ARA (S$1.28, BUY, TP: S$1.67): In our view, ARA is Asia’s finest asset manager with a high cashflow generating business model and little earnings downside since its fee income is based on a % of property value and % of net property income, which has proven to be resilient in previous crisis.

Following a set of strong 3Q11results which beat expectations, near term catalysts for the stock includes the formation of a new fund - Asia Dragon fund II aiming to raise US$1bn by 1Q12 - and a potential new REIT listing in 2012, with potential AUM of over S$2bn, which would add 10% to current AUM.

Fees from these potential assets under management are poised to bolster fees growth in 2012 and 2013.

Our target price of 18x FY12 AUM earnings for ARA is pegged to the higher end of global asset manager peers (PE ranging from 10x-18x), justified by its superior ROE, strong earnings visibility and multi earnings growth drivers over the next two years in our view.

--DBS VICKERS