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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Singapore REITs
Year of transition
2025 outlook
Moderated but continued rate cuts and economic growth, along with reasonable valuation and flows to safe haven keep us POSITIVE on the sector. Last year’s underperformance suggests lighter positioning. Distribution downside should subside from 2H. Sub-sectors have ample pros and cons, implying scope for rotation as the year progresses. Our preference is for commercial, followed by industrial and hospitality. Our stock picks combine quality and value: CDLHT, CICT, CLAR, CLAS, FEHT, LREIT, MINT, MLT and OUEREIT (see Fig 4).
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Parkway Life REIT (PREIT SP) Asia’s largest healthcare REIT
Expensive but defensive, initiate with BUY We initiate coverage of PREIT with a BUY and DDM-based target price of SGD4.10. PREIT has a strong record of uninterrupted recurring dividend growth, a well-articulated growth strategy and a visible and growing distribution profile from lease renewals. Sponsor has one of the world’s largest healthcare networks and provides an acquisition pipeline and deal network. While the yield spreads are tight, we view that the attractive attributes and favourable sector/thematic justify the premium valuation.
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CGS CIMB |
UOB KAYHIAN |
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Wilmar International Increasing stake in Adani Wilmar
■ WIL has entered into an agreement to acquire up to a 31.06% stake in AWLTD, making AWLTD a 75%-owned subsidiary (from an associate). ■ We expect the transaction to take place in FY26F. In the meantime, WIL is exploring opportunities to bring aboard other strategic investors. ■ Reiterate Add, with an unchanged TP of S$3.47 (11x FY26F P/E).
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Singapore Post (SPOST SP) Ignore The Noise; Divestments Still On Track
Following whistleblower reports and investigations, SPOST recently announced the termination of three senior management executives. However, the planned sale of SPOST’s Australian business is still on track while the group’s strategy to divest noncore assets remains unchanged. We expect the sale of Famous Holdings to take place in the near-medium term, followed by the sale of SingPost Centre. Maintain BUY with an unchanged target price of S$0.72, which implies 1.0x FY26F P/B.
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LIM & TAN |
LIM & TAN |
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Suntec REIT ($1.20, up 1 cent) via their joint financial advistors UOB/ DBS, announced that they would be revising the offer price to $1.19/ share in cash. Unitholders who have earlier accepted the Offer are entitled to the Revised Offer Price, subject to the Offer becoming or being declared to be unconditional in all respects in accordance with its terms. Accordingly, no further action in respect of the Offer is required to be taken by Unitholders who have already validly accepted the Offer. At its last traded price of $1.19, Suntec REIT is capitalized at $3.5 billion and trades at 0.6x price to book and 5.2% dividend yield. Bloomberg consensus 1 year target price of $1.24 implies a potential upside of 4%. We note that the mandatory general offer was made solely to comply with Rule 14.1 of the Take-over Code, and despite raising the offer to $1.19, it is still a deep discount to its NAV of $2.07/ share. Given this is not the final offer, we recommend shareholders “HOLD” and await a final offer from the offeror.
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China/HK: China’s Geely Holding Group said it aims to sell more than five million vehicles annually by 2027, a big jump from 2023, which it hopes to achieve by accelerating consolidation of its sprawling brands and improving efficiency. The goal represents about 79 per cent growth from 2023, when Geely Holding sold 2.79 million units of passenger cars and commercial vehicles. It would also deepen the alignment of research and development of key technologies in seven aspects including architecture, smart driving and cockpits, and batteries among the group, which has made redundant investments with separate R&D team under each brand. The Chinese company owned by billionaire Eric Li embarked on a series of strategic moves in September to focus on its main business of automaking after expanding into other sectors such as satellites, smartphones and banking in previous years. |
