ANALYSTS SAY: Buy, Sell, Hold (4 Apr)

UOB KAYHIAN

SPH REIT (SPHREIT SP)
Recovering, Low Deal Visibility

Healthy metrics, but Prefer FCT (BUY)
SPHREIT’s 2Q22 DPU rose c.4% YoY/c.16% QoQ with 1H22 DPU reaching 49% of our FY22E. The results - with revenue up 1.2% YoY/3.2% HoH and NPI rising 0.4% YoY/7.7% HoH - were in line to our estimates, and we maintain our forecasts and DDM-based TP of SGD0.95 (COE: 7.2%, LTG: 1.5%). Stay at HOLD. While recovery is underway, acquisition visibility remains low, and we expect SPHREIT to trade sideways in the near term, as it is bound by a chain offer, resulting from its sponsor’s ongoing privatisation exercise.
Clementi Mall’s resilience however reinforces our preference for suburban retail. As a result, we prefer FCT (FCT SP, CP SGD2.44, BUY, TP SGD2.90) for its concentrated suburban mall portfolio.

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STRATEGY – SINGAPORE
Alpha Picks: Add MM2, SIAEC, Venture, Remove BRC
Asia And YZJ

Our Alpha Picks rose 6.3% mom and outperformed the STI which rose 5.1%. However our portfolio underperformed on a quarterly basis, up 5.3% in 1Q22 vs the STI’s 9.1% increase. For Apr 22, we add SIA Engineering and MM2, both being key beneficiaries of Singapore’s reopening after the COVID-19 peak, while we like Venture’s robust demand outlook. We have elected to take profit on BRC Asia and YZJ, up 11% and 53% respectively since their inception into our portfolio.

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UOB KAYHIAN

CGS CIMB

SECTOR UPDATE
REITs – Singapore

S-REITs Bi-Weekly Updates (16-31 Mar 22)
The domestic economy will receive an uplift from the easing of social distancing measures and the border reopening. Externally, the Russo-Ukrainian war creates heightened uncertainties and has pushed bond yields higher. We seek solace and support from S-REITs with resiliency. BUY ART (Target: S$1.29), FCT (Target: S$2.98), MCT (Target: S$2.48) and MINT (Target: S$3.72). Maintain OVERWEIGHT.

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Property Devt & Invt
Slowdown in price momentum in 1Q22

■ The flash estimate of the Urban Redevelopment Authority’s (URA) property
price index showed a 0.4% increase qoq in 1Q22.
■ Meanwhile, primary and resale residential sales volume declined post the
cooling measures.
■ Reiterate sector Overweight on valuations. Sector top picks: CIT and UOL. 

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