不希望碰上，但不得不懂，也不得不预防。本篇列举数项供房东们参考。

一栋好的房子、一个好的房东，在租约届满后，租户肯定有续租的意愿，房东不必费心思再去找新的租户，也省下空置及再招租的烦恼与费用。

即使因为租户不愿意续租，也有很多的客户即刻可以填补，再不然就放回市场招租，重新开始租赁的程序。

当租约届满或在某种情况被中止后，亲爱的房东将面对另一阶段的工作。

现在，就让我们从更专业的角度，讨论如何面对与处理这些问题。

更新租约

老租户要续约一般上都不难处理，只要是好的租户，租金差了一点也无所谓；不过，若是恶租户，房东千万别贪图多收几个月的租金，反而应该趁着约满的良机，即刻解除宾主关系。

然而，房东必须了解续约手续和利害关系，也必须懂得如何拒绝恶租户的续租要求。

租约给予房东与租户的是一项权力，却也是一个职责，更是一种约束。

当租约届满时，倘若租户去意已决，房东则希望圆满收场，准备迎接下一个新的一品租户；倘若租户有意继续租下，则续约必须看当初的合同如何签订；因此，双方对合同的了解是绝对重要的。

首先，合约必须先决定是否在约满时允许更新租赁期。

房东一般都会允许更新租期一年或两年，商业租户因为大笔投资于装潢或仪器，而可能要求制定允许更新期三年的续租合约，甚至两个或三个三年的续约选择权。

这个授或受的选择权通常都附带着条件，而这个附带条件就决定了新合约的成功与失败。

约满时争取有利条款

除了一些大型的商业广场，在续约时会要求租户重新装修以新面目示人，让该产业维持整体的生命力与迎合时代感，其他的房东最多也不过是要求重新检讨租金。

在一般合约里，房东与租户都会在签约前争取在约满时对他们有利的条款，但一般可归纳于以下三类：

1. 新租约以当时的市场租价为准，市价涨则租金起，市价跌则租金落；双方若有争议，则交给仲裁庭决定，或可以估价师的数据为准。

2. 续约的租金修订不可超过一个顶限，如10％、20％等，这意即调整后的租金涨幅最高不可超过限定额，但切记市场跌时则租金依例调低。这个要求一般都是由租户提出的。

3. 双方同意一个预订的续约租金，这一般采用在新兴产业区，比如第一期每平方尺5令吉，第二期（续约）以6令吉计算，以此类推；这个方程式通常都是房东方面提出的。

依照条款续约 房东无权不续租

无论如何，续约与否的选择权还是在于租户，房东若将租金大幅度调高，租户一般都会选择搬出，另寻其他租金合理的房子或店面，除非绝对没有其他的选择。

不过，只要租户依照条款续约，房东没有权力不续租给该租户。
即使房东将该产业卖了，新买主还是得将有关房子继续租给该租户，这续约的选择权是绝对的，除非合约另有增加中止合约（解约）的权力与条款。

两个月前通知续约

这里有几点还请房东与租户，在决定续约之前需要多注意。

一般的合约都会规定租户必须在租期届满的两个月前通知屋主续约的决定，否则，屋主有权力假设租户放弃续约的选择权，将房子租给第三者。

然而，我们还是时常看到房东与租户在这一方面出现了争执，其中最主要的原因是因为沟通与了解到问题。

只要租户没有在有关期限内表明续约的意愿，房东可要求租户给予方便，向其他客户招租，展示其房子。

但若租户续约，则房东可以根据合约的允许下提高租金，并调整租赁押金及水电押金。

要达到双赢的局面，更新租约是最佳的选择；房东可以不需重新装修、粉刷房子、不必空置房子、不必面对一个新的陌生租户；而租户一般上也不太愿意因租金过高而迁徙，能够舒舒服服的住下去，不但节省了搬迁的时间与费用，更不必面对一个新的环境而须重新适应。

无奈的租约届满、无法续约造成双输局面，但天下无不散的宾主关系，房东最重要的是了解笔者前数篇所谈过的：如何留住您的好租户！那您才能做到一个富有的一品房东。

http://www.nanyang.com.my/node/377582?tid=691