SGX Stocks and Warrants

Author: kimeng   |   Latest post: Fri, 14 May 2021, 10:47 AM


Netlink NBN Trust - On the Lookout for Investment

Author: kimeng   |  Publish date: Fri, 14 May 2021, 10:47 AM

•     Results broadly in-line; 2HFY21 EBITDA surge due largely to lower amount of write-off of capitalised project costs

•     Exploring potential investments with a focus on telecoms infrastructure opportunities

•     Maintain FV of SGD1.10


NetLink NBN Trust (NLT NBN) designs, builds, owns and operates the passive fibre network infrastructure of Singapore’s Next Gen NBN. With the increasing usage of fibre broadband services for day-to-day activities driven by growing demand for connectivity and rapid broad-based growth in data consumption, we believe NLT NBN has a resilient business model, and hence able to weather through various economic cycles given the defensive nature of its income streams. Furthermore, we expect NLT NBN to be a key participant of growth in other connected services within the non-residential and NBAP space, especially with Singapore’s push to transform into a digital economy.

Source: OCBC Research - 14 May 2021

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Manulife US REIT (MUST SP) - Looking for Growth Opportunities in Magnet Cities

Author: kimeng   |  Publish date: Fri, 14 May 2021, 10:44 AM

Manulife US REIT (MUST) reported 1Q21 business update. Portfolio occupancy remained healthy at 92.0% which was above the US Class A average of 82%. Management saw some improvement in leasing momentum with 5.8% of leases by NLA or 270,000 sq ft at +2.1% rental reversion executed in 1Q21.

MUST will continue to look for opportunities to enhance portfolio by acquiring at least 20% of high growth tenants (currently at 10%) e.g. business parks, tech and healthcare tenants via joint ventures and acquisitions in magnet cities with robust population growth and low cost of living. We see MUST as a beneficiary of recovery of US economy with its fast rollout of vaccines.

We continue to like MUST’s resilient portfolio, quality tenants, stable income streams from built-in escalations and minimal lease expiry profile (4.4% of leases by GRI) in FY21 which could limit downside risk and help MUST ride over the market turmoil.

We maintain our fair value estimate of USD0.82. BUY.

Source: OCBC Research - 14 May 2021

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Genting Singapore - A soft quarter

Author: kimeng   |  Publish date: Wed, 12 May 2021, 2:16 PM

Genting Singapore (GENS) reported its 1Q21 business update. GENS’s revenue and net profit dropped 32% YoY and 26% YoY to SGD277.9m and SGD34.5m, respectively, dragged down by weaker gaming and non-gaming revenue due to a high base in 1Q20.

1Q21 adjusted EBITDA dropped 15% YoY to SGD128.1m, which we consider below expectations, weighed down by resurgence of Covid-19 cases in several of GENS’s key source markets.

The Singapore government announced tighter social distancing measures from 8-30 May to limit the potential spread of the pandemic amid higher infection rates.

While these measures could potentially weigh on GENS’s recovery trajectory, we believe the recovery in international travel demand in 2H21 remains intact and expect sequential recover in GENS’s performance. We continue to see GENS as a beneficiary of the rollout of vaccines and gradual easing of travel restrictions.

Factoring in a slower recovery, our fair value decreases from SGD1.02 to SGD0.96 which is based on 8.5x FY22F EV/EBITDA. BUY.

Source: OCBC Research - 12 May 2021

Labels: Genting Sing
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Singapore Post (SPOST SP) - Focusing on Driving ECommerce Growth

Author: kimeng   |  Publish date: Thu, 15 Apr 2021, 5:22 PM

Singapore Post’s (SPOST) share price rose ~8% MTD in April as investors viewed it as a potential restructuring play following Singapore Press Holdings and CapitaLand Limited’s strategic review and proposed restructuring. We are currently not aware of any material change in SPOST’s operations and guidance.

We note that SPOST had undertaken a series of restructuring exercises to step up its transformation and growth in the digital age in recent years. However, we believe more time is needed for SPOST’s initiatives to bear fruit.

SPOST is likely to continue to face headwinds from declining volumes of letters and printed papers in Singapore, and higher conveyance costs for its international post and parcel business.

On the other hand, we expect SPOST to continue its efforts to strengthen its e-commerce logistics capabilities which contributed ~65% of revenue in 1HFY21. After adjustments, our fair value estimate increases from SGD0.71 to SGD0.74.

Source: OCBC Research - 15 Apr 2021

Labels: SingPost
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Singapore Press Holdings - Undergoing a strategic review

Author: kimeng   |  Publish date: Tue, 6 Apr 2021, 10:11 AM

Recommendation :  BUY

Fair Value           :  SGD 1.92

SPH is a leading media organization in Asia, which is in the process of innovating digitally to transform its media business to meet changing readership and advertisers’ needs.

To diversify its income stream beyond media which is seeing structural headwinds, the group has made moves beyond its core business to diversify its portfolio, including its acquisition of student accommodation assets overseas, positioning in the aged care market in Singapore (Orange Valley Nursing Homes) with plans for expansion in Japan with Bridge C Capital and acquisition of M1 limited (with Keppel Corp) in April 2019 to leverage on synergies and explore new areas of growth.

While a modest recovery path for the company’s key businesses is the base case ahead, supported by vaccine rollouts progress and global economic recovery, near term share price volatility is expected pending developments on the strategic review, which has lifted share price and raised optimism for potential value unlocking initiatives.

Source: OCBC Research - 6 Apr 2021

Labels: SPH
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Singapore REITs Sector – Volatility Expected Given Bond Yields Spike

Author: kimeng   |  Publish date: Thu, 11 Mar 2021, 9:54 AM

The S-REITs sector has come under some selling pressure in recent weeks given the sudden and sharp spike in sovereign bond yields. This leaves us more cautious on the sector in the near-term as sentiment over yield sensitive instruments weakens and we expect further volatility in the months ahead, with potentially more selling pressure.

We observe that there has historically not been a clear correlation between the FSTREI and 10-year Singapore government bond yield. However, a sudden and sharp spike in bond yields can cause an initial negative knee-jerk reaction in the share prices of S-REITs.

In the past three episodes when this happened since 2013, we have subsequently seen a 15% to 21% rebound in the sector from the trough over a 12-month period once bond yields stabilise. Hence, although the sudden surge in bond yields this year is a concern, investors should also focus on the underlying drivers such as a stronger economic outlook, which would support the recovery of the operational performance of S-REITs and drive a potential sector re-rating.

In terms of valuations, given the spike in bond yields, the current forward yield spread between the FSTREI and the 10-year Singapore government bond yield has now compressed to 395 bps, which is below the 10-year average.

For investors looking for exposure to the sector, we would position with a recovery basket comprising retail and hospitality REITs given that we have already seen a more meaningful rotation to value and cyclical stocks globally: Ascott Residence Trust [BUY; FV: SGD1.24], CapitaLand China Trust (CLCT SP) [BUY; FV: SGD1.58], Frasers Centrepoint Trust (FCT SP) [BUY; FV: SGD2.95], Mapletree Commercial Trust (MCT SP) [BUY; FV: SGD2.18] and Mapletree North Asia Commercial Trust (MAGIC SP) [BUY; FV: SGD1.06].

For investors with a longer-term horizon, we would be buyers on dips of high-quality S-REITs which are expected to be beneficiaries of secular growth trends with room for solid inorganic growth opportunities.

Preferred picks within what we term as our resilient basket would be: Ascendas REIT (AREIT SP) [BUY; FV: SGD3.89], Frasers Logistics & Commercial Trust (FLT SP) [BUY; FV: SGD1.62], Keppel DC REIT (KDCREIT SP) [BUY; FV: SGD3.51], Mapletree Industrial Trust (MINT SP) [FV: SGD3.51] and Mapletree Logistics Trust (MLT SP) [BUY; FV: SGD2.17].

Over the next 9-12 months horizon, we would expect our recovery basket to outperform our resilient basket.

Source: OCBC Research - 11 Mar 2021

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