| MAYBANK KIM ENG |
UOB KAYHIAN |
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SPH REIT (SPHREIT SP) Stable quarter, awaiting deals In line, forecasts and TP unchanged; Preferred BUY FCT
2Q19 DPU was in line with consensus and our estimates, up 0.7% YoY to SGD1.41cts, bringing 6M19 to 49% of our full year est. SPHREIT’s AUM has expanded on its first overseas deal. While we expect a recovery in prime Orchard Road rents due to tight supply supporting further positive rental reversions at Paragon, the sales growth outlook for its tenants could be capped by falling tourism shopping receipts. We remain selective on retail REITs and expect larger-destination malls (VivoCity) to do better. Investors need patience as there is limited visibility on its long-discussed potential Seletar Mall deal. Reiterate HOLD with DDM-based TP of SGD1.05 (COE 6.8%, LTG 1.5%). We like FCT (BUY, TP SGD2.60) for its suburban-mall footprint and 6.0% 3-year DPU CAGR.
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Alpha Picks: Refreshing Picks
Our portfolio recorded a simple average return of 1.1% mom while the FSSTI was unchanged in March. Within our portfolio, CSE Global has been the star outperformer for the past three consecutive months. We are refreshing our picks by adding in STE, SPH and newly-initiated Koufu. On the other hand, we remove CSE Global and Memtech.
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| CGS CIMB | RHB |
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Singapore Post Ltd Jagged no more
■ We think exiting its US e-commerce unit is positive for SPOST, as losses will no longer be a drag, prompting a higher EPS and our rating upgrade to Add. ■ Apart from the immediate boost to EPS, we see potential improvements in logistics and synergistic M&As as future areas of growth. ■ We see limited downside at 16x FY3/21F P/E (1 s.d. below historical mean), with major concerns priced in and 3-4% forecasted dividend yield.
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Singapore Exchange (SGX SP) Derivatives Still In Driver’s Seat; Keep BUY
Still a BUY with lower SGD8.10 TP from SGD8.20, pegged to 23x FY20F (Jun) P/E, offering 9% upside plus 4% FY19F yield. 3QFY19 securities average daily value (SADV) declined 31% YoY to SGD0.97bn. We lowered our FY19F SADV to SGD1.04bn from SGD1.07bn, which is slightly above the 9MFY19 SADV of SGD0.99bn. Our FY20F SADV assumption has been lowered to SGD1.12bn from SGD1.29bn – we expect global stabilisation to drive FY20F SADV higher YoY.
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Check out our compilation of Target Prices
