| PHILLIP SECURITIES | MAYBANK KIM ENG |
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Sabana Shari'ah Compliant REIT A new substantial Unitholder has emerged SINGAPORE | REAL ESTATE (REIT) | TRADING NOTE Event-driven trading idea Since our original Trading Note from over a month ago (23 January), units of Sabana Shari'ah Compliant REIT (SSREIT) have appreciated by ~15%, and investors who had bought into it would have also received the 4Q FY16 distribution of 0.88 cent/unit – bringing total return to ~17%. We believe that the odds of a re-rating for the REIT have just improved with the new substantial Unitholder coming on board.
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Q&M Dental Group (QNM SP) FY16 dragged by higher costs; D/G to HOLD Cut TP 23%, upside risk from strategic review FY16 headline earnings were lifted by a SGD21.3m gain from the spin-off of Aidite. Core earnings missed our expectation by 12% due to higherthan-expected costs, amid integration of M&As and spin-off of subsidiaries. On the positive side, core earnings grew by a commendable 23% YoY, after adjusting for various one-off items. To account for higher integration costs and earnings dilution from spin-off of two subsidiaries, we cut FY17-18E EPS by 19-28%. We downgrade Q&M to HOLD and reduced our TP by 23% to SGD0.77. Our TP is now based on 36x FY18E EPS, pegged to its long-term forward P/E mean (down from +1SD of 42x). Market anticipation of the strategic review could support the share price, while a positive outcome could pose upside risk to our TP.
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| CIMB | |
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Singapore Strategy Hunt for laggards ■ Property developers led the earnings beats in 4Q16 while small-cap O&M had the most misses. We are still trimming EPS but at a narrower spread of <1%. ■ We advocate investors to take some profit from capital goods and banks as they are priced ahead of growth and orders. ■ We still see upside for earnings upgrades and valuation re-ratings from the tech/manufacturing sector and US$ plays. ■ We reshuffled some of our Alpha picks due to outperformance. Our big cap picks are FCL, STE, Venture, UOL and First Resources. ■ Small-cap picks are: CSE Global, UMS, Talkmed, Best World, Cityneon, Sunningdale and Valuetronics.
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| OCBC | DBS VICKERS |
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Singapore REITs: Challenging quarter, but bright spots exist The 24 S-REITs under our coverage have concluded their 4QCY16 results reporting. Lippo Malls Indonesia Retail Trust beat our expectations for a second consecutive quarter, but Starhill Global REIT missed. The remaining 22 S-REITs we cover met our expectations. Overall DPU growth for the quarter saw a negative 2.0% YoY fall. While we continue to maintain our cautious view on the operational outlook of the S-REITs sector, we note that there were some bright spots seen over the past few months across most of the sub-sectors. Given uncertainties over the geopolitical environment and sustainability of the global economic recovery, we believe S-REITs can still warrant a strategic position in investors’ portfolio. Maintain OVERWEIGHT on the S-REITs sector. Our preferred picks are unchanged: Frasers Centrepoint Trust [BUY; FV: S$2.28], Keppel DC REIT (KDCREIT) [BUY; FV: S$1.39], Ascendas REIT [BUY; FV: S$2.68], Frasers Logistics & Industrial Trust [BUY; FV: S$1.08] and Mapletree Greater China Commercial Trust [BUY; FV: S$1.08]. |
Mapletree Industrial Trust (MINT SP) : BUY Value accretive addition to the portfolio Secured built-to-suit project at S$60m Long term commitment from tenant in excess of 10 years Positive impact to distributions when completed in 2H18 Maintain BUY and S$1.90 TP What’s New Secured a built-to-suit data-center development. Mapletree Industrial Trust (MINT) announced that it has secured a builtto-suit (BTS) contract to develop a data-center for an established operator for approximately S$60m. The datacenter will be located in the West Region of Singapore and is within a specialised industrial park for data centres (which we believe to be at “Tanjong Kling”) with supporting infrastructure.
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