Excerpts from analyst's report
Phillip Securities analyst: Peter Ng
 Alphabeta is the newest architectural expression of the 'new economy'. Photo: AlphabetaWeaker GBP translation caused by BREXIT has minimal impact on group’s overall performance. Rental revenue from SinarMas Land's (SML) two UK investment properties (Alphabeta Building and Warwick House) contributed less than 2% to Group’s total revenue in FY15. The 8% depreciation in GBP/SGD (2.00 to 1.85) translates to a revenue decline of 0.2% in our revenue forecast which will have minimal impact on the group’s overall performance. Weaker GBP translation led to lower asset values of two UK properties and a reduction in projected RNAV. Factoring in a weaker GBP translation in our FY16E RNAV projections and keeping the rest of our assumptions intact led to a downward adjustment of S$0.02 to asset values of the two UK properties, representing a 1.2% reduction in total RNAV. These two properties made up 18% of the group’s total RNAV before the adjustments were made and 17% after adjustments.
We maintain our BUY rating with a $0.02 reduction in TP to $0.72 (S$0.74 previously) based on our SOTP RNAV estimates, to take in account of a weaker contribution of rental income from the group’s two UK properties which has led to lower asset values in our projections. In the grand scheme of things, the impact is minimal to the group’s total revenue and prime offices in London will continue to benefit from the positive demand and supply dynamics in the near term (mentioned in a previous report published on 25-Apr-16) |
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Full report here.
