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DBS projects 'robust' DPU CAGR of 5% in FY2021-FY2022 for Ascendas India Trust

Felicia Tan
Felicia Tan11/3/2021 04:19 PM GMT+08  • 2 min read
DBS projects 'robust' DPU CAGR of 5% in FY2021-FY2022 for Ascendas India Trust
The analysts have, however, lowered their target price on the REIT to $1.80 from $1.85 previously.
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DBS Group Research analysts Derek Tan and Dale Lai have kept “buy” on Ascendas India Trust (a-iTrust) on the back of the REIT’s updates for the 3QFY2021 ended September.

See: Ascendas India Trust 3QFY201 net property income up 8% y-o-y

On Oct 27, a-iTrust reported net property income (NPI) of $39.9 million, up 8% y-o-y on better cost management.

The quarter’s total property income was up 4% y-o-y to $48.9 million due to higher rental collection, but offset by lower utilities and carpark revenue due to the Covid-19 pandemic.

However, the analysts have lowered their target price on the REIT to $1.80 from $1.85 previously. The new target price implies 1.25 times price-to-adjusted net asset value (P/NAV).

In addition, Tan and Lai have lowered their earnings estimates by 8% for the FY2021/FY2022 “on the back of lower occupancy assumptions for IT Park Chennai (ITPC). The lower estimates were also done to account for the lower exchange rate between the Indonesian rupiah (INR) and the Singapore dollar (SGD) of 55 from 53 previously.

See also: RHB downgrades Starhill Global REIT to 'neutral' on arbitration overhang

That said, the analysts remain positive on the REIT as it is “projected to deliver robust distribution per unit (DPU) compound annual growth rate (CAGR) of 5% in FY2021/2022 driven by acquisitions”.

As it is, the analysts acknowledge that they have estimated an above-consensus growth for the REIT as they see a myriad of robust growth opportunities for the trust.

Such opportunities, according to the analysts, will emerge in the coming quarters, beginning from the expansion into the industrial and data-centres space.

See also: RHB maintains 'buy' on Raffles Medical Group following strong revenue and China's reopening

“We anticipate a-iTrust to complete the construction of its pipeline of committed forward purchase funded capacity (up to 50% gearing),” they write in an Oct 29 report.

Tan and Lai also see upsides to the REIT being an emerging data centre player.

“The manager has invested in the data centre space, augmenting its position as a leading new economy player in India. With its portfolio of future ready real estate assets, we continue to see upside as it executes its forward funding contracts and developments.”

As at 4.38pm, units in a-iTrust are trading 2 cents higher or 1.43% up at $1.42, or an FY2021 P/NAV of 1.3 times and DPU yield of 6.2%.

Photo: Ascendas India Trust

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