| UOB KAYHIAN |
UOB KAYHIAN |
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Zixin Group (ZXGH SP) Unearthing The Sweet Potato Value Chain
We visited Zixin’s cultivation base, as well as manufacturing and distribution facilities, in Liancheng County, Fujian, China in Dec 23 to learn about its sweet potato value chain. We also saw new facilities that would improve Zixin’s operational efficiencies. With the local governments’ initiatives to safeguard China’s food security, Zixin is poised for growth as it expands its cultivation base beyond Liancheng County.
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Shipping And Ports – China Economic Indicators Still Slow; Red Sea Crisis To Bolster Shipping Earnings
Economic indicators for global trade demand were still largely weak in the most recent month, but we maintain our expectations for a moderate reacceleration of global trade by mid-24 driven by potential restocking needs in the US. The ongoing Red Sea crisis has driven a significant surge in spot ocean freight rates in recent weeks, which should bolster shipping players’ near-term earnings. Maintain MARKET WEIGHT on the sector. Top picks: CSP for ports and CSH for container shipping
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LIM & TAN |
LIM & TAN |
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AIMS APAC REIT / AAREIT ($1.32, down 0.01) is pleased to announce that AA REIT has renewed the master lease with KWE-Kintetsu World Express (S) Pte Ltd (“KWE”) at 7 Bulim Street for a new 5 year term and extended the master lease term with Aalst Chocolate Pte Ltd (“Aalst Chocolate”) at 26 Tuas Avenue 7 for a further 10 years. At $1.32, AAREIT is capitalized at $1.07 billion and trades at 13x PE, 1x book, 7.1% yield and based on consensus 1 year target price of $1.48, potential upside is 12%-13%. While the positive rental reversions and extensions of WALE from the renewal of contractual terms with 2 of AAREIT’s key client is positive, its valuations and upside potential seems quite fair relative to current share price. We would “HOLD” the stock for now and see better buying opportunities near the $1.20 level.
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he Ascott Limited (Ascott), a lodging business unit wholly owned by CapitaLand Investment / CLI (S$3.01, up 1 cent ), today announced the expansion of its award-winning lyf (pronounced ‘life’) brand with eight new property signings, expanding into new resort and city destinations such as Bali, Penang, Sydney and Frankfurt. CLI’s market cap stands at S$15.4bln and currently trades at 19x forward PE and 1x PB, with a dividend yield of 4%. Consensus target price stands at S$4, representing 30% upside from current share price. We continue to like CLI given the strong growth of their recurring fee based income stream as well as the reopening of global economies which will benefit their hospitality division and the expected interest rate cuts in 2024 will also provide operating leverage to their suite of REIT portfolio. We maintain an “Accumulate” rating on CLI. |
| OCBC | |
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Initiate coverage on PLIFE with a fair value (FV) estimate of SGD4.27–
Based on the dividend discount model (DDM) methodology, with a cost of equity assumption of 5.8%, terminal growth rate of 2%, and a slight ESG discount, we derive an FV estimate of SGD4.27 for the stock, representing an implied price-to-book (P/B) ratio of 1.8x. Our forecasted FY24 distribution yield of 4.1% (as at 5 Jan 2024) is in line with consensus estimates and represents around half a standard deviation (s.d.) above the five-year historical average. While a yield of ~4% might seem less attractive vis-à-vis other selected S-REITs, we believe that the premium is justified given the defensiveness of the healthcare subsector, as well as PLIFE’s track record of steady DPU growth and risk profile. We note that PLIFE is also trading at a forward 12 month P/B ratio of 1.3x, which represents more than one s.d. below the five-year historical average. In our view, this could present an attractive entry point for long-term investors seeking a stable and defensive income stream.
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