| MAYBANK KIM ENG | OCBC |
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Cache Logistics Trust (CACHE SP) Re-balancing act Diversification gains Cache saw sequential improvements in revenue and NPI in 2Q17 from its sound portfolio reconstitution efforts YTD, as momentum from its Australian expansion helped mitigate weaker fundamentals at its Singapore core. Looking ahead however, the near-term supply outlook for warehouses remains challenging, while a stretched balance sheet could constraint further inorganic growth upside. We keep our forecasts, HOLD and DDM-based SGD0.95 TP unchanged, and prefer AREIT (AREIT SP, BUY, TP SGD 2.90) for its Singapore business parks exposure.
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CapitaLand Mall Trust: Firm cap rate compression CapitaLand Mall Trust (CMT) reported a stable set of 2Q17 results which met our expectations. NPI and DPU grew 1.2% and 0.4% YoY to S$117.6m and 2.75 S cents, respectively. Operationally, CMT saw a mild negative rental reversion of 1.6% in 1H17, given the drag from Bedok Mall (-7.4%) and Westgate (-10%). However, shopper traffic and tenants’ sales psf per month were stable. Overall portfolio occupancy was 98.6%, versus 97.7% as at end-1Q17. CMT’s portfolio valuation saw a net increase of S$207.5m, as at 30 Jun 2017, given a firm tightening in cap rates by as much as 50 bps assumed by the independent valuers, although this was partially offset by a moderation in rental growth assumptions by 50 bps. In terms of financial position, CMT’s aggregate leverage was 34.7%, as at end-2Q17, which is 0.6 ppt lower than the preceding quarter. Maintain BUY and S$2.20 fair value estimate on CMT. |
| CIMB | |
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Capital Goods 2Q17 results preview ■ We think SMM has the highest beat potential if there are no provision for cost overruns. Ship repair and execution of orders should turnaround its losses from 1Q17. ■ STE is starting to see some seasonal earnings pick-up from 2Qs. Aerospace may see a yoy margin expansion with higher efficiency in EFW. ■ SCI’s losses in India could narrow on higher power and wind generation but net profit growth in 2Q could swing either way, depending on land sales in urban development. ■ Our preference among the capital goods names: SMM, SCI, STE, YZJ and lastly SIE.
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| PHILLIP SECURITIES | |
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First REIT First acquisition of 2017 at attractive rental yield of 10% SINGAPORE | REAL ESTATE (REIT) | UPDATE Proposed acquisition of Siloam Hospitals Buton and adjacent Lippo Plaza Buton from sponsor at S$28.5mn, a 1.2% discount to average of two independent valuations. Combined base rental yield on cost of 10%. Master lease tenure of 15 years (option to renew a further 15y); rental escalation pegged to Singapore CPI. Maintain NEUTRAL with unchanged target price of S$1.32.
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