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Property – Singapore
Developers: Increased Residential Supply Likely To Hit The Market Soon
Public and private property prices remain strong in Singapore in 2022. However, we note that higher interest rates have resulted in a real estate downturn in other developed markets.
Importantly, the Singapore government has doubled GLS in 2022 vs 2021, potentially injecting significant levels of supply in the near to medium term. We prefer CLI which does not have exposure to the Singapore residential market. Maintain OVERWEIGHT on the sector.
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Scientex (SCI MK)
Appealing Mid- To Long-term Prospects
With resin costs retracing >20% from the ytd peak, Scientex’s manufacturing segment is poised to deliver better margins in coming quarters, with resilient export sales amid the global economic reopening.
Meanwhile, the property segment is set to record robust growth with more project launches despite higher material costs compressing bottom line margins. Scientex offers decent mid- to long-term prospects alongside palatable valuations. Maintain HOLD. Target price: RM4.01.
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Property Devt & Invt
Slower new home sales in Aug
■ There was a mom decline in Aug home sales due to lack of new launches.
■ Two new project launches in Sep should boost upcoming new sales.
■ We stay sector Overweight due to inexpensive valuations. Our sector top picks: CIT, CLI and UOL.
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Frasers Centrepoint Trust
Retail recovery offset by macroeconomic headwinds
SINGAPORE | REAL ESTATE (REIT) |Update
Occupancy and tenant sales have recovered above pre-pandemic levels.
Moderately protected from rising interest rates, with 69% of total borrowings hedged to a fixed rate. Every 50bps increase in SOR/SORA is estimated to impact DPU by c.1.3%.
Maintain ACCUMULATE, DDM TP (COE 7.08%) lowered from S$2.64 to S$2.38. No change in DPU estimates. Cost of equity increased from 6.41% to 7.08% on higher riskfree rate assumption.
The current share price implies a FY22e DPU yield of 5.7%. However, the yield spread has narrowed significantly since the start of the year from 4.36% to 2.65%.
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Yangzijiang Shipbuilding
GTT is a big deal; LNG orders incoming?
■ Latest industry newsflows suggested that YZJ is in negotiation for LNG carriers. This follows its recent GTT license announcement.
■ YZJ’s GTT licence allows it to build large LNG carriers, including >100,000 CBM vessels. Only 29 shipyards in the world have a GTT licence.
■ Order wins, especially of LNG vessels, are key catalysts for the stock. YZJ is one of our SG country top pick. Reiterate Add and TP of S$1.63.
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Minor International
Concerns on higher electricity costs priced in
■ Although higher electricity costs and wages are likely to burden MINT’s FY23F core net profit, we believe it can pass on higher costs.
■ A 6% increase in room rate would neutralise the impact of a 100% increase in electricity prices and a 10% increase in wages in FY23F, in our view.
■ We reiterate our Add call with an unchanged THB46 target price (14x FY23F EV/EBITDA, -0.5 s.d.).
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