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MAYBANK KIM ENG |
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Ascendas REIT Rejuvenation in the works but not a bargain
■ AREIT’s growth profile remains visible thanks to its portfolio rejuvenation but valuations, which are at most recent peak levels in 2013, are expensive. ■ We incorporate potential accretive acquisitions from new sponsor – base case scenario of S$500m at 5.5% yield and 40:60 debt equity funding ratio. ■ We maintain our Hold call with a higher TP of S$3.12.
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SPH REIT (SPHREIT SP) In Need Of A Sizeable Deal
DPU in line, maintain HOLD, prefer FCT 4Q19 DPU, up 2.1% YoY, was in line with consensus and our estimate, bringing 12M19 to 99.2% of our full year. Looking ahead, contributions from earlier deals and rental recovery at Paragon should support DPUs. Valuation at 5.1% dividend yield on muted organic growth is unexciting. Reiterate HOLD with 5% higher DDM-based TP of SGD1.10 (COE 6.6%, LTG 1.5%) after DPU adjustments and rolling over to FY20. A sizeable overseas acquisition would be a positive catalyst, given limited DPUaccretive opportunities in Singapore. For now, we prefer FCT (BUY, TP SGD2.80) for its stronger 4.0% 3-year DPU CAGR.
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MAYBANK KIM ENG |
RHB |
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Hi-P International (HIP SP) Gone car shopping
New customer through M&A; upgrade to HOLD The proposed acquisition SEAMCO provides access to a high profile UKfounded customer (Customer D) that presents Hi-P with “enormous growth prospects in consumer electronics and automotive”. SEAMCO’s capabilities and production footprint appear to complement needs for Customer D’s Singapore-based EV project. Pending further clarity, we conservatively raise FY20-21E EPS by 8% to factor in this acquisition. ROE-g/COE-g TP rises to SGD1.21, on unchanged 1.5x FY19 P/B. Upgrade to HOLD from SELL.
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Genting Singapore (GENS SP) Higher Tourist Arrivals To Help
Maintain NEUTRAL with an unchanged TP of SGD0.97, 9% upside and c.4% dividend yield. As a result of the ongoing protests in Hong Kong, in 2H19, GENS could benefit from increased tourism activities. Higher tourist arrivals could help boost the mass-gaming and non-gaming revenues which could offset the softness in mass-gaming volumes that happened as a result of an increased levy, for local and permanent residents, implemented in 2Q19.
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