Far East Hospitality Trust (FEHT SP)
Better visibility in 2H22
Recovery underway
FEHT’s 2H21 DPU jumped c.11% YoY/c.39% HoH, and was in line with consensus estimates, but ahead of ours due to lower-than-expected finance costs. We see stronger revenue and NPI in FY22E, underpinned by higher occupancy and RevPARs, in line with Singapore’s steady re-opening.
Near-term RevPAR visibility is low against easing pandemic-driven demand, but should strengthen in 2H22. Divestment of Central Square will bolster its balance sheet, and FEHT remains our preferred play in an uneven sector recovery. FEHT has a high proportion of minimum fixed rent from its master leases. This offers downside support amid lower RevPAR growth. We fine-tuned forecasts and kept our DDM-based TP (COE: 5.9%, long-term growth 2.0%) at SGD0.70. |
Netlink NBN Trust (NETLINK SP)
Delivering stable performance
Noise from re-measurement loss; Maintain BUY
Netlink’s consolidated 9MFY22 revenue at SGD282m (+1.9% YoY) and net profit at SGD62m (-12% YoY) marginally missed MIBG/Street estimates due
to higher operating expenses impacted by a re-measurement loss of SGD12.4m relating to finance lease receivables. Excluding this loss, we expect stable EBITDA growth YoY. We continue to like NetLink as its 5.6% FY22E yield offers strong dividend visibility. Changes to its regulated returns (7% pre-tax WACC) are key risks. Maintain BUY and DDM-based TP
(COE: 6.3%, LTG: 1.5%) of SGD1.13. We transfer coverage to Kelvin Tan.
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Singapore Telecommunications (ST SP)
3QFY22: Earnings In Line; Expect Stronger Footing
Singtel reported firm yoy 3QFY22 core earnings of S$473m (- 11% qoq) as Optus had a
good run (aided by postpaid ARPU uplift) and stable mobile service revenue in Singapore. This was partly offset by lower devices sales, softer enterprise revenue and higher finance cost. 9MFY22 core earnings is in line with our estimate but below the
street’s forecast. Singtel expects 2HFY22 DPS to mirror 1HFY22’s DPS of S 4.5 cents.
Maintain BUY with a higher target price of S$2.90 as we roll over valuation to FY23.
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Lendlease Global Commercial REIT (LREIT SP)
Eking Out Mild DPU Accretion
Jem is a dominant suburban mall at Jurong Gateway, the commercial hub of Jurong
Lake District. The acquisition has increased AUM by 2.1x to S$3.6b, of which the resilient suburban retail accounts for the lion’s share of 46.8%. By securing full
ownership of 100%, LREIT is able to generate tax savings of S$5.6m per year. It will also benefit from a potential increase in weightage in the FTSE EPRA Nareit Developed Asia Index. FY23 distribution yield is attractive at 6.3%. Maintain BUY. Target Price: S$1.08.
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