buysellhold july.23



Elite Commercial REIT

Attractive valuations with monetisation underway


 The rental escalation of around 11% that is tied to CPI began in Apr23. We believe there is downside protection from the UK government department, contributing 93.2% of the total rental income, with no further break clause until FY28.

 ELITE is actively reducing leverage through divestments. As of 3Q23, the total proceed of £11.4mn reduced the gearing by 60bps to 45.4%. 4 assets, valued at c.£13.8mn, are ready for the next round of divestment, and they are expected to lower gearing by c.100bps further.



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Singapore REITs Monthly: Oct23

3Q23 results within expectations


 S-REITs Index fell 6.9% MoM in October, due to the hawkish stance of FOMC to hold interest rates higher for longer. 3Q23 results were mostly in line with our expectations, as all REITs were negatively impacted by higher interest rates.

 S-REITs are now trading at a forward dividend yield of c.6.9%, 1.3x s.d. above the mean of 6.1% and a P/NAV of 0.8x, 2.6x s.d. below the mean of 1.03x. We think this is an opportune time to reposition into S-REITs for the eventual interest rate pause and decline. 



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Link REIT (823 HK)

Takeaways From Shenzhen And Guangzhou Property Tour


We visited Central Walk, Liwan Link Plaza and Tianhe Link Plaza on 20-21 Nov 23. LINK REIT strengthened its mix of F&B tenants and shifted to more leisure and entertainment tenants to cater to the latest trend. Both Central Walk Shenzhen and Liwan Plaza saw record daily footfalls. Tenant sales are still below pre-COVID-19 levels due to the weaker performance of retail tenants. We expect the China retail portfolio to improve in 2024 on the adjusted tenant mix and completion of AEI. Maintain BUY. Target price: HK$50.70. 



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Rex International Holding (REXI SP)

Not Much To Cheer About Heading Into The Festive Season


Rex’s latest production update for Oct 23 did not provide much cause for cheer due to continued travails at its Yumna Field. At present, it is shut down with no visibility as to when production can resume. The Brage Field meanwhile has brought on-stream two new wells; however, we note the lack of disclosure on production numbers. In earlyNov 23, Rex bought a 17% stake in the Brasse Field offshore Norway for an undisclosed sum. Maintain SELL. Target price: S$0.10.



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Expect A qoq Drop For 4Q23 Core Profit, But Valuation To Be Interesting


The tone from the analyst meeting was neutral. PTT has updated the progress of the Future Energy & Beyond project. It aims to increase profit to 30% of total net profit in 2030. Despite the short-term challenges stemming from a decline in core profit expectations in 4Q23, PTT's stock price remains appealing, featuring favourable dividend yields. Maintain BUY. Target price: Bt41.00.



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LHN Limited ($0.34, unchanged) achieved a 10.9% year-on-year (“Y-o-Y”) increase in FY to Sept’23 revenue from continuing operations, from approximately S$84.5 million to S$93.6 million, with all key business segments contributing to the growth. The Group’s Space Optimisation Business revenue rose 46.1% Y-o-Y, while its Facilities Management Business (excluding dormitory business) revenue gained 14.8% Y-o-Y, and the Energy Business saw its maiden revenue contribution in FY2023. Profit attributable to equity holders of the Company reached S$38.2 million for the financial year ended FY2023, down from S$45.8 million for the financial year ended 30 September 2022 (“FY2022”). This was primarily due to net fair value losses associated with the Group’s investment properties and the investment properties of its joint ventures in FY2023 amounting to S$8.7 million, as compared to fair value gains in FY2022 (“FV (Loss)/Gain”) of S$24.8 million. Excluding the fair value changes, core earnings rose 25% to $30mln, coming in line with our expectations.


At 34 cents, LHN is capitalized at $137mln and trades at an undemanding 4-5x core earnings and yields an attractive 5.9% (core dividend of 2 cents/share) and 8.8% (including special of 1 c + 1 c final + 1 c interim). P/B ratio is undemanding at 0.6x while consensus target price of 50 cents implies a potential upside of 47%. We believe successful execution of the space optimization business coupled with monetization of noncore assets and successful strata-title sale of the food factory next year could see the stock re-rate nearer consensus target price.

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