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Phillip Morning Note - 23 August 2016 (CapitaLand Retail China Trust)
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CapitaLand Retail China Trust – Chengdu beckons: First acquisition since 2013
Recommendation: Accumulate (Maintained), Last Done Price: S$1.60
Target Price: S$1.62, Analyst: Dehong Tan
- Acquisition of Galleria in South Chengdu.
- Galleria’s NPI yield of 5.4% lower than FY15 portfolio NPI yield of 5.8% but management aims to boost this through readjusting tenant mix and improving operational efficiency.
- Pure debt and cash acquisition increases DPU-accretiveness of mall due to lower cost of debt vs equity – but execution risks remain.
- Maintain ACCUMULATE with increased target price of S$1.62.
Wing Tai Holdings (WINGT SP/BUY/S$1.78/Target: S$2.37) by UOB Kayhian
Wing Tai Holdings (WINGT SP) FY16: Awaiting Acquisition-led Growth Wing Tai’s results came in below our and consensus expectations. We opine that growth could be bolstered by the group’s sizeable debt headroom with acquisition opportunities in overseas markets like China, Malaysia and even Australia. Management remains bearish on near-term prospects in the Singapore residential and retail segments. A special dividend of 3 S cents/share was announced, bringing total dividend for the year to 6 S cents. Maintain BUY. Target price: S$2.37.
APAC: CIMB Asia Pacific Daily - 23 August 2016
Singapore
Wing Tai Holdings (HOLD, tp:S$1.87▼) - Residential drags
Wing Tai Holdings Residential drags ■ 4Q and FY16 results below our expectations, dragged down by residential margin compression. FY16 core net profit made up only 12% of our forecast. ■ Retailing turnaround is sustained while rental income has been stable. ■ Focus on boosting sales, a light balance sheet, and gearing enables reinvestment opportunities. ■ Maintain Hold. RNAV-based target price lowered to S$1.87. Total final DPS of 6 Scts proposed. Results below expectations Wing Tai’s 4Q and FY16 results were below our expectations .4Q net profit fell 98% yoy to S$1.9m on a revenue of S$140.7m, down 35% yoy, as lower gross margins and reduced fair value gains dragged down the bottom line. Residential development activities made up 60% of the topline, while rental income contributed another 7%. The group has proposed a total final DPS of 6 Scts, translating to a yield of c.3.4%.
Wired Daily 23 August 2016 (not for distribution in US)
Please click here for report: Wired Daily: 23 Aug 2016
| Summary |
· CapitaLand Retail China Trust - FX a near-term headwind
· SATS enters Saudi Arabian cargo market
· SGX and Baltic Exchange: update on proposed acquisition
· Broadway to dispose foam plastics solutions and flow control device businesses for S$150m
· Chip Eng Seng – award of S$191.9m contract by HDB
· Ley Choon wins S$35.3m PUB water pipeline contract
| Stock to Watch |
CapitaLand Retail China Trust (CRCT SP): HOLD
Market Cap: US$1,016m | Average Daily Value: US$1.25m
Last Traded Price: S$1.60; Price Target: S$1.65 (Upside 2.9%) (Prev S$1.60)
FX a near-term headwind
· Acquisition of Galleria mall in Chengdu for total investment cost of Rmb1.53bn and 5.4% NPI yield
· Opportunity to achieve higher NPI yield through tenant remixing and leveraging on CapitaLand’s strong network of five existing malls in Chengdu
· 1-4% accretion to FY16-17F DPU
Read more ...
NRA Capital
TEE LAND: Reverting to Growth Over FY17
TEE Land’s FY16 ended May results were largely in line with expectations. Full year PATMI came in at S$7.3m against our forecast of S$7.2m, despite falling by 33.9%. In this report, we updated our model to incorporate current selling prices and find that our valuation of TEE Land largely remains intact at S$0.325 per share, presenting upside of 67.5% from a share price of S$0.194. The kicker is that TEE Land is expected to revert to profit growth in FY17 owing to contribution from wholly owned projects such as Hilbre28 and Third Avenue, with potential catalysts arising from the sale of existing properties and investments. Aside from potential placement on the Watchlist due to the MTP criteria, we see TEE Land as a high-average return / low risk opportunity given the robustness of the upside following our model review.
Read more...
OCBC Investment Research
| Singapore REITs: Staying positive on S-REITs | |||
| During the recently concluded 2QCY16 earnings season, out of the 23 S-REITs under OCBC Investment Research’s (OIR) coverage, only OUE Hospitality Trust and Ascott Residence Trust (after stripping out a one-off gain) reported results which fell short of our expectations. Overall DPU growth for these REITs was flat (-0.1%) on a YoY basis. Notwithstanding the macroeconomic uncertainties and supply pressures within the sector, we believe the recent FOMC Jul meeting minutes released supports our thesis that there will be a structural shift towards a prolonged period of accommodative interest rates. We reiterate our OVERWEIGHT rating on the S-REITs sector, with Frasers Centrepoint Trust[BUY; FV: S$2.32], Keppel DC REIT [BUY; FV: S$1.30] and Ascendas REIT [BUY; FV: S$2.66] as our top picks. Given our positive view on the sector, we also add SPH REIT[BUY; FV: S$1.05] and Mapletree Greater China Commercial Trust [BUY; FV: S$1.18] into our preferred picks list. | We reiterate our OVERWEIGHT rating on the S-REITs sector. (Wong Teck Ching Andy) | ||
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Oil & Gas sector: Market speculation about a deal again
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| OPEC members are meeting major exporting non-OPEC countries at the International Energy Forum in Algeria from 26-28 Sep to discuss the oil market situation, including any possible action that may be required to stabilize the market. Statements from other countries such as Russia have added to speculation about a deal. At present, while many market watchers are expecting a low possibility of curtailed output by OPEC, we expect market speculation to continue till the end of Sep. We believe that this would deter short-selling in oil, offering some support for oil prices in the meantime around the $40+ range and alleviating downward pressure on oil and gas stocks especially after the Swiber incident, although oil remains volatile as seen from last night’s 3% drop. Still, the overall operating environment for companies in the sector remains tough. For investors with a longer term view and keen to gain exposure, our preferred pick is Sembcorp Industries [BUY, FV: S$3.07] which has a more diversified business mix, supported by a relatively stable utilities segment that has exposure to emerging market growth. |
Maintain NEUTRAL on the oil & gas sector. (Low Pei Han)
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