ANALYSTS SAY: Buy, Sell, Hold (26 Apr)

CGS CIMB

Singapore Post (SPOST SP)
FY22 Results Preview: Positive Signs Leading To A Gradual Recovery

We expect SPOST’s FY22 revenue and PATMI to post strong yoy growths, coming off a low base in FY21. The post & parcel segment is expected to recover gradually, driven by
e-commerce and the reopening of international borders. The logistics segment continues to benefit from elevated sea freight rates and the property segment from relaxed COVID-19 measures. We opine that SPOST remains attractive at current price levels. Maintain BUY with a higher target price of S$0.86 (previously S$0.78).

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Singapore Strategy
Reopening continues to gain ground

■ Singapore relaxes to DORSCON yellow w hile domestic and inbound travel restrictions are eased further.
■ Sectors that w ill benefit include retail and office landlords, transport and those tourism-related as w ell as hospitality.
■ Our preferred reopening plays: SIE, SingTel, SPOST, CICT, LREIT and ART. 

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CGS CIMB

CGS CIMB

APAC Realty Ltd
Mandatory general offer at S$0.57/share

■ NHPEA to acquire 59.8% of APAC; makes mandatory general offer for remaining shares at $0.57/share.
■ Offer price appears low, at 7-8x FY22F P/E multiple, vs. comparable peers.
■ Reiterate Add rating with an unchanged TP of S$0.93. 

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Parkway Life REIT
Stability priced in

■ 1Q22 revenue/NPI were in line at 24%/24.3% of our FY22F forecasts.
■ Stronger Singapore and Japan contributions due to organic and acquisition growth.
■ Downgrade to Hold with an unchanged TP of S$5.05. 

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Suntec REIT ($1.83, unchanged) reported a distributable income of S$68.7 million for the period from 1 January to 31 March 2022 (“1Q 22”) which was 18.2% higher than the quarter ended 31 March 2021 (“1Q 21”). The distribution per unit (“DPU”) of 2.391 cents for 1Q 22 was 16.9% higher year-on-year, coming in slightly above expectaƟ ons.

At $1.83, Suntec REIT is capitalized at $5.248 billion and trades at 0.9x price to book and 5.2% 2022 expected dividend yield. While Suntec REIT’s DPU is expected to reach pre-Covid 19 level of 9.5-9.6 cents in 2022, its share price has similarly reached pre-Covid 19 levels seen in early 2020. With Suntec REIT trading at consensus target price, upside seems limited, hence we are “Neutral” on the REIT (a fast rising interest rate environment could post challenges for Suntec REIT’s funding posiƟ on going forward).

APAC Realty (S$0.805, down 1 cent) announced that NHPEA Ace Realty Company Limited (“Off eror”), a wholly-owned subsidiary of a private equity fund managed by Morgan Stanley Private Equity Asia (“MSPEA”), disclosed that it has agreed to acquire 59.8% of the total outstanding shares of SGX-listed APAC Realty Limited (“APAC Realty”), a leading real estate services company in Asia, for a total consideration of approximately S$129.5 million.

At S$0.805, market cap of APAC Realty is S$275.3mln, FY21 P/E is 7.8x, current P/B is 1.7x and FY21 dividend yield is 6.8%. Given that the offer price of $0.57 represents (S$0.61 if we include the 4 cents fi nal dividend) a 29.2% discount to its last done share price of $0.805, we believe that this uncondiƟ onal off er by Morgan Stanley Private Equity for APAC Realty will likely face strong resistance from minority shareholders (in addiƟ on, there will likely be downside risks to APAC Realty’s share price given its strong run-up this year – up
12% this year).