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MAYBANK KIM ENG |
PHILLIP SECURITIES |
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Singapore REITs Sideways stability
SREITs to consolidate gains, Positive mid-term outlook The Fed going big and recalibrating the dot plots should keep discount rates capped and raise the odds of earlier-than-expected growth in distributions. However, hawkish commentary is likely to keep the counters running ahead of fundamentals. While we expect the sector to be rangebound in the near term following a 15% run up over the past 3 months, our POSITIVE sector stance is unchanged. We shuffle our preferred picks away from low-yielding CLAR and replacing it with CDLHT.
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Centurion Corporation Limited Shortage of beds persists
▪ Demand for workers’ accommodation in Singapore is expected to surpass supply levels by c.12k in 2024 (3% of demand). We believe that shortage will persist till end 2025. ▪ Occupancy rates of students’ accommodation in UK increased from 70% in 2020 to 93% in 2023. We expect occupancy rates to remain above 95% for FY24 and FY25 room rates to rise by 5% YoY for FY24.
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PHILLIP SECURITIES |
UOB KAYHIAN |
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Singapore REITs Monthly: Aug24 Rate cut fuelled rally
▪ The S-REITs Index advanced 4.2% in August, building on its 5.4% rally from July. The top performer for the month was Keppel Pacific Oak US REIT (KORE SP, non-rated), gaining 30%, while the worst performer was ARA US Hospitality Trust (ARAUS SP, non-rated), falling 23.3% after weak 1H24 results. The overseas commercial sub-sector was the top performer in August, gaining 10.2%, driven by the US office REITs. In contrast, the worstperforming sub-sector was hospitality, which grew by 0.9%.
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Wilmar International Rate cut tailwind to flow through in FY25F
■ With the US interest rate cut, we think WIL will see lower finance cost from FY25F as short-term debt made up 72.9% of total debt in 1H24. ■ Improving soybean crush margins in China QTD, along with the sugarcane harvesting season in Australia, should support better profitability for 2H24F. ■ Reiterate Add with an unchanged TP of S$3.63.
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| LIM & TAN | LIM & TAN |
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Bloomberg: DBS Group Holdings (S$39.00, up 50 cents) aims to double fees from wealth management by 2027 as more of the world’s affl uent investors shift their assets to Asia. DBS’ income from servicing rich clients rose to more than S$2 billion last year, doubling from 2015. It expects the same pace of increase in half that period as well-heeled people and family offi ces from various parts of the world head to Asia to park their money, said Shee Tse Koon, head of consumer and wealth banking at DBS. “Given the trajectory and traction we have had over the past years, our aim going forward is that by 2027 we want to double our wealth fees,” he said. At $39, DBS is capitalized at $111bln and trades at 10-11x PE, 5.5% dividend yield and 1.7x price to book. While the wealth business segment is expected to help mitigate the softness from the net interest income segment, we note that consensus is pencilling in fl attish/slight declined in profi tability from 2H’24 onwards as net interest income headwinds start to emerge due to the start of the interest rate cutting cycle (another 50 bp in 4Q’24 and 100 bp in 2025) while asset quality issues could start to surface with HSBC having just reported a 6-fold surge in bad loans in their asset portfolio in Hong Kong. Bloomberg consensus 1 year target price of $39.70 implies a potential upside of less than 2%. We maintain NEUTRAL/HOLD recommendation on DBS.
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We highlight the key points from SGX’s(S$11.25, down 11 cents) annual report that was just recently released The presentation of revenue has been revised in FY2024 to the following four operating segments – Fixed Income, Currencies and Commodities; Equities – Cash; Equities – Derivatives; and Platform and Others. FY2023 revenue has been reclassified to the four operating segments for a like-for-like comparison against FY2024. SGX’s market cap stands at S$12.0bln and currently trades at 21.1x forward PE and 6.1x PB, with a dividend yield of 3.1%. Consensus target price stands at S$1.26, represenƟ ng no upside from current share price. |
