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Hongkong Land Holdings Ltd Lowest valuation among office landlords ■ Demand for offices in the Central area remains strong, primarily driven by mainland companies, as businesses move further out. ■ It is reported that Excelsior Hotel has been listed on the secondary market with asking price of HK$40k/sf. The hotel was approved for redeveloping into offices. ■ Murray Road site is open for tendering. Market appraises the land at HK$25k- 40k/sf; we believe the final tender price might provide positive surprise. ■ HKL is trading at 41% discount to NAV, which is deepest among peers. We raise TP to US$8.5 given sustained demand and rising land price in office space. ■ Key risks: recession in HK/China, businesses moving outside of Central faster than expected.
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Lippo Malls Indo Retail Trust (LMIRT): Positive on Indo Retail In 2017, we expect occupancy rates and rental rates in Greater Jakarta to remain stable, given the relatively muted supply pipeline this year as well as indicators of a healthy retail sector. On top of this, we expect LMIRT to enjoy strong rental reversions when 23% of their leases by NLA expire closer to the end of 2017. Beyond 2017, we see a risk of occupancy and rental reversion headwinds in 2019 as the annual retail supply is projected to increase by ~5% in Jakarta and by ~11% in Greater Jakarta according to Colliers. As of yesterday’s closing price of S$0.395, LMIRT is currently trading at an attractive FY17F yield of 8.6% and a FY18F yield of 8.7%. We maintain our BUY rating on LMIRT with a fair value of S$0.43. |
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DBS VICKERS |
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China Everbright Water Another breakthrough · First urban-rural integration water supply project in Shandong with total investment of Rmb3.1bn · Clinched total project wins of >Rmb4bn in 1QFY17, compared with Rmb2.5bn in FY16 · Stronger project pipeline · Maintain BUY with TP of S$0.64
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