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Phillip Securities Singapore REITs Still awaiting the elusive 2016 rate hike SINGAPORE | REAL ESTATE (REIT) | UPDATE What is the news? Expectations have been rising in recent months for Fed rate hike in December Rising expectations in recent months for a December rate hike by the Federal Reserve may have gotten investors jittery about the knee-jerk reaction that might be caused to the REIT markets. Current polled odds from Bloomberg for a December rate hike stand at c.67%, an increase from a mere 7.7% on 27 June 2016, the Monday after the Brexit referendum. |
CIMB ST Engineering Tiny dot, global play ■ We hosted a NDR for STE in the US and Toronto. No major change in strategy by the new CEO but we believe resumption of growth and defending dividend are key. ■ Investors were generally surprised by STE’s competitiveness against global players such as Lockheed Martin, General Dynamics, BAE, Panasonic and Siemens. ■ Maintain Add and target price, still based on blended DCF, 22x CY17 P/E and dividend yield. Stronger contract wins could be key catalysts. |
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UOB KayHian Ascott Residence Trust (ART SP) Leveraging On Disruptive Technology Investor queries revolved around the impact of disruptive technology, potential acquisitions and hedging policies. We opine that ART can leverage on CapitaLand’s tie-up with online rental service provider Tujia. On Airbnb, management reiterated that its clientele is mainly corporates, which tend to be less price sensitive than leisure travellers. We note that limited debt headroom would imply equity fund raising and asset recycling to underpin acquisition-led growth. Maintain BUY. Target price: S$1.37.
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OCBC Global Logistic Properties Ltd: Expands partnership with Walmart
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