Citic Envirotech (Hold)
DBS Group Research, Dec 29
Dec 29 close: $0.745
Target price: $0.80
Citic Envirotech (CEL) entered into an agreement to place 83.2 million new shares to New Resources at $0.85 per share last Thursday. The new shares account for 3.6 per cent of the existing share capital or 3.5 per cent of the enlarged share capital.
The placement price presents a 14.8 per cent premium to the weighted average price of $0.7407 of the previous trading day. Net proceeds of $70.7 million will be used to fund CEL's projects and general working capital.
We reckon the market will react positively to the share placement in the short term, given the high placement price. We estimate CEL's net debt-equity ratio to remain in the single digits after the placement.
The shareholders of New Resources are Shandong Hi-speed CE and China InnoVision Capital. Shandong Hi-speed CE is a fund set up by Shandong Hi-speed and China Everbright Finance.
China InnoVision Capital is an investment fund, and founder and chief executive Zhao Fu was a former director of CEL.
We reckon the new shareholder can help CEL to broaden its financing channels.
Mapletree Logistics Trust (Cease coverage)
RHB Research, Dec 28
Dec 29 close: $1.32
A Pan-Asian logistics player, Mapletree Logistics Trust (MLT) was listed in 2005 and is Singapore's first Asia-focused logistics Reit. As at Oct 31, 2017, it had a portfolio of 125 logistics assets in Singapore, Hong Kong, Japan, China, South Korea, Australia, Malaysia and Vietnam, with a total book value of $6.2 billion.
Recently, MLT has been actively rejuvenating its portfolio, with the acquisition of Mapletree Logistics Hub Tsing Yi for HK$4.8 billion (S$832 million), and the divestment of three of its properties in the second quarter of the 2018 financial year. Despite a challenging logistics market, its overall portfolio rent reversions have stayed positive, and occupancy has remained resilient at 95.8 per cent (as at Q2FY18).
We are ceasing coverage on MLT due to a redistribution of internal resources. Our last recommendation was "neutral", with a target price of $0.89.
• Compiled by Andrea Soh
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