Month: August 2012
PLife – Lim and Tan
- We are downgrading PLife to HOLD following the expiry of the right of first refusal granted by Parkway Holdings, which is today part of IHH Healthcare.
-
The expiry suggests:
a. Mt Elizabeth Novena may not be sold to PLife;
b. hope for dual listing of Plife in Malaysia may not materialize.
- PLife’s 5% yield, which still has upside given Singapore’s high inflation, is expected however to provide cushion.
FE-HTrust – UOBKH
Hotel REIT's Comparison Table
|
Far East Hospitality Trust |
CDL Hospitality Trust |
Ascendas Hospitality Trust |
|
|
Market Cap (S$ m) |
1492 |
1867 |
703 |
|
No.of Assets |
11 |
12 |
10 |
|
Country of Operation |
Singapore only |
Singapore, Australia and New Zealand |
Australia, China and Japan |
|
Asset Class |
Stapled security (REIT+Dormant business trust) |
Stapled security (REIT+Dormant business trust) |
Stapled security (REIT+Active business trust) |
|
Total Asset Value (S$ m) |
2140 |
2030 |
1057 |
|
No. of Singapore Assets |
11 |
6 |
0 |
|
Sin Asset Value (S$ m) |
2140 |
1675 |
0 |
|
2012F Yield |
6% |
5.90% |
7.90% |
|
2013F Yield |
6.30% |
6.10% |
8.10% |
|
Gearing |
30.20% |
25.2% |
34.3% |
|
NAV/Share |
0.93 |
1.6 |
0.82 |
|
Prem/(Disc) to NAV (as at 18th Aug) |
0% |
20.6% |
7.0% |
|
Investment Mandate |
Singapore only |
Asia Pacific |
Asia pacific |
|
Sponsor Stake |
56% |
35.2% |
35% |
A-REIT – OCBC
STRONG RUN-UP LIKELY TO CAP FURTHER UPSIDE
- Diversified industrial landlord
- Positive outlook
- But further upside likely limited
Well-diversified portfolio
Ascendas REIT (A-REIT) is Singapore’s first listed business space and industrial REIT. It has a diversified portfolio of 101 properties in Singapore, comprising business and science park properties, hi-tech industrial properties, light industrial properties, and logistics and distribution centres, as well as a business park property in China. As at 30 Jun, A-REIT’s total assets amounted to ~S$6.6b. These properties house a tenant base of over 1,100 international and local companies from a wide range of industries and activities. A-REIT is managed by Ascendas Funds Management (S) Limited, a wholly owned subsidiary of Singapore-based Ascendas Group.
Commendable set of 1QFY13 results
For 1QFY13, we note that A-REIT turned in a commendable set of results, with DPU rising 10.3% YoY to 3.53 S cents despite an enlarged unit base post private placement. Operationally, A-REIT’s portfolio occupancy rate also improved to 94.6% from 94.3% in
4QFY12. For the rest of FY13, we understand that A-REIT has 9.1% of its revenue due for renewal. Given that the current market rents are 16-35% higher than the average passing rents for the areas due for renewal, we remain positive that A-REIT may continue to benefit from favourable rental reversions in the coming quarters.
Downgrade to HOLD on valuation grounds
In our view, A-REIT looks set to deliver another year of robust growth, supported by full-year contributions from its recent investments. However, we believe most of the positives have been reflected in its unit price, which has risen by 22.4% YTD. A-REIT is
currently trading at 1.2x P/B and is just 1.3% shy of our fair value of S$2.27. Its FY13F DPU yield of 6.2% is also lower than the industrial REIT subsector average of 7.6%. As upside is likely limited, we downgrade A-REIT from Buy to HOLD on valuation grounds.
StarHill – AmFraser
AEI Completion To Provide Buffer Against Headwinds
Investment Highlights
Singapore property portfolio propping up growth. Starhill Global REIT (SGREIT) recorded growth of 4.4% YoY in its net property income (NPI) for 2QFY2012, which was mainly buoyed by an improving performance of its Singapore property portfolio. Gross revenue, meanwhile, witnessed an increase of 4.8% YoY in the same quarter. As at the end of 2QFY2012, SGREIT has a portfolio occupancy rate of 99.5%.
Comfortable debt headroom. SGREIT’s gearing stands at around 30.5%, which is a healthy level. The company has a weighted average debt maturity of 1.8 years. SGREIT has S$576mil worth of debt maturing in FY2013. According to the company’s management, SGREIT is in the midst of discussions with banks to refinance the AUD$63mn term loan, which is maturing in January 2013, with an expected maturity beyond 2016.
An increasingly challenging macro environment. SGREIT generates 62.8% of its gross revenue from Singapore, leaving it heavily exposed to the underlying macroeconomic trends in the market. SGREIT’s retail
assets, namely Wisma Atria and Ngee Ann City, are positioned in the mid‐to high‐end segment, which means that its clientele comprises largely of discretionary spenders. The company’s portfolio does not consist of
Takashimaya department stores. Therefore, we do not believe the company is likely to escape unscathed from a broad‐based retail spending slowdown. Retail sales growth in Singapore (excluding automobile sales), in YoY terms, is showing waning signs of momentum, signalling more cautious discretionary spending in the near future.
Asset enhancement initiatives completion at Wisma Atria to partly cushion against economic slowdown. The majority of asset redevelopment works at Wisma Atria has already been completed in 2QFY2012, generating a return on investment (ROI) of around 12.8%, which exceeded the company’s initial projected ROI of 8%. Thanks to its AEI at Wisma Atria, SGREIT recognised positive rental reversions and higher occupancy rates. While the near‐term operating environment is likely to serve up greater challenges, the completion of its AEI at Wisma Atria should leave SGREIT better positioned in the current macroeconomic climate.
Trading at a forward dividend yield of 6.3%, according to Bloomberg consensus estimate, SGREIT continues to offer a decent yield, particularly amid the current low interest rate climate. The company has a price‐to‐book ratio of 0.85.
CCT – OCBC
SHOWING SOLID VALUE HERE
- Market expectations overly pessimistic
- Limited office renewal in 2H12
- Upgrade to BUY with higher S$1.53 FV
The Grade A office bellwether
CapitaCommercial Trust (CCT) is a commercial REIT focused on investing in quality income-producing commercial properties. Its current portfolio consists of 10 quality office commercial assets in the Central Area of Singapore, with a total NLA of approximately three million sq ft and ~550 tenants. One of the first REITs to list on the local bourse in May 04, it is a Grade A office bellwether with total assets of S$6.8b (as of end 2Q12) and market cap of S$3.9b. CCT’s sponsor is CapitaLand.
Better than expected 2Q12 results
2Q12 distributable income of S$58.5m was 7.5% higher YoY and translated to a DPU of 2.06 S-cents per share. Judging from consensus estimates, we believe this to be above market expectations which had anticipated weaker rental reversion performances in the year to date. Key drivers for CCT’s 2Q12 numbers were the revenue contribution from Twenty Anson, higher revenues from Raffles City and HSBC Building, and higher yield protection income for One George Street.
Upgrade to BUY with higher fair value estimate of S$1.53
In our view, the 4.7% dip in Grade A office rentals in 2Q12 was rather benign relative to more pessimistic market expectations. In 2Q12, we also saw the core CDB vacancy rate show a reversal from a rising trend to register a 0.9% dip to 8.4%, mostly due to limited supply completion and a stronger than expected office absorption during the quarter. We see this dynamic of limited office completion and stabilizing vacancy rates continuing till 2H13 (when Asia Square T2 and The Metropolis T1&2 are slated for completion). Moreover, with limited office leases in its portfolio up for renewal (4.1%) in 2H12, we judge CCT’s operating fundamentals to be reasonably sound ahead. All considered, we believe there is solid value at current valuations (0.87x PB with a forward yield of 5.6%) for CCT’s portfolio of prime office assets and operating track record. Upgrade to BUY with a higher fair value of S$1.53, versus S$1.31 previously, as we incorporate stronger cap values for CCT’s portfolio.