Towards Financial Freedom
DBSV S'pore Wired Daily 19 December 2013
Industrial REITs - Challenges ahead given significant supply outlook. Pick MINT for superior growth profile; Cache for high yields
The Industrial REITs sector performed better than expected in 2013, as demand growth kept up with supply completions. As a result, rental and capital values inched up, albeit at a more moderate rate of 5-7%. Looking ahead, we see outlook turning modest, owing to a significant supply pipeline of 51.8m sq ft (+12% supply expansion) of industrial space currently under construction/planning, which is projected to be completed over 4Q2013-2015. However, we expect rental reversions to remain positive, buffered by low expiring rent levels while retention rates are expected to remain high. As such, we believe that earnings risk is minimal and forecast industrial REITs to deliver FY13F-15F DPU growth of c.3%. We pick Mapletree Industrial Trust (TP: S$1.44) for superior growth profile and Cache (TP: S$1.33) for high yields of close to 8.2%-8.5%.
Yoma Strategic Holdings has entered into a proposed joint venture with Sumitomo Corporation, a leading general trading house in Japan, to distribute and service Hino brand trucks and buses in Myanmar. Yoma's involvement in this joint venture will serve to further broaden the company's burgeoning automotive interests in Myanmar.
Pacific Radiance will be pressing forward with its growth strategy, moving ahead with plans to expand and upgrade its offshore fleet by adding two high-specification platform supply vessels (PSVs) to its newbuild programme. The latest pair of vessels are due to be delivered in 4Q 2015. This latest order brings the Group's newbuild programme to 19 vessels in all.
CapitaMall Trust has issued S$100m 3.15% fixed rate notes due 18 December 2020. The proceeds will be used to refinance existing borrowings, to finance/refinance the investments held by CMT, to finance any capital expenditure and asset enhancement works and for the general corporate and working capital purposes.
Mermaid Maritime has been awarded a subsea construction support services contract with a major engineering, procurement, construction, installation and commissioning (EPCIC) contractor in Thailand serving a major international upstream oil and gas operator. This is the ninth consecutive year Mermaid has been awarded this work. 2014 campaign has estimated contract value of US$32m and comes with options for up to two additional campaign years.
Rex International has signed an agreement to acquire the remaining 25% stake in Jasmin Oil and Gas from independent third parties. Jasmin holds 100% of the South Erin Block licence in Trinidad & Tobago.
ST Engineering's Land Systems arm, ST Kinetics has set up a specialty vehicles subsidiary in Brazil and acquires manufacturing assets worth about S$9.2m to launch its manufacturing presence. This will provide ST Kinetics with direct access to opportunities driven by Brazil's economic growth and the government's commitment to improve the country's infrastructure.
China Print Power Group is proposing to place up to 41.8m new shares at HK$2.60 per placing share. The estimated net proceeds from the Placing will be approximately HK$106.4m, and is intended to be used for potential acquisition activities as identified by the Group and as for general working capital purposes.
Mermaid Maritime has been awarded a subsea construction support services contract with a major engineering, procurement, construction, installation and commissioning (EPCIC) contractor in Thailand serving a major international upstream oil and gas operator. This is the ninth consecutive year Mermaid has been awarded this work. 2014 campaign has estimated contract value of US$32m and comes with options for up to two additional campaign years.
Rex International has signed an agreement to acquire the remaining 25% stake in Jasmin Oil and Gas from independent third parties. Jasmin holds 100% of the South Erin Block licence in Trinidad & Tobago.
ST Engineering's Land Systems arm, ST Kinetics has set up a specialty vehicles subsidiary in Brazil and acquires manufacturing assets worth about S$9.2m to launch its manufacturing presence. This will provide ST Kinetics with direct access to opportunities driven by Brazil's economic growth and the government's commitment to improve the country's infrastructure.
China Print Power Group is proposing to place up to 41.8m new shares at HK$2.60 per placing share. The estimated net proceeds from the Placing will be approximately HK$106.4m, and is intended to be used for potential acquisition activities as identified by the Group and as for general working capital purposes.
The Singapore government will cut land sales under the weight of supply. For H1 2014, MND will launch through confirmed list eight sites that can generate 4,630 private homes. The 4,630 private homes that can be generated from the confirmed list sites slated for launch by the government in H1 next year is not only down 22.3% from the current H2 2013 slate but is also the lowest half-yearly quantum since H1 2010, when the figure was 2,925 units.
Business sentiment among Asia's top companies dropped sharply in the fourth quarter, extending last quarter's declines, with global economic uncertainty and rising costs weighing on the region's firms. The Thomson Reuters/Insead Asia Business Sentiment Index fell to 62 in the fourth quarter from 66 in the third quarter of 2013, the lowest reading since the third quarter of 2012.
The FED will trim its monthly bond purchases by USD10bil to USD$75bil starting January 2014. The Fed's purchases will be divided between USD40bil in Treasuries and USD35bil in mortgage bonds. Stocks rallied, sending benchmark indexes to all-time highs because the Fed coupled its decision to taper with a stronger commitment to maintaining an accommodative policy. The tapering steps going forward will be data dependent. The Fed added its benchmark interest rate is likely to stay low "well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below" the Fed's 2% goal.
Source: DBSV
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