buy sell hold 2021



Keppel Pacific Oak US REIT (KORE SP)
1Q23: Head And Shoulders Above Peers

Adjusted distributable income dropped 12.5% yoy in 1Q23 due to higher interest rates. Portfolio occupancy eased 0.7ppt qoq to 91.9%. Excluding Spectrum, rental reversion was positive at 4.9%. KORE’s unit price dropped 15% in Mar 23 due to the collapse of Silicon Valley Bank. This is not justifiable as KORE borrows in US dollars from local and foreign banks with a presence in Singapore. KORE trades at an attractive 2023 distribution yield of 13.8% and P/NAV of 0.45x (55% discount to NAV). Maintain BUY. Target price: US$0.70.


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Property – China
Imbalanced Recovery Of Industry In 1Q23; Expect Policies To Revive Investment

Mar 23 NBS data showed strong new-home sales and property completion, while investment and housing starts remained weak. Government revenue from land sales dropped further by 27% yoy, with sharper divergence of investment enthusiasm among locations. We think the property industry’s recovery in 1Q23 was weak and imbalanced. We expect more policies to revive investment, thus there is a higher possibility of further re-rating of POEs. Maintain MARKET WEIGHT. COLI remains our top pick. 


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Economic Activity

1Q23 Growth Beats Expectations But Accommodative Policies Still Necessary

China’s 1Q23 real GDP growth was surprisingly strong at 4.5% yoy, helped by better manufacturing activities and a pick-up in retail sales in March, which rose 10.6% yoy. Although the 1Q23 data confirms that the worst is over, FAI and industrial activities were below expectations in March. The latter highlights the need for further accommodative policies and we expect additional RRR cuts in the coming months to reinforce this recovery. 


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Keppel DC REIT ($2.08, unchanged) announced 1Q23 business updates yesterday and reported that distributable income and DPU for 1Q 2023 increased by 4.1% and 3.0% year-on-year respectively, mainly due to
contributions from acquisitions and proactive asset management such as:

• Increase in gross revenue from the acquisitions of Guangdong Data Centre 2 & building shell of Guangdong Data Centre 3;

• Completed asset enhancement initiatives (AEI), renewals and income escalations; and

• Tax savings from approvals obtained for the NetCo Bonds to be qualified as QPDS


KDC REIT’s market cap stands at $3.6bln and currently trades at 20x forward PE and 1.5x PB, with a yield of 4.8%, Consensus target price
stands at S$2.14, representing 3% upside from current share price. We maintain our “Neutral” call on KDC REIT.






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