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UOB KAYHIAN |
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Suntec REIT (SUN SP) Assessing The Impact Of COVID-19; BUY
Keep BUY with a lower TP of SGD 1.78 from SGD 2.08, 48% upside and c.7% yield. While Suntec REIT’s convention and retail segments face nearterm challenges due to the COVID-19 pandemic, the office segment is expected to remain relatively resilient due to a minimal lease expiry and low average expiring rents (vs committed rents). Its balance sheet remains relatively healthy and the completion of development assets is largely on track. Valuations are starting to look attractive at 0.6x P/BV.
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Singtel (ST SP) A Defensive Bet, Connectivity Is Deemed Essential Amid COVID-19 Outbreak; Upgrade To BUY
We see emerging value as share price has fallen 22% ytd and yield spread has widened to 550bp. Importantly, telco earnings are resilient and the stock offers an attractive dividend yield of 6.7%. We take the view that 5G and non-essential capex will be deferred and this will pave the way for management to sustain a 17.5 S cents DPS for FY21. We trim FY21-22 net profit forecasts by 5-6% to account for a 6% depreciation of the A$/S$. Upgrade Singtel to BUY with a DCF-based target price of S$3.00.
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DBS VICKERS |
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Mapletree North Asia Commercial Trust Believing in magic
BUY, TP revised to S$1.05. We see value emerging for Mapletree North Asia Commercial Trust (MNACT) at 0.56x P/NAV and forward prospective yields of >9.0%. While investors’ concerns on the impact of the COVID-19 outbreak on Festival Walk remain valid, we believe that such negatives are priced in at this level. The stock is trading in excess of 2.0% spread against top 10 S-REITs and 3.0% against HK retail peers, levels that we have not seen in the past five years. BUY maintained, TP adjusted to S$1.05 as we price in higher equity risk assumptions with revised DPU estimates.
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