StarHill – BT

Starhill rises after positive reports by analysts

STARHILL Global Reit units rose yesterday after Standard Chartered initiated coverage of the trust with an ‘outperform’ rating and a target price of 81 cents.

Investment Research report which identified Starhill as the bank’s preferred pick in the retail segment.

Starhill, which owns stakes in the Ngee Ann City and Wisma Atria shopping malls along Orchard Road, ended the day one cent, or 1.7 per cent, up at 60 cents.

Stanchart said in a report dated Aug 22 that Starhill is a cheap proxy to luxury retail in Singapore.

Analysts Meenal Kumar and Regina Lim noted that the trust is the cheapest Reit in Singapore with exposure to Singapore retail assets. The stock was trading at around 0.7 times adjusted net asset value.

The analysts expect a compound annual growth rate of 5.7 per cent for Starhill’s distribution per unit over the 2011-2013 financial years, as they expect the company’s Singapore assets to deliver a strong performance.

‘We believe central area retail rents will outperform suburban retail rents because of the large amount of suburban retail supply in the next three to five years,’ they said in their report. ‘We now prefer central retail landlords to suburban retail landlords and believe Starhill Global Reit is one of the best ways to play this theme.’

OCBC Investment Research likewise said in a new report yesterday that it prefers Orchard Road retail exposure over suburban malls.

The supply of retail space in the Orchard Road vicinity is expected to ease in the 2012 financial year, the firm added.

OCBC has a ‘buy’ call on Starhill with a target price of 70 cents.

Starhill Global Reit, which owns commercial assets in Singapore, Malaysia, Australia, China and Japan, is sponsored by Malaysia-listed YTL Corporation.