Macquarie is listing put warrants over CMA and AREIT this morning.

This is the first time Macquarie has listed a warrant over Ascendas Real Estate Investment Trust (AREIT). AREIT is the largest business and industrial trust listed on the SGX, with a portfolio of 101 properties in Singapore and a business park property in China.

Recently on April 15, it announced after market its full year 2013 results, which came in at $305.6mn, a 8.5% year-on-year increase and in line with analysts’ estimates. On the back of these results, Macquarie Equities Research (MER) released a research report on the same day stating that AREIT at $2.78 is trading at a Full year 2014E yield of 5.3% and price to book ratio of 1.45x, which appear expensive versus its 10-yr mean of 6.7% and 1.32x. Thus, while it continues to be the dominant player within Singapore’s industrial property sector, MER prefers office SREITs over AREIT and has a ‘Neutral’ view maintained on the stock, with a 12-month target price of $2.60 (Neutral). MER’s target price is 5.5% below AREIT’s closing price on Tuesday at $2.75.

Only AREIT put warrant in the market
Since the report, AREIT has pulled back 4.2%, but is nevertheless still trading at its highest level in almost 6 years, since July 2007. Investors who believe that AREIT will see a further pullback in the short term may consider today’s newly listed put warrant,

It is the only put available over AREIT in the warrant market. This warrant tend to gain in price when AREIT’s share price falls, as puts have an inverse relationship with the underlying share price movements.

CMA back above $2 on strong 1Q13 results
Another property name that recently announced its result earnings was CapitaMalls Asia, the retail property unit of CapitaLand that develops, owns and manages shopping malls in Asia. CMA had posted a “strong first quarter” result of $73.2mn in net profits, which was a 9.6% increase from the same period the previous year. CMA’s CEO attributed its strong results to record growth in key markets and continue to be positive about the long-term retail prospects in these key markets.

Buyers brought CMA’s share price back above the $2 mark on the back of its earnings announcement. The stock had on April 17 fallen below the $2 mark – a level it had hovered around for the most of this year, after crossing it for the first time in two years on January 3. It closed at $2.10 on Tuesday.

Investors holding the view that CMA might backtrack to trade below the $2 mark again may wish to consider this morning’s two new put warrants over CMA.

Source: Macquarie Research - 2 May 2013