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JPMorgan upgrades Suntec REIT (T82U.SG) to Neutral from Underweight and raises its target price to $1.60 from $1.35.
While the house retains its view the trust requires one more round of recapitalization, it says the stock is trading at a discount to NPV and book value estimates on a fully diluted basis; “In fact, as with the share price performance post the previous EFR exercise, we think a potential re-capitalization would help to fully lift the fundraising overhang and could be the share price catalyst.”
While the house retains its view the trust requires one more round of recapitalization, it says the stock is trading at a discount to NPV and book value estimates on a fully diluted basis; “In fact, as with the share price performance post the previous EFR exercise, we think a potential re-capitalization would help to fully lift the fundraising overhang and could be the share price catalyst.”
The house fine-tunes earnings estimates to factor in December’s equity fundraising and lowers its discount rate assumption. JPMorgan says at $1.60/unit, on a fully diluted basis, it estimates a 5% FY11 yield and a 5% discount to book.
The house prefers Suntec over CapitaCommercial Trust (C61U.SG) for office exposure on “better portfolio quality, better earnings growth profile and a more attractive valuation.” REIT +0.6% at $1.57.
