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CSE Global (CSE SP) 1Q21: Weakness Due To Weather Disruption; Expect Better Quarters Ahead
CSE’s 1Q21 EBITDA of S$10m (-22% yoy) was slightly below expectation, forming 21% of our full-year estimates. The miss was due to lower revenue from the energy segment that was affected by severe winter weather in the Americas, which we expect to reverse in the coming quarters from delayed revenue recognition. There was a strong showing from the infrastructure segment which reported a 21% yoy growth in revenue and 50% yoy growth in order intake. Maintain BUY. Target price: S$0.68.
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Frasers Logistics & Commercial Trust On an acquisition growth path
■ FLCT is acquiring six properties in Europe for a total of S$548.7m ■ The acquisitions are DPU and NAV accretive while post-acquisition gearing would be 36.2% ■ Reiterate Add with an unchanged DDM-based TP of S$1.57 Acquiring 6 properties in Europe FLCT proposed the acquisition of six properties (four from sponsor, two from third parties) in Germany, Netherlands and the UK for S$548.7m or 2.5% discount from the appraised values. The properties have a total net lettable area of 123,328 sq m. An estimated 54.8% of the properties, by purchase value, are logistics and industrial assets; the remaining 45.2% are office and business parks properties. They are 97.4% occupied (UK: 95.7-100%, Germany and Netherlands: 100%) with a weighted average lease to expiry of 9.1 years. Notable tenants include Hermes, Gymshark, Hofer Powertrain, BASF, Oracle and Hendi. FLCT targets to complete the acquisitions in Jun 2021. The UK properties comes with a 24-month rental guarantee of £3.9m for existing vacant spaces.
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CGS CIMB |
PHILLIP SECURITIES |
Sector Note [ Tech Manufacturing Services │ Overweight (no change) ] A question of execution
Demand remains strong in FY21F for tech manufacturing companies under our coverage. The challenge for companies is to deliver on execution given component shortages/tightness and the ongoing Covid-19 pandemic. In the semiconductor space, we favour smaller caps, such as Grand Venture (Add, TP S$1.12) and ISDN (Add, TP S$0.84) In the consumer product-related space, we like Aztech (Add, TP S$1.91) given its strong order book.
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Singapore REITs Monthly Rolling with the punches SINGAPORE | REAL ESTATE (REIT) | UPDATE
All nine REITs under our coverage performed in line in 1Q21. REITs traded down after Singapore tightened COVID-19 measures. This and a 20bp dip in 10YSGS lifted dividend yield spreads to 274bps, back to -1SD. Healthcare the only subsector in the green (+1.2%). Hospitality REITs fared the worst, down 6.9%. Remain OVERWEIGHT with selective preferences. Catalysts expected from pick-up in economy and resumption of DPU growth. REITS under our coverage expected to deliver FY21e DPU yields of 3.6-8.8%. Prefer Industrial and Retail. Top picks are Manulife US REIT (MUST SP, BUY, TP US$0.84) and Ascendas REIT (AREIT SP, BUY, TP S$3.64).
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