ANALYSTS SAY: Buy, Sell, Hold (21 Apr)

UOB KAYHIAN

Keppel REIT (KREIT SP)
Recovery To Growth

Improving fundamentals, U/G to BUY KREIT’s 1Q22 distributable income rose 4.3% YoY to SGD53.8m, while NPI rose 8.6% YoY, as the Keppel Bay Tower acquisition helped offset its 275 George St (Brisbane) divestment in Jul 2021. Office demand tailwinds have strengthened its fundamentals, and we raise DPUs by 3-5%, on the back of improving occupancy and accelerating rents. Leasing velocity is strong, and we see >SGD500m in capital distributions cushioning downtime and DPUs. We lift our DDM-based TP (COE: 6.6%, LTG: 2.0%) to SGD1.30 from SGD1.20. With 15% total return, we raise our rating to BUY from HOLD. We see a favourable risk-reward, at 5.1% FY22E dividend yield and 3.5% 2-year DPU CAGR, with limited downside from interest rate and cost sensitivities.

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Keppel Pacific Oak US REIT (KORE SP)
1Q22: Benefitting From In-migration And Growth In Magnet Cities

Growth in NPI of 6.7% yoy in 1Q22 was attributed to the acquisition of Bridge Crossing in Nashville and 105 Edgeview in Denver, which was completed on 20 Aug 21. KORE provides a unique exposure to in-migration and growth in magnet cities. Growth in rents for growth markets has increased 1.2% in the past 12 months and is projected to increase 3.4% in the next 12 months. KORE provides attractive 2022 distribution yield of 8.4% and P/NAV of 0.94x. Maintain BUY with a lower target price of US$1.07.

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UOB KAYHIAN

UOB KAYHIAN

Nanofilm Technologies International (NANO SP)
1Q22: Revenue In Line; Positive Outlook Despite Macro Challenges

Nanofilm's 1Q22 revenue growth of 27% yoy was largely in line with our estimate of 30% yoy growth for 2022. AMBU, the largest segment, contributed 81% of revenue in 1Q22, with 3C products contributing 63%. Nanofilm highlighted that the market has returned to operating in a normalised cycle with the easing of supply chain disruptions. Despite several macro challenges, Nanofilm is positive and confident of 2022. Maintain HOLD and target price of S$2.72 (23x 2022F PE). 

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Yangzijiang Shipbuilding (Holdings) (YZJSGD SP)
Shipbuilding Business Materially Undervalued

We highlight that YZJ’s current share price, excluding YZJFH, implies a P/B of less than 0.5x which in our view materially undervalues the company. Since its IPO in 2007, YZJ has significantly grown and transformed its shipbuilding business, and in addition has the tailwind of high asset prices and charter rates that will benefit its shipping fleet. Our pro forma SOTP valuation for YZJ ex-YZJFH is S$1.16. Maintain BUY. Target price: S$1.95. 

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Keppel REIT (KREIT SP)
1Q22: Portfolio Occupancy Boosted By Pick-up In Leasing Activities

Property income and NPI grew 6.7% and 9.9% yoy respectively in 1Q22 due to the acquisition of Keppel Bay Tower, which was completed on 18 May 21. KREIT has signed letters of intent with a few prospective tenants and is in the midst of finalising lease documentation. If successfully signed, these new leases would improve portfolio occupancy by 1.9ppt to 97%. KREIT provides 2022 distribution yield of 5.0% (CICT: 5.0%, Suntec: 5.1%). Maintain BUY with target price of S$1.50.

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Nanofilm Technologies Int'l Ltd
Confident of growing in FY22F

■ In its 1Q22 business update, Nanofilm reported that revenue increased 27% yoy supported by growth in all its business units.
■ While acknowledging the challenging operating environment, the group guided that it remained confident of growth in FY22F.
■ We reiterate our Add call as Nanofilm enters the typically stronger secondhalf. 

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