Ascott Residence Trust
DPU accretive deal to enlarge asset base by one-third SINGAPORE | REAL ESTATE (HOSPITALITY) | UPDATE
Proposed ART-AHT merger to be 2.5% DPU accretive and NAV neutral.
Enlarged presence in APAC region - Australia (+9ppts) and Japan (+5ppts). Debt headroom will increase from c.S$850mn to c.S$1bn.
The combined entity will be the largest hospitality trust in APAC and eighth largest trust globally, facilitating index inclusion.
Downgrade to ACCUMULATE due to recent share price appreciation. Target price of $1.36 unchanged.
Alpha Picks: Meaningful Changes To Our Portfolio
Our portfolio rose 6.8% mom as June clawed back most of May’s 7.5% mom decline. We have made some meaningful changes to our portfolio by adding CDL Hospitality Trust as a long idea, and Venture and SATS as short ideas. We also removed CCT, OCBC and SPH from the portfolio.
Game changing moves
• Liang Court investment could prove to be a S$3.0bn opportunity
• Funan – engaging shoppers enabled by technology
• Merger of ART and AHT to herald a new dawn for the group
• REITs to see further rise on acquisitions and low interest rates
Singapore Airlines Group
No smoke without fire
• SIA Engineering’s share price spike seems to be indicating the possibility of privatisation by parent SIA
• M&A/privatisation activities have gained momentum of late in the Singapore market
• SIA has enough firepower to effect the deal, which should be accretive to SIA at the right price
• Upgrade SIA Engineering stock to BUY with a revised TP of S$3.01, after factoring in privatisation premium
Check out our compilation of Target Prices