Steady yield growth expected as Singapore REITs go on buying spree

Steady yield growth expected as Singapore REITs go on buying spree

By: 
Stanislaus Jude Chan
05/10/17, 12:42 pm

SINGAPORE (Oct 5): UBS says Singapore real estate investment trusts (SREITs) are expected to see DPU growth of 1.0% per annum from 2016 through to 2019, even as they go on the acquisition trail.

Healthcare and Industrial sector REITs are expected to lead the growth, at 3.7% and 2.5% respectively.

According to UBS, SREITS are trading at an expected yield of 6.0% in 2017, some 406 basis points higher than government bonds.

“In terms of year-to-date price performance, SREITs are up 14.0% but trails developers at 25.7%,” says UBS lead analyst Cheryl Lee in the Singapore market wrap for September.

The continued growth is expected to come on the back of acquisitions amid an improving economic outlook.

CapitaLand Commercial Trust (CCT) in September announced it is buying Asia Square Tower 2 from American asset manager BlackRock Inc for a total of $2.15 billion.

The acquisition of the 46-storey Grade A office building located in Singapore’s Marina Bay financial district is one of republic’s largest real estate deals this year.

See: CapitaLand Commercial Trust to buy Asia Square Tower 2 for $2.15 bil

“To be part-financed by a rights issue, the transaction is DPU dilutive and we believe could result in near term share price weakness,” says Lee. “Nevertheless, we think this acquisition is positive for the medium-term as it enhances the quality and growth potential of CCT's portfolio at an attractive price.”

UBS has a “neutral” rating on CCT with a target price of $1.58.

As at 12.38pm, units in CCT are trading flat at $1.65.

Meanwhile, Mapletree Logistics Trust (MLT) is looking at beefing up its Hong Kong footprint.

MLT in late August announced the acquisition of Mapletree Logistics Hub Tsing Yi from its sponsor for HK$4.8 billion ($834.8 million).

The 11-storey modern ramp-up warehouse in Hong Kong is set to be MLT’s largest acquisition to date.

See: Mapletree Logistics Trust to acquire Hong Kong warehouse for $834.8 mil

“Mapletree Logistics Trust's share price has risen 19% year-to-date, outperforming both the SREIT universe and STI index by 6 percentage points,” says Lee. “We believe this was driven by its attractive valuations and a stabilisation of operations in Singapore.”

“Further, we believe the capital deployment into Hong Kong where market fundamentals are the strongest within MLT's portfolio could also elevate its appeal,” she adds.

UBS has a “buy” recommendation on MLT with a target price of $1.30.

As at 12.38pm, units in MLT are trading flat at $1.24.

UBS’ key picks for SREITs are MLT and Ascendas REIT in Industrial sub-sector, as well as Frasers Centrepoint Trust and CapitaLand Retail China Trust in the Retail sub-sector.

Continued overseas expansion to fuel a stronger 2H for MindChamps: RHB

SINGAPORE (Oct 17): RHB Research is maintaining its “buy” call on MindChamps Preschool with an unchanged target price of 94 cents based on a blended valuation methodology comprising a target EV/EBITDA of 18 times, in line with the peer average, and DCF. In a Tuesday report, analyst Juliana Cai reiterates her positive expectations of the company’s impending release of its 2H results, as she expects higher earnings on stronger student enrolment, contributions from the Australia preschools, and one-off gains from the sale of franchise licenses. With MindChamp’s acquisition of six ce....
Read More >>

Singapore NODX up a higher 8.3% in Sept on non-electronic exports

SINGAPORE (Oct 17): Singapore’s non-oil domestic export (NODX) increased by 8.3% in September, following the 5.0% growth in August; due to growth in non-electronic NODX which outweighed the decline in electronics, reported Enterprise Singapore this morning. Electronic NODX declined by 0.9% in September, following the 1.5% decrease in the previous month. PCs, diodes & transistors and parts of ICs declined by 22.7%, 22.5% and 41.7% respectively, contributing the most to the decrease in electronic domestic exports. Non-electronic NODX grew by 11.9% in September, following the 7.8%....
Read More >>

Netflix crushes estimates, renewing faith after July letdown

LOS ANGELES (Oct 17): Netflix Inc.’s Cinderella story isn’t over just yet. The world’s largest paid online TV network added far more subscribers than analysts forecast in the third quarter and issued an upbeat outlook for the current three months, rebounding from a slowdown earlier this year. Netflix signed up 6.96 million customers in the quarter, according to a statement Tuesday, boosting its global total to 137.1 million. The results should extend Netflix’s reign as one of the best-performing stocks on Wall Street, giving the company leeway to spend billions of dollars mor....
Read More >>
Stars align for US banks to shine

(Oct 15): A decade after the global financial crisis, the landscape of the US financial services ind