Ascott Residence Trust (ART) upgraded to 'buy' by OCBC on 'impressive' sale of Raffles Place property

Ascott Residence Trust (ART) upgraded to 'buy' by OCBC on 'impressive' sale of Raffles Place property

PC Lee
14/01/19, 11:32 am

SINGAPORE (Jan 14): OCBC Investment Research is upgrading Ascott Residence Trust (ART) to “buy” from “hold” given the serviced residences REIT managed to sell Ascott Raffles Place Singapore at significantly above its book value.

Ascott REIT divests Ascott Raffles Place for $353.3 mil; 64% above book value

While OCBC was not surprised by the divestment given ART’s active asset recycling strategy, the research house was impressed that ART has managed to sell the property for $353.3 million, which is 64.3% above the valuation of $215 million.

“We continue to like ART’s portfolio of assets with its strong brand recognition and high geographical diversification,” says analyst Deborah Ong in a recent report.

The net gain from the sale is estimated to be $134 million, after decducting expenses. Net sale proceeds will be used to pare down debts, to fund the development of properties such as lyf on-north Singapore, or to fund potential acquisitions.

If the sale had been completed by Jan 1 2017, FY17 DPU would fall 2.4% from 7.09 cents (actual) to 6.92 cents (pro forma). For 9M18, Ascott Raffles Place accounted for 3% of ART’s gross profit. In terms of NAV per share, FY17 NAV per share would increase 4.8% from $1.25 (actual) to $1.31 (pro forma).

As at Sept 30 2018, gearing stood at a reasonable rate of 36.4%. OCBC expects it to decrease to 32% by end 2019 after the divestment is completed and proceeds are used to pay down debt, assuming no acquisitions are made.

ART is currently trading at a 6.3% dividend yield for both FY19F and FY20F. OCBC currently assumes that ART will make additional capital distributions out from net gains till the end of FY19 to smoothen out the loss in distributable income from the divestment.

“After adjustments, our fair value increases to $1.18,” says Ong.

Units in ART last traded at $1.13.

Stamford Land's 4Q earnings fall 80% to $5 mil on lower revenue

SINGAPORE (May 22): Stamford Land Corporation reported an 80.4% y-o-y decline in 4Q19 earnings to $5 million compared to $25.6 million previously due to lower revenue. The latest quarterly result brings Stamford’s FY19 earnings to $47.8 million, down 15.4% from $56.4 million a year ago. Revenue for the latest quarter fell 74.8% to $47.9 million from $189.7 million 4Q18 on the back of lower contributions across all segments. The overall decline in 4Q topline was mainly due to a steep drop in revenue and operating profit for the Property Development segment in the absence of settled u....

Neo Group FY19 earnings nearly double to $5.4 mil after strong 4Q

SINGAPORE (May 22): Neo Group Limited has announced earnings of $3.9 million for the 4Q ended March, rising 42.8% from $2.7 million a year ago mainly due to higher revenue.    This brings the group’s FY19 earnings to $5.4 million, up 48.7% y-o-y from $3.6 million previously on higher revenue and lower full-year purchases and consumables used. Revenue for 4Q rose 7% to $50.9 million from $47.6 million previously, driven mainly by higher contributions from the group’s flagship Food Catering business due to stronger recurring income from the childcare and elderly market segmen....

$1,379 – that's how much an elderly person needs to survive in the world's most expensive city

SINGAPORE (May 22): Just how much does a single, elderly person aged over 65 years who lives alone in Singapore need to cover his basic needs? Some $1,379 a month, according to a team of researchers led by assistant professor Ng Kok Hoe of the Lee Kuan Yew School of Public Policy (LKYSPP) at the National University of Singapore (NUS). If the name sounds familiar, it is because Dr Ng had in 2017 conducted the first count of Singapore’s homeless people. Singapore has shied away from defining a poverty line, or setting a minimum wage. But, for the first time, a group of researchers has....