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MAYBANK KIM ENG |
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CapitaLand Mall Trust (CT SP) 2Q19: Goodies From Westgate And Funan
CMT’s 2Q19 DPU of 2.92 S cents (+3.9% yoy) is in line with our expectations. It maintained positive rental reversion at 1.8%. Westgate contributed the bulk of yoy growth in gross revenue. The successful reopening of Funan in June, with committed occupancy at 95% for retail space and 98% for office space, augurs well for outlook in 2H19. We estimate Funan to contribute rental income of S$16.5m in 4Q19, representing 8% of total gross revenue. Maintain HOLD. Target price: S$2.65. Entry price: S$2.42.
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Frasers Centrepoint Trust (FCT SP) Rerating On Retail
Organic growth momentum intact; Top pick FCT’s 3Q19 DPU of SGD3.00cts (-1.2% YoY) was inline with our/consensus est.’s driven by stronger occupancies and positive rental growth momentum. While our DPUs are lowered by 3% to factor in funding for its recent investments (PGIM fund, Waterway Point), organic growth fundamentals remain intact. FCT has delivered strong share price action, but we see upside catalysts to valuations backed by entrenchment of its suburban mall footprint, visible growth drivers, sound balance sheet, and additional deals. Our DDM-based TP is raised 8% to SGD2.80 (COE: 6.6%, LTG: 2.0%), on lower risk-free rate assumptions (of 2.5%). FCT’s 4.8% DPU yield remains compelling against peers and its growth profile, and it stays as our preferred retail REIT.
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CGS CIMB |
OCBC |
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Mapletree Logistics Trust Stable ship in choppy waters
■ We maintain our Hold call with a lower TP of S$1.55 due to a softer leasing environment in Singapore and Hong Kong. ■ Cautious sentiment is returning in Singapore and Hong Kong although portfolio quality could still keep occupancies and rental reversions resilient. ■ 1Q20 DPU of 2.025 Scts was in line at 25% of our/consensus forecasts.
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ESR-REIT: Comforted by capital distributions ESR-REIT’s 2Q19 revenue, net property income and distributable income roughly doubled YoY mainly due to last year’s merger with Viva Industrial Trust. 2Q19 DPU increased 0.3% YoY to 1.004 cents, which comes up to 26.5% of our initial full-year forecast. We consider this above expectations due to higher-than-expected capital distributions. That said, in terms of distributable income (or distributable amount before capital gains), 2Q19 results were in line with our expectations. Rental reversions were flat for leases signed in 1H19, and management noted that businesses have been more cautious about their expansion plans given trade war uncertainties. We previously noted that due to the time gap between the equity fundraising and the additional income expected from the AEIs, our FY19F and FY20F forecasts for distributable income have been adjusted downwards. That said, we expect quarterly DPU to remain fairly stable given that ESR-REIT currently has >S$60m to distribute in capital distributions. After adjustments and decreasing our risk-free rate from 2.3% to 2.0%, our fair value increases from S$0.56 to S$0.58. As at 23 Jul’s close, ESR-REIT is trading at a 7.4% FY19F yield. We re-iterate BUY on ESR-REIT. |
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