buysellhold july.23



Mapletree Logistics Trust

Resilience with portfolio diversity


■ 1QFY3/24 DPU of 2.271 Scts was broadly in line, at 26.3% of our FY24F forecast.

■ Rental reversion was a healthy +4.2% in 1QFY24, although management expects rental pressure in China as it adopts a tenant retention strategy.

■ Reiterate Add, with a DDM-based TP of S$1.88.


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Keppel REIT

Benefitting from a quality portfolio


■ 1H23 DPU of 2.90 Scts was in line, at 49% of our FY23F forecast.

■ KREIT achieved positive rental reversions of 8.1% in 1H23.

■ Reiterate Add with an unchanged TP of S$1.14.


1H23 results highlights

KREIT reported a 4.7% rise in 1H23 revenue to S$114.9m, but NPI was flat at S$89.9m due to higher property expenses including utilities cost. However, distribution to unitholders was down 1.4% yoy to S$109m (1H23 DPU: 2.90 Scts, -2.4% yoy) on the back of lower associate and JV contributions and higher interest expense, partly offset by its anniversary distribution of S$10m. 1H23 DPU was broadly in line, at 49% of our FY23 forecast. KREIT conducted a mid-year independent valuation and the value of its Singapore assets were adjusted marginally higher but overseas assets were adjusted slightly lower. Its Australia offices reflected a higher cap rate and its Japan property value was affected by weaker forex. This resulted in an overall 0.1% decline in portfolio value vs. Dec 2022. In 1H23, KREIT bought back and cancelled 19.65m of units, or c.0.5% of its share capital.


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Keppel DC REIT

A steady quarter with stable DPU


 1H23 DPU of 5.051 Singapore cents (unchanged YoY) was in line and formed 51% of our FY23e forecast.

 Contributions from the acquisitions of Guangdong Data Centre 2 and 3, along with renewals, income escalations, and tax savings resulting from the approval of the NetCo Bonds as Qualifying Project Debt Securities, or QPDS, were offset by higher facilities expenses including increased electricity costs at some of its Singapore co-location assets, and higher finance costs due to refinanced loans, as well as floating interest rate loans.

 Downgrade from ACCUMULATE to NEUTRAL due to the recent share price performance. DDM derived target price remains unchanged at S$2.26. Catalysts include more accretive acquisitions and lower-than-expected interest costs. The current share price implies FY23e/24e DPU yields of 4.4%/4.5%.


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SIA Engineering (SIE SP)

1QFY24: Results In Line; Core Profitability Continues To Recover


SIAEC’s 1QFY24 net profit of S$27.0m (+111% yoy) was in line with our expectation, at 22% of our full-year forecast. The company achieved a turnaround at the operating level while its JV/associates contribution continued to improve. We expect SIAEC’s earnings to further improve for the rest of FY24, as regional flight activities continue to recover. Maintain BUY with an unchanged target price of S$2.67.


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1H23: Resiliency From Home Base Singapore


KREIT achieved positive rental reversion of 8.1% for 1H23. Portfolio occupancy improved 0.7ppt qoq to 97% if we exclude Blue & William. Average signing rents for Singapore office leases increased 7% to S$12.35psf pm. 8 Chifley Square in Sydney has signed a new government tenant and is close to signing a co-working operator. KREIT provides 2023 distribution yield of 6.2% (CICT: 5.8% and Suntec: 5.8%). P/NAV is attractive at 0.71x. Maintain BUY with a target price of S$1.12.


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CSE Global (CSE SP)

Riding multiple upcycles


Initiate BUY with a TP of SGD0.62

We initiate coverage on CSE with a TP of SGD0.62, pegged to a 17x blended FY23/24F P/E. CSE is at an inflection point and we project profitability will surge by 250% YoY in FY23E on the oil and gas (O&G) upcycle and strong demand from datacentres and infrastructure projects in Australia and Singapore. Its order book stood at SGD480m as at 31 Mar 2023 and we expect it to hit SGD900m by end-FY23E. Local O&G peers are trading at an average of 22.3x P/E, making CSE an undervalued counter with an attractive and sustainable 6.2% FY23E dividend yield, in our view


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