buysellhold july.23




2H23: Hope For The Best But Prepared For The Worst


2H23 results were affected by provisions for arrears from Guangdong data centres of S$10.5m, equivalent to 5.5 months of rental income from DC 1 and DC 2 and coupon income from DC 3. KDCREIT has drawn up a recovery road map and seeks to resolve the arrears amicably. On a brighter note, the High Court has ruled in favour of KDCREIT as it seeks to claim S$14.8m from DXC. Geographical diversification has cushioned the negative impact from Guangdong data centres. Maintain BUY. Target price: S$2.10. 



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Mapletree Industrial Trust (MINT SP)

3QFY24: Broad-based Positive Rental Reversion In Singapore Market


MINT achieved broad-based positive rental revision of 7.2% in 3QFY24 for renewed leases across all property segments in Singapore. WALE increased from 4.2 to 4.4 years due to several new and renewed leases with an average lease term of 10 years in the Singapore and North America markets. The newly acquired Osaka data centre has started to contribute since 3QFY24. MINT provides FY25 distribution yield of 5.6% (DCREIT: 5.6%, KDCREIT: 5.3%). Maintain BUY. Target price: S$2.98. 



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Venture Corporation (VMS SP)

Expect Earnings Recovery In 4Q23 And 2024; Raise Target Price By 16% To S$16.37


We expect VMS to report 4Q23 earnings of S$65m (-34% yoy/+3% qoq), its first qoq growth after three consecutive quarters of decline since 1Q23. Earnings growth in 2024 will be driven by customers’ inventory restocking, new product launches and relocation of manufacturing facilities to the ASEAN region. Also, most of VMS’ customers expect to record revenue growth in the coming quarter/year. We raise our target price by 16% to S$16.37 after raising our valuation multiple to +0.5SD above mean. Maintain BUY. 



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Mapletree Industrial Trust (MINT SP)

Headwind from US datacentres


Occupancy keeps slipping

MINT reported 3QFY24 DPU of SGD3.36c, +1.2% QoQ,-0.9% YoY. 9M DPU of SG10.07c, down 1.7% YoY and 76.5% of our FY est. Steady portfolio performance and contribution from new assets was offset by enlarged unit base. Occupancy slipped, led by US data centres (DC) partially offset by higher occupancy in hi-tech buildings. Positive rental reversion was across the property segment. While it is encouraging to see occupancy picking up in Singapore hi-tech spaces, US DC vacancy and absence of divestment gains will negatively impact DPUs. We lower our estimates but raise our TP to SGD2.30 due to a lower discount rate. Maintain HOLD.



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Keppel DC REIT

Turning bearish on missed rental payments


■ FY23 DPU of 9.383 scts (-8.1% yoy) missed at 91.7% of our FY23F.

■ We assumed the default of Bluesea; FY24F-26F DPU cut by 17.5%-22.6%.

■ Downgrade to Hold as we factor in the high likelihood of tenant default.



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Frasers Centrepoint Trust

Increasing stake in a quality asset


■ Acquisition of 24.5% stake in NEX is FY24F DPU-neutral, in our view.

■ Organic growth and tax transparency potential could provide more upside.

■ Reiterate Add; upside not fully reflected in FY25F DPU yield of 5.3%.



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