| PHILLIP SECURITIES | OCBC |
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Earnings hit by higher operating costs SINGAPORE | TRANSPORT SERVICES | 1Q18 RESULTS ■ 1Q18 revenue in line with our forecast ■ 1Q18 associates/JVs in line with our forecast ■ 1Q18 recurring PATMI exceeded our forecast by 21% ■ Higher reported EBIT YoY and materially lower reported PATMI YoY are due to one-offs last year
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Mapletree Industrial Trust: Downgrade to HOLD on valuation grounds Mapletree Industrial Trust (MIT) reported its 1QFY18 results which met our expectations. Gross revenue and NPI grew 5.6% and 6.9% YoY to S$88.8m and S$68.2m, respectively. DPU of 2.92 S cents represented an increase of 2.5% YoY. MIT’s average portfolio passing rental rate continued to exhibit resilience, but occupancy saw a slight dip and rental reversions for renewal leases came in negative for its Business Park Buildings, Hi-Tech Buildings and Stack-Up/Ramp-Up Buildings segments. We trim our FY18 and FY19 DPU forecasts by 0.3% and 2.6%, respectively, as we factor in a recent divestment and softer assumed occupancy for Business Park Buildings in FY19. This results in a revised fair value estimate of S$1.92 (previously S$1.93). Given that MIT’s share price has appreciated 14.3% YTD and 20.1% since our upgrade on 24 Nov last year, we believe upside potential is now limited. Hence, we downgrade MIT from ‘Buy’ to HOLD on valuation grounds.
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| MAYBANK KIM ENG | |
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Mapletree Logistics Trust (MLT SP) Stabilising conversions, overseas recovery Diversification strength, 1Q18 results in line MLT reported 1Q18 DPU of SGD1.89cts, up 2.0% YoY and 1.5% QoQ, driven by stabilising asset conversions in Singapore, a stronger performance in Hong Kong (revenue/NPI up 5.7%/6.1% YoY) and contributions from FY17 acquisitions, which helped mitigate transitional downtime at a S. Korean property. We have revised our estimates to factor in stabilising NPI margins and recent divestments in Japan. Acquisitions should continue to drive longer-term upside for MLT, while potential interest savings from a perpetual refinancing initiative could add 1-2% upside to our FY18-20E DPU forecasts. For now, we maintain HOLD and our SGD1.20 TP, and prefer AREIT (BUY, TP SGD2.90) for its business parks exposure.
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| CIMB | UOB KAYHIAN |
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Parkway Life REIT Staying on growth path
■ PREIT’s 1H17 DPU of 6.6 Scts makes up 48.2% of our FY17 forecast, in line with our expectations and consensus. ■ We expect Singapore contributions to enjoy stronger rental growth with the minimum guaranteed rent growth revised from 1% to 1.27% in 23 Aug 17 to 22 Aug 18. ■ Japan income continues to benefit from acquisition boost. ■ Lower interest cost could likely result in interest savings in 2H. ■ We maintain our Add call with a DDM-based TP of S$2.83.
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CITIC ENVIROTECH (CEL SP) Expecting A Fantastic 2H17
CEL’s 2Q17 results were largely in line with our expectations although revenue dipped 4% yoy due to the timing in revenue recognition. CEL guided demand remains healthy and expansion is on track. We expect a fantastic 2H17 as revenue recognition from new projects begin amid sustained orderbook wins. CEL is on track to meeting its new-contract wins target of S$1b for 2017. Maintain BUY and DCF-based target price of S$1.10.
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