| CGS CIMB |
OCBC |
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LY Corporation Limited Brightening bedrooms
■ LY Corporation Limited (LYC) is a Malaysian-based manufacturer and exporter of wooden bedroom furniture. LYC’s main export market is the US. ■ Management believes furniture exports to the US in the near future will remain strong, given the surge in US new home sales in May. ■ Management thinks the US-China trade tension could be positive for LYC.
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OUE Hospitality Trust: Too cheap to ignore
OUE Hospitality Trust’s (OUEHT) unit price has declined 7.3% since 10 Sept’s close, a sharp drop that we believe was prompted by concerns of an equity fundraising in the near term to fund the acquisition of one of its ROFR assets, Oakwood Premier. We believe 1) Oakwood Premier needs more time to stabilize before it is offered for sale, 2) even in the case of an acquisition, OUEHT is more likely to conduct a placement as opposed to a rights issue and 3) the conditions for OUEHT to raise equity are not particularly ripe following the most recent rout. While we cannot rule out the possibility that OUEHT could acquire a non-ROFR asset (and conduct a rights issue), we believe there is nothing particularly suggestive of this right now to warrant such a sharp unit price decline. Looking forward, 2019 prospects appear bright to us. We believe Crowne Plaza Changi Airport is at the cusp of surpassing its minimum rent and with the opening of the nearby Jewel Changi Airport (expected end-March 2019), we see room for CPCA to contribute beyond this threshold. As of 19 Sept’s close, OUEHT is trading at 7.3% FY18F yield and 7.5% FY19F yield and we find the REIT to be very attractively valued. We upgrade OUEHT from Hold to BUY with an unchanged fair value of S$0.79. |
| PHILLIP SECURITIES | DBS VICKERS |
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Singapore REITs Monthly Monthly Tracker: September 2018 SINGAPORE | REAL ESTATE (REIT) | UPDATE
FTSE S-REIT Index declined 2.6% YTD. Weakness across all sub-sectors over the past month, with Starhill Global REIT being the top performer (+5.1% MTD) and OUE Commercial REIT being the worst performer (-11.7% MTD). Sector yield spread of 296bps over the benchmark 10-year SGS (10YSGS) yield remains close to the -1 standard deviation (SD) level as at end-August. 3m SOR rose to 1.65% as at end-August, near 10-year highs. Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and Hospitality.
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Thai Beverage Public Company
Lock-in of rates should allay concerns • ThaiBev has issued an additional Bt77bn in debentures • Weighted average fixed coupon rate of 3.42%; including earlier issuance (Bt50bn), average rate at 3.19% • Move to allay market’s concerns on group’s exposure to rising interest rates • Further catalyst from upturn in operational performance, elections
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Check out our compilation of Target Prices
