Towards Financial Freedom
DBS Equity Research: Wired Daily 24 Apr 2015
Ascendas REIT - 4Q15 results in line. Downgrade to HOLD on valuations, TP S$2.65 maintained.
4Q15 results for Ascendas REIT in line. Outlook remains challenging as rental reversions turn modest; going forward, acquisitions are expected to driven earnings. At 1.2x P/Bk NAV and forward yield of 5.8%, we believe that positives of A-REIT's income resilience and diversity are priced in at current levels. Downgrade to HOLD on valuations, TP S$2.65 maintained.
Suntec REIT's 1Q15 revenue grew 13% to S$74m, and NPI of S$51m was 17% higher, due to the opening of Suntec City Phase 2 and stronger performance from Suntec Singapore. DPU of 2.23Scts was below our estimates, as committed rents and occupancy rates at Phase 3 were slower amid difficult retail environment in Singapore. While we believe that the office segment will remain resilient going forward, there could be some downside risk for the retail portion should leasing activity remain weak. We maintain our HOLD call and TP S$1.84.
1Q15 results for Ascott Residence Trust (ART) in line. 1Q DPU grew 1% y-o-y to 1.76 Scts. The modest rise in DPU was attributed to higher interest expenses and dilution from shares issued in lieu of management fees, which offset the 10% rise in NPI to S$43.1m as ART benefited from acquisitions made over the past year. Maintain BUY with TP of S$1.36. We continue to like ART for its geographically diversified exposure and still decent DPU growth (3 year CAGR of 3.6%).
1Q15 results for Sheng Siong Group slightly ahead of expectations, lifted by strong Chinese New Year sales. Store expansion and China development is on track. Our current Buy call and TP of S$0.83 under review.
Global Logistic Properties announced that GLP Japan Development Venture will sell GLP Kobe-Nishi to GLP J-REIT for approximately JPY7.2 bn (US$60m). The sale crystallizes a 38% development value creation margin for the Venture within 14 months, with net levered property IRR of 128% before fees and promotes.
Separately, Global Logistic Properties has signed a new agreement with Carrefour, a leading global retailer, to lease 48,000 sqm (517,000 sq ft) in Midwestern China. Carrefour will use the facilities to enhance its distribution capability in Midwestern and Southwestern China.
Q & M Dental Group is exploring a possible spin-off of its subsidiary, Q & M Aidite International, via a listing on a reputable Stock Exchange. Q & M Aidite is in the business of manufacturing zirconium oxide blocks in China, which are used in dental Computer-Aided Design/Computer-Aided Manufacturing ("CAD/CAM") machines in the fabrication of dental prosthesis.
Union Steel Holdings is expected to report a net loss for 3QFY2015, mainly attributable to the slowdown in market demand for steel products and related services. The Group expects to remain profitable for 9MFY2015.
SGX Mainboard-listed United Fiber System, effected a change in company name to "Golden Energy and Resources Limited" or "GEAR" on April 21, 2015, following the completion of a S$1.88 billion acquisition exercise of 69.9998% of PT Golden Energy Mines or "GEMS", a Sinar Mas-linked entity. The name change is to better reflect the change in business focus to coal mining, forestry and trading businesses of GEAR post RTO. This is one of the largest RTOs in Singapore in recent years. Post RTO, Golden Energy and Resources will be a subsidiary of PT Dian Swastatika Sentosa Tbk, a Sinar Mas unit which is listed on the Indonesia Stock Exchange.
Singapore's consumer prices fell for a fifth straight month in March - slipping 0.3% from a year ago, unchanged from February's - and the market believes that the inflation rate may turn positive only in the third quarter of this year. As with previous months, housing and transport were the main drags. Accommodation costs fell 2.2% in March as the housing market continued to soften, extending February's 2.1% decline. Private road transport costs continued to fall too, but the hike in petrol duty rates meant a more moderate 4% compared to February's 5.8% drop. Core inflation -which strips out accommodation and private transport costs - came in at one per cent, mainly reflecting lower food inflation. This was down from 1.3% in February, and lower than the 1.1% core inflation the market had been expecting.
China's factory activity contracted at its fastest pace in a year in April. The flash HSBC/Markit Purchasing Managers' Index (PMI) fell to 49.2. New orders declined further to a one-year low of 49.2 from March's 49.8, pointing to softer domestic demand.
The Nasdaq Composite climbed to the highest level in 15 years, topping its dot-com-era high, as US stocks shrugged off mixed earnings and disappointing manufacturing data from across the globe. Oil rose to a four-month high. Dow up slightly at 18, 059.
Source: DBS
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