ANALYSTS SAY: Buy, Sell, Hold (25 Jan '18)

Mapletree Industrial Trust

Strategic acquisition in US to lift portfolio

SINGAPORE | REAL ESTATE (REIT) | 3Q18 RESULTS

 Gross revenue 4.1% higher than expected; we under-estimated the impact of Phase 2 of the HP build-to-suit

 DPU consequently higher than our estimate by 3.6%

 JV of 14 US data centres started contributing and mitigates domestic headwinds

 Maintain Neutral; higher target price of $2.15 (previously $1.99)

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Suntec REIT

4Q17: Retail revenue drag decelerating

■ 4Q17 DPU met expectations, at 26% of our FY17 forecast. FY17 DPU broadly met our expectation at 99.8% of our forecast.

■ Office leasing appetite improving in Singapore.

■ Retail rental drag eased in 4Q as shopper traffic and tenants sales rebounded yoy.

■ Visible acquisition growth pipeline.

■ Upgrade to Hold, with a revised TP of S$2.17.

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CapitaLand Mall Trust: Potentially earlier boost from Funan

CapitaLand Mall Trust (CMT) reported its 4Q17 results which met our expectations. Gross revenue and DPU grew 1.8% and 0.7% YoY to S$172.4m and 2.90 S cents, respectively. Operationally, CMT’s shopper traffic slipped marginally by 0.3% in FY17, while tenants’ sales psf/month held steady. Rental reversions were lower by 1.7% for the full-year. If we exclude Bedok Mall and Westgate, rental reversions for FY17 would have increased slightly by 0.2%. Portfolio occupancy remained high at 99.2%. Management highlighted that the Funan redevelopment project may be completed ahead of its initial 4Q19 target, and is hoping to achieve a pre-commitment level of 70% by year end. Management also pointed out that it has seen an improvement in discretionary spending at its malls. We fine-tune our assumptions after taking into account CMT’s full-year results, and raise our FY18 and FY19 DPU forecasts by 0.7% and 1.0%, respectively. Rolling forward our valuations, we derive a higher fair value estimate of S$2.26 (previously S$2.20). Maintain BUY on CMT.

REITs − Singapore 4Q17

Results: CMT (Above), SUN (In Line); 1QFY18: FHT (In Line) CMT’s results came in ahead of our expectations, mainly due to higher-thanexpected contributions from Bugis Junction and Atrium@Orchard. Maintain HOLD with a target price of S$2.04. Suntec REIT’s results were in line with expectations. Maintain HOLD with an unchanged target price of S$2.13. FHT results were in line with expectations. Maintain BUY with a raised target price of S$0.90 (from S$0.85). Maintain OVERWEIGHT on the sector.

WHAT’S NEW

 Suntec REIT (SUN), CapitaLand Mall Trust (CMT), and Frasers Hospitality Trust (FHT) have reported their latest quarterly results

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MAYBANK KIM ENG

Mapletree Commercial Trust (MCT SP)

Mall Moderation Not Priced In

Results in line, maintain forecasts, TP

MCT’s 3Q18 results were in line with MKE and the street, with DPU at S2.90cts, up 0.9% YoY and 2.7% QoQ. We have kept estimates and DDMbased SGD1.45 TP (WACC: 7.1%, LTG: 1.2%) intact. We are negative on retail S-REITs, given structural challenges from e-commerce disruption and sales leakage. We see downside risk to market expectations of rental reversion prospects at VivoCity. MCT remains our key SELL given a moreexposed tenant portfolio, moderating rental profile, and lofty valuations.

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