| CIMB | PHILLIP SECURITIES |
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Keppel REIT Business as usual ■ 1Q17 DPU of 1.45 Sts slightly below expectation, accounting for 22.5% of our FY17 forecast. ■ Renewed an attributable 67,700sf at slight negative rental reversion. ■ Tenant retention is key; a further 4.5% of leases to be renewed/reviewed in 2017, another 22.3% in 2018. ■ Maintain Hold, with a slightly higher target price of S$1.09.
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CapitaLand Commercial Trust Record office property transactions not indicative of REIT future performance Net property income and DPU was within our forecasts. Negligible (5% by gross rental income) of portfolio expiring for rest of 2017. Recent record office transactions and optimistic land tender not necessarily indicative of forward stock price performance for the coming year. Maintain NEUTRAL with unchanged target price of $1.63.
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OCBC |
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Healthcare Sector: Tapping on China for growth continues Challenges have persisted for healthcare companies looking to tap on China for growth, yet this has not deterred further investments into the country but rather, the country has remained an attractive choice for expansion plans for the long run. Earlier in the month, Raffles Medical Group (RMG) had announced the development of a 700-bed hospital in Chongqing, China, an addition to the 400-bed Shanghai hospital that is already in the pipeline. Separately, we also see China as an important source of foreign patients for institutions, particularly Health Management International (HMI)’s hospital in Malacca given the broader developments there. We are NEUTRAL on the overall sector as we are cognizant of execution risks in new markets as well as the possibility of expenses taking a prolonged toll on profitability. Nonetheless, we are heartened by the strong management team behind both RMG and HMI. We maintain our call on Raffles Medical [BUY; FV: S$1.60] for its pipeline of expansion plans and management strength; as well as HMI [BUY; FV: S$0.80] based on a healthy growth outlook for its two hospitals in Malaysia.
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