| MAYBANK KIM ENG | UOB KAYHIAN |
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Prime US REIT (PRIME SP) Broadening Growth
Acquisitions add growth, strengthen AUM PRIME has added two new US markets to its portfolio, as it expands into San Diego and Florida, with its latest deals. The freehold office properties are well-sited in attractive submarkets, and backed by strong attributes, and we expect its resilient tenancies to strengthen PRIME’s AUM growth profile. The favourable lease structures (with +3% pa rental escalations) and longer WALEs should reinforce its DPU visibility, while rising leasing momentum suggests further positive rental reversions. We maintain DPUs pending deal closure, as valuations are compelling at 8% FY21 DPU yield, and >30% upside to our USD1.10 DDM-based TP (COE: 8.3%, LTG: 2.0%).
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Aztech Global (AZTECH SP) Production And Customers’ Demand Remain Intact
We hosted a conference call with Aztech’s management team. The key takeaways are: a) its manufacturing plant in Dongguan has not been affected by the recent COVID-19 outbreak, b) production in Malaysia has seen limited impact from the tightened MCO, and c) Aztech continues to see healthy demand from its key customers, with orders going as far as 2022. Further improvement in profitability track record should help Aztech rerate upwards. We maintain BUY and target price of S$1.86.
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UOB KAYHIAN |
CGS CIMB |
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Keppel Corp (KEP SP) Plans In Place To Substantially Exit The O&M Industry
KEP’s non-binding MOUs to combine its O&M business with SMM will enable it to substantially exit the O&M industry. At present, details are still being worked out and valuation numbers are unavailable. We view the developments as largely positive as it moves the company closer towards its Vision 2030 with a goal of generating a doubledigit ROE and more recurring income. Maintain BUY. Target price: S$6.37.
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Yangzijiang Shipbuilding Pay up for the slot
■ YZJ is still able to take on orders for 2022-23 delivery with better pricing as seen in the latest win worth US$715m. Order book is at a record US$7.3bn. ■ To manage yard tightness, YZJ could subcontract portions of work to smaller fabricators. Margin should be healthy as steel price pressure eases. ■ Our TP of S$1.63 is based on 1x P/BV or +1 s.d. from its 6-year average. Stronger orders are catalysts while rampant order cancellation is a key risk.
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Check out our compilation of Target Prices
