| MAYBANK KIM ENG |
OCBC |
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Mapletree Logistics Trust (MLT SP) Easing Into A Larger Base
In line; maintain HOLD 2Q19 DPU of 1.958 SGD cts, up 3.8% YoY, is in line with Street and our estimates. We fine-tune estimates for the 28 Sep closure of its acquisition of five Singapore logistics properties. While these properties could boost revenue / NPI by 4% / 11% through FY20E, our estimates on DPU accretion are more limited, given funding from a 9.6% increase in new equity and higher borrowing costs. Maintain HOLD to our unchanged DDM-based TP of SGD1.30 (COE 7.4%, LTG 1.5%). Our top industrial-sector pick remains the business-park-focused AREIT (AREIT SP, SGD2.55, BUY, TP SGD3.05).
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Suntec REIT: 3Q18 DPU grew 0.3% YoY
Suntec REIT reported its 3Q18 results this morning which met our expectations. Gross revenue declined 2.5% YoY to S$88.8m and NPI fell by a larger magnitude of 11.4% to S$56.5m due largely to lower contribution from 177 Pacific Highway (partially due to AUD weakness) and sinking fund contribution for Suntec City office upgrading works. According to Suntec REIT, the latter has no impact on distributable income, and if we exclude it, NPI would have declined by 3.9% YoY instead. DPU was stable YoY at 2.491 S cents (+0.3%), as the 2.9% dip in DPU from operations was offset by a 23.8% jump in DPU from capital (arising from a portion of the sale proceeds from the sale of Park Mall previously). For 9M18, Suntec REIT’s gross revenue was up 1.2% to S$266.9m and this formed 75.7% of our full-year forecast. DPU was flat at 7.398 S cents and accounted for 73.5% of our FY18 forecast. We will provide more details after speaking with Suntec REIT. For now, we have a HOLD rating and S$1.84 fair value on the stock. |
| RHB | DBS VICKERS |
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EC World REIT Visit Note: Master Lease Assets Ramping Up
We do not have a rating on EC World. We recently visited its assets in Hangzhou and noted the REIT’s strategic market positioning and the favourable logistics sector outlook. Key takeaway: master lease assets (70% of 2Q18 NPI) are ramping up steadily, with the sponsor likely to extend master leases – this could help sustain dividend yields. The assets also cater mainly to local demand and, contrary to market expectations, may potentially benefit from current trade tensions. This is due to the Chinese Government’s push to boost its domestic consumption.
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Singtel
Rising associate’s contribution to drive the share price Fixed dividend commitment of 17.5 Scts over FY19-20F each (5.5% yield) with 6% EPS CAGR over FY19F-21F. Current quarter associates’ profit contribution has been a critical factor for Singtel’s share price historically. Associates’ profit contribution bottomed out in 1Q19 possibly and is expected to grow in FY20F (after two years of decline) led by Telkomsel, AIS and Globe despite delay in Bharti’s recovery. Besides, core business is likely to be stable too as soon-to-be merger of Vodafone-TPG in Australia and TPG’s abysmally low capex in Singapore (~S$66m so far) have significantly reduced the risk of irrational competition. Singtel is attractive at 12-month forward PER of 16x, -1SD of its 17x historical average and offers 5.5% yield.
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