ANALYSTS SAY: Buy, Sell, Hold (22 June 2017)

Lippo Malls Indonesia Retail Trust

Continues on growth path

■ We adjust our FY17-19 DPU estimates to factor in three recent developments.

■ 1Q17 performance lifted by new contributions and positive rental reversions, potential AEIs to provide further medium term lift.

■ LMRT proposed to acquire Lippo Plaza Kendari for S$33.2m or 9% NPI yield.

■ Raised S$120m of perpetual securities, gearing likely to dip to 27.5%.

■ Maintain Hold, with higher target price of S$0.41.

Read More ...

Singapore Press Holdings: Awarded Bidadari mixed site

SPH announced yesterday that, together with its JV partner Kajima, its consortium has been awarded for S$1.132b the HDB tender for a 99Y leasehold site at Upper Serangoon Rd at the Bidadari Estate. The mixed site has a land area of c.25.4k sqm (with a max GFA of 958.5k sq ft) and the consortium plans to develop over 600 homes with a 310k sq ft commercial component. While the consortium’s bid was deemed to be bullish by the market, we note that its bid was only 1.1% higher than the second highest bidder and believe the project will likely be accretive, particularly given improved sentiments in the domestic residential sector. Given the uncertain economic outlook and the continuing disruption of the media industry, we expect conditions to remain challenging for the group’s media business. We update our model with the latest acquisition and weaker media assumptions and our fair value estimate slips further to S$3.34. That said, since we have downgraded our rating to SELL on July 18 last year, the stock has declined 19% and we see the correction to be overdone. Upgrade to HOLD on valuation grounds.

MAYBANK KIM ENG

Singapore REITs

Paper Chase

Global rate upturn not an immediate threat

We remain confident that a firmer rate regime poses no immediate threat to Singapore industrial REITs. S-REITs are up 11.2% YTD, in line with the market. Valuations are well supported by strong investor appetite for yield amid ample liquidity in the system. This is also reflected in the robust demand for perpetual securities, whose issuances were up 115% YoY YTD. MLT is a clear beneficiary amongst the industrial REIT names. Potential interest savings from refinancing its first perpetual when due in Sep 2017 should boost DPU by an estimated 1-2%. Low leverage for the large-cap REITs and depressed cost of capital should quicken the pace of acquisitions in 2H, driving upside to our DPU forecasts and valuations. DPU yield have so far compressed despite firmer rates. AREIT remains our top sector pick.

Read More 

Office remains alluring

Site at Beach Road gets triggered

• URA to launch public tender for Beach Road land parcel

• Minimum land price implies per sqft of NLA of S$2,300-2,500

• Office REITs remain undervalued considering land prices in Singapore

• Overweight office sector; top pick KREIT (BUY, TP S$1.23)

Read More