CapitaLand Commercial Trust (CCT SP)
One Step Closer To a Mega Merger
Keep NEUTRAL and TP of SGD1.70, 1% upside. CapitaLand Commercial Trust unitholders will be voting on the proposed merger with CapitaLand Mall Trust next week. We recommend unitholders to vote in favour of merger. The underlying benefits are better diversified portfolio with potential cheaper cost of capital, greater redevelopment and rejuvenation potential of combined entity outweighing negative retail sector outlook.
Far East Hospitality Trust (FEHT SP)
Staying Resilient; Anticipated Recovery Drawing Closer
We expect contributions from government contracts to remain stable in 3Q20, followed by a mild pickup boosted by Singaporeans going for staycations in 4Q20. We expect recovery to take place in mid-21 and normalcy to return in 2H21. FEHT has demonstrated its defensive qualities with distributable income falling by a milder 26.5% yoy in 1H20 (CDREIT: -57% yoy). Its P/B of 0.65x is one of the lowest in our universe of coverage for S-REITs. Maintain BUY but increase target price to S$0.72.
Read through from IPO pricing of YKA
■ Wilmar’s subsidiary YKA has set its China IPO pricing at Rmb25.7 per share.
■ This translates into a historical P/E of 31.12x (above our base case of 26x).
■ Wilmar remains an Add. It offers a cheaper and more liquid entry to YKA.
A whole new digital world
• Some digital bank applicants can bring strategic value, leveraging on alternative data in their existing ecosystems to assess and provide credit to underserved segments
• A platform-based business model is likely to be more scalable and profitable
• Implications: S’pore banks to continue improving their value proposition; new digital banks unlikely to cannibalise S’pore banks’ diversified profit streams in near-term
• Open banking developments, facilitated by MAS, may be a bigger disruption force than digital banks’ entry
Check out our compilation of Target Prices