Money Talk: SPH Reit, Lian Beng

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. SPH Reit

Broker: OCBC

For its fourth quarter for financial year 2014, the company's income distributable to unit holders was $34.9 million, which translates to a distribution per unit of 1.39 cents. This was 6.1 per cent above the forecast when the Reit was listed and we judge these numbers to be marginally above our expectations.

Operational performance from both Paragon and The Clementi Mall remained firm over this period, both being fully leased and generating gross revenues in line with the IPO forecast. Though we have seen weakening visitor arrivals and retail sales in Singapore over 2Q-3Q14, management indicated that they remain confident of maintaining positive rental reversions ahead in FY15.

The Reit is also going ahead with three asset enhancement initiatives at Paragon, which is expected to generate an estimated net lettable area of 10,000 sq ft (to be phased in from FY16) and improve the operational efficiency of the mall.

HOLD with unchanged fair value of 99 cents.

2. Lian Beng

Broker: OSK-DMG

Compiled by Ann Williams

Lian Beng reported a strong set of results for the first quarter of its 2015 financial year. Revenues grew 10.8 per cent to $167.6 million, while profit after tax and minority interests surged 58.5 per cent to $12 million. The surge in profits is largely attributable to the recognition of profits from property development projects such as NEWest, KAP Residences, The Midtown and Midtown Residences.

Going forward, we expect the recognition of profits from The Midtown and Spottiswoode Suites to continue to drive earnings, alongside a steady execution of construction projects.

Other near-term catalysts include potentially sizeable quick profits from the sale of strata-titled Prudential Tower units (Lian Beng owns 32 per cent in the consortium that bought 92.8 per cent of the aggregate area of Prudential Tower from Keppel REIT), incoming granite supply business and an associate stake of 40 per cent in the asphalt premix supply business.

BUY with a target price of $1.17