buy sell hold 2021




Frasers Centrepoint Trust
The “NEX” acquisition


 No financials areprovided in this business update. Retail occupancy improved 1.2% YoY to 98.4%. Tenant sales and shopper traffic improved 13.4% and 38.3% YoY respectively.
 Frasers Centrepoint Trust and its sponsor, Frasers Property, announced the joint acquisition of 50% interest in NEX at an agreed property valueof S$2,077.8 million on a 100% basis, in line with appraised value.
 Maintain ACCUMULATE, DDM TP (COE 6.90%) lowered from S$2.38 to S$2.31. We trim our FY23e-FY25e DPU estimates by 6-8% after factoring in the NEX acquisition and higher borrowing costs. The current share price implies a FY23e DPU yield of 5.5%.

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Keppel Corporation
SMM announce EGM on 16 Feb 2023


 Sembcorp Marine (SMM) will hold an extraordinary general meeting (EGM) on 16 Feb 2023, to vote on its proposed acquisition of Keppel offshore & marine.
 The independent financial adviser (IFA) for the deal saw its terms as fair and reasonable, and had advised the independent directors to recommend that shareholders vote in favour
of the deal.
 We believe the better clarity on the deal time-line and future management team will reduce overhang on the stock. The new enlarged Group will also be able to better capitalise
on the energy transition.
 Maintain BUY with unchanged SOTP TP of $8.95. We valued the Group based on the four new segments unveiled during Vision 2030 to better reflect the Group’s reporting segments
going forward. Our TP translates to about 1.2x FY22e book value, a slight premium to its historical average as the Group’s transformation plans gain traction and ROE expands to 8.8%. Catalysts are expected from approvals obtained for the transaction.

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CapitaLand Ascott Trust (CLAS SP)
2H22: Continued Recovery With Strong Sequential Momentum

Portfolio RevPAU recovered 78% yoy and 17% qoq to S$155 in 4Q22, reaching prepandemic pro forma RevPAU on continued improvement in occupancy (78%) and ADR. Japan, Australia and the US had the largest sequential improvement of 98%, 29% and 21% qoq respectively. Aggregate leverage is healthy at 38.0%, while cost of debts was stable at 1.8%. 2023 distribution yield is attractive at 5.7%. Maintain BUY. Target price: S$1.39.

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Keppel Corp (KEP SP)
2022: All Segments Profitable, With China Property In Focus For 2023

KEP reported slightly weaker-than-expected profit for 2022 largely as a result of its exposure to the China property market as well as losses on investments and lower disposal gains. Its dividend of S$0.33 was slightly better than expected. With the divestment of KOM around the corner and all other business segments performing well operationally, 2023 will be a transformative year for KEP. Maintain BUY with a slightly lower target price of S$9.68 (previously S$10.11). 

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Singapore | Real Estate

Rating BUY (as at 2 February 2023)
Last Close SGD 0.38
Fair Value SGD 0.42
Rejuvenating portfolio to drive future

• 2H22 DPU rose 7.5% YoY to 1.52 Singapore cents
• Positive rental reversion of 11.8%
• Logistics and high-specs industrial segments drove space demand

Investment thesis
ESR-LOGOS REIT’s (ELOG) 2H22 revenue and net property income increased by 61.0% year-on-year (YoY) and 64.0% YoY to SGD195.6m and SGD141.5m respectively, largely driven by incremental contributions from ARA Logos Logistics Trust (ALOG) following the
completion of the merger in April 2022. 2H22 distribution per unit (DPU) came in at 1.54 Singapore cents (+7.5% YoY), brining full year DPU to 3 Singapore cents (+0.4% YoY). Rental reversion came in at 11.8% in FY22 with all the segments registering positive rental reversions. ELOG will continue to focus on portfolio rejuvenation through redevelopments and asset enhancement initiatives. We understand that ELOG is targeting further divestments of
SGD300-450m this year with proceeds from the
divestments to be reinvested into new economy assets and potentially be used to lower its gearing level. As of 31 Dec 2022, ELOG’s gearing stood at 41.8%, with 72% of debt hedged on fixed rate. After adjustments, our fair
value estimate remains at SGD0.42.


CapitaLand Integrated
Commercial Trust

Results missed but FY23 DPU still
poised to grow

• 2H22 distribution per unit (DPU) rose 2.7% year-onyear (YoY) to 5.36 Singapore cents but missed expectations
• Positive rental reversions for both office and retail sectors in 4Q22
• Slightly lower aggregate leverage ratio of 40.4%; continuing feasibility studies on portfolio optimisation

Investment thesis
CapitaLand Integrated Commercial Trust (CICT) is the largest S-REIT by market capitalisation and assets in Singapore. It has a strong sponsor in CapitaLand Investment Limited, and its scale has been significantly
enlarged following the completion of the merger with CapitaLand Commercial Trust in Oct 2020. CICT now offers investors diverse exposure to the suburban and downtown retail market and core CBD office sector in Singapore, coupled with a small exposure to Germany,
and has recently penetrated the Australian commercial market. We see positive signs of recovery from the pandemic, and view CICT as a good proxy to the reopening theme. However, its aggregate leverage ratio of 40.4% (as at 31 Dec 2022) is slightly on the high side. There are mitigating factors, such as having 81% of its borrowings hedged and CICT’s average term to
maturity for its debt is among the longest in the S-REITs sector.

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