Suntec Reit | Hold
April 26 close: $1.91
Fair value: $1.84
Broker: OCBC Investment Research, April 26
Suntec Reit reported its Q1 2018 results, which met our expectations.
We believe underlying operations have firmed up for both its office and retail segments. We expect office spot rents to continue their upward trajectory this year.
Since our downgrade to a "sell" on Jan 24, and as of the closing price on April 25, Suntec Reit's share price has corrected by 11.6 per cent. We believe valuations are less demanding than before, with Suntec Reit now trading at FY2018F distribution yield of 5.3 per cent.
We factor in Suntec Reit's acquisition of an additional 25 per cent interest in Southgate Complex and raise our fair value from $1.81 to $1.84. Upgrade from "sell" to "hold".
Ascendas India Trust | Buy
April 26 close: $1.03
Target price: $1.22
Broker: DBS Group Research, April 26
We believe the recent acquisition of a portfolio of warehouses... combined with other announced redevelopments and acquisitions, should result in Ascendas India Trust delivering a three-year distribution per unit compound annual growth rate of 8 per cent - three to four times faster than the average for the S-Reit sector.
The key risk to our bullish stance on Ascendas India Trust's distribution per unit is a significant depreciation of the rupee; a downturn in the Indian economy which will depress rents; or delays in the completion of acquisitions and development projects.
AEM Holdings | Add
April 26 close: $6.03
Target price: $7.24
Broker: CGS-CIMB, April 25
We deem Q1 2018 core net profit, at 18 per cent of our full-year forecast, to be below expectations.
We attribute this to the higher expenses arising from its three recent acquisitions, which we were not able to forecast.
CapitaLand Commercial Trust | Accumulate
April 25 close: $1.78
Target price: $1.88
Broker: Phillip Securities Research, April 25
Lease renewal and interest rate refinancing risks have been largely reduced, with only 5 per cent of leases and zero debt expiring this year. Distribution per unit outlook is thus stable. Near-term growth drivers are contributions from Asia Square Tower 2, acquired in September last year, and the completion of CapitaSpring in 2021.
With strengthening rents, as well as refinancing risks much reduced until FY19 and negative rental reversions turning out less severe than we expected, we revise our FY19E distribution per unit upwards by 3 per cent, with a corresponding increase in target price. Upgrade to "accumulate", with an increased target price of $1.88, from $1.80 before.
Sunningdale Tech | Add
April 25 close: $1.29
Target price: $2.50
Broker: CGS-CIMB, April 24
Q1 2018 core net profit was below expectations and gross profit margin is into its third quarter of consecutive decline since peaking at 15.6 per cent in Q2 2017.
Management cites an increasingly competitive business landscape in the rest of the year.
We maintain our "add" call, with better cost management as a potential catalyst. Slowdown in customer orders is a downside risk.
