Brokers' Call

MM2 ASIA

Broker: DBS Group Research

Call: Buy

Target Price: 63 cents

The listing status of 41.9 per cent-owned UnUsUal would help to propel mm2's growth, going forward. UnUsUal can now tap the equity market for expansion.

mm2 is projected to grow at an earnings per share compound annual growth rate of 52 per cent from financial year 2016 to 2019, underpinned by growth in productions, expansion into the China market and contribution from UnUsUal.

The cinema arm, on the other hand, helps the group to build a recurring income base.

Upon completion of the latest acquisition of 13 cinemas in Malaysia, mm2 Asia would become a top four player in Malaysia.

North Asia is expected to contribute more than 70 per cent of core revenue from financial year 2017, up from 23 per cent in 2016.

Upside to earnings could come from more projects, especially in China where the market is bigger and budgets are much higher.


SOILBUILD REIT

Broker: OCBC Investment Research

Call: Hold

Target Price: 64 cents

Soilbuild Business Space Reit (Soilbuild Reit) reported gross revenue of $22 million in the first quarter of 2017, representing an increase of 9.2 per cent year on year.

Distribution per unit fell 4.4 per cent to 1.489 Singapore cents but this is within expectations.

There were some positive takeaways from this set of results, as portfolio occupancy rose from 89.6 per cent (as at the end of financial year 2016) to 91.8 per cent.

It is understood that Soilbuild Reit has obtained approval from JTC to lease out up to 30 per cent of its 72 Loyang Way property's gross floor area to non-oil and gas related tenants. As such, the property's occupancy came in at 9.9 per cent.

While the leasing environment has improved, rental reversions are likely to remain soft.

There are also uncertainties as to how quickly Soilbuild Reit will be able to find an anchor tenant for its 72 Loyang Way asset.

A version of this article appeared in the print edition of The Straits Times on April 17, 2017, with the headline 'Brokers' Call'. Print Edition | Subscribe