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ARA Logos Logistics Trust (ALLT SP) Small-cap Pure Log Play
Strong 2H20, 8+% div yield ALLT delivered strong 2H20, with DPU up 8.9% YoY and 26.0% HoH on the back of improving portfolio occupancy (from 97.0% to 98.5%) and +9.8% rental reversion (+4.8% for FY20). Fundamentals are sound, underpinned by strong leasing momentum into FY21 and better DPU visibility from its higher Australian contributions. Logistics vacancies in Singapore should fall further on strong demand while NPI is set to rise as rental recovery gains pace. Valuations are compelling at 8+% FY21 dividend yield, with catalyst from a stronger-than-expected DPU recovery. We maintain our forecasts and DDM-based TP SGD0.80 (COE: 8.7%, LTG: 1.5%). BUY.
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Singapore Banks Liquidity gives you wings
Stronger growth signals could support momentum Our Negative call in Nov 20 has not worked given strong market liquidity and expectations for more stimulus. This momentum is likely to continue, buoyed by continued economic relaxing, targeted support for the vulnerable sectors and higher non-interest income due to market volatility. Asset quality risks remain elevated, but continued relief measures may see it kicked further down the road. A relaxing of dividend caps in line with other OECD regulators could be a further upside catalyst. We raise sector outlook to POSITIVE. We raise DBS and OCBC to BUY (from SELL) and UOB to HOLD (from SELL).
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MAYBANK KIM ENG |
UOB KAYHIAN |
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Suntec REIT (SUN SP) A Retail Lift
Further deterioration ahead, stay at SELL SUN’s 2H20 DPU, down 12.8% YoY, was in line with ours and consensus’ estimates. While retail recovery gained pace in 4Q20, rising office vacancy due to increasing WFH trends suggest weak fundamentals into FY21. Its overseas AUM remains a silver lining, as contributions rise from 21 Harris and 477 Collins in Australia, and Nova properties in the UK. We see an overhang from a potential dilutive equity raise as it continues to pursue acquisition opportunities, given its high c.44% gearing, and valuations at 0.7x P/B. SELL with a DDM-based TP of SGD1.20 (COE: 8.2%, LTG: 1.0%).
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Mapletree Logistics Trust (MLT SP) 3QFY21: 3PL and e-Commerce Resilient Despite COVID-19 Pandemic
MLT demonstrated resiliency with portfolio occupancy relatively stable at 97.1% while maintaining positive rental reversion at 1.6%. It has completed acquisition of nine properties in China, Malaysia and Vietnam and a remaining 50% stake in 15 properties in China in 3QFY21. More acquisition is on the cards with management evaluating further expansion in South Korea, India and Australia. Maintain HOLD. Target price: S$2.08. Entry Price: S$1.88.
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Check out our compilation of Target Prices
