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UOB KAYHIAN |
UOB KAYHIAN |
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REITs – Singapore S-REITs Monthly Update (May 24)
S-REITs weathered selling pressure as interest rates are expected to stay higher for longer. Many blue-chip S-REITs are trading at attractive distribution yields of 6-7% after the recent correction. Maintain OVERWEIGHT. Our top picks are hospitality and retail plays, which benefit from continued recovery in visitor arrivals and resilient consumer spending. BUY CDREIT (Target: S$1.48), FCT (Target: S$2.71), FEHT (Target: S$0.82), FLT (Target: S$1.55), KREIT (Target: S$1.20) and LREIT (Target: S$0.96).
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Property – Hong Kong Limited Downside Risks To Property Price in Near Term; Watch For Policy Support For Hong Kong Tourism
The cooling of primary transactions, ie 1,400 units sold in May, is within our expectations. CCL is returning to a downward trend, while CRI is back on an upward trend, supporting rental yields. March and April saw worse-than-expected declines in Hong Kong's retail sales. Hong Kong’s property prices may see support from: a) improved liquidity in the mainland; and b) the upcoming peak season of leasing. Continue to watch for policy catalysts for landlords. Top picks: SHKP and Wharf REIC.
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UOB KAYHIAN |
LIM & TAN |
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Oil & Gas – Malaysia Petronas Set To Embrace Volatilities In Net Zero Transition
Petronas’ 1Q24 results showed that no business can escape the effects of volatility, as it experienced lower averaged realised prices, but higher costs. The local capex allocation for O&G and upstream achievements is overshadowed by the many uncertainties of existing projects (PRefChem) and the commercial settlement agreements with East Malaysia. Petronas remains steadfast in its target RM142b upstream capex for five years, with its focus on at least two overseas mega projects.
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CapitaLand Ascott Trust / CLAS ($0.895, unchanged) has acquired the remaining 10% stake in Standard at Columbia, a freehold student accommodation property in South Carolina, United States of America (USA). The earnings before interest, taxes, depreciation and amortisation (EBITDA) yield on total development cost is expected to be approximately 7%. This is higher than the 6.2% EBITDA yield that was projected in 2021 on the basis that the property has achieved stable performance. The acquisition is funded by proceeds from CLAS’ earlier divestments. CLAS acquired Standard at Columbia in phases over three years. We maintain an “Accumulate” rating on CLAS given that consensus is bullish with a target price of $1.18 and valuations are undemanding with price to book of 0.8x, yield of 7% with DPU growth of 10%. |
| LIM & TAN | |
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Keppel (S$6.68, down 4 cents) officially opens its first senior living facility in Asia. Enabled by technology and innovation, the 400- bed assisted living community in Nanjing, China, seeks to set new benchmarks for quality elder care solutions in Asia. Keppel’s market cap stands at S$12.0bln and currently trades at 12.6x forward PE and 1.1x PB, with a dividend yield of 5.1%. Consensus target price stands at S$8.31, representing 24.4% upside from current share price. We maintain an “Accumulate” rating on Keppel Ltd as we believe that management’s transformation plan will bring the company to greater heights and in the process shareholders will be able to benefit over the medium-longer term basis.
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