Compiled by Andrea Soh
SINGAPORE AIRLINES | HOLD
JUNE 23 CLOSE: $9.96
TARGET PRICE (TP): $10.03
OCBC Investment Research, June 23
Singapore Airlines' wholly owned subsidiary Budget Aviation Holdings (BAH) recently announced that Scoot and Tigerair will operate under the Scoot brand from July 25 as these two brands will merge to operate under a single air operator certificate (AOC).
According to CAPA Centre for Aviation, Scoot and Tigerair operate a combined fleet of 37 aircraft flying to 60 destinations, with plans to expand to 40 aircraft and more than 60 destinations by end-FY18.
Post-integration, with Scoot and Tigerair operating a single AOC, BAH will be able to optimise capacity with increased flexibility to change the type of aircraft used on different routes.
Integration could also help in improving connectivity between the two brands, thereby increasing interlining traffic.
All said, yields are still under pressure on intensifying competition driven by expansions of the Gulf and Chinese carriers, which could erode any gains derived from the integration.
SINGAPORE REITS | OVERWEIGHT
CIMB Research, June 22
We brought a group of local investors to three distinct business park clusters: Singapore Science Park, one-north and Changi Business Park.
Given easing supply and demand from science, technology and media sectors, we believe business parks would be the first to post recovery gains this year.
A flattening/declining yield curve and abating supply pressures in 2018 underpin our "overweight" stance on the sector. Risks include rate hikes or economic recession.
We believe the positive view on business park recovery and further acquisitive DPU (distribution per unit) growth have been largely priced in for Ascendas Reit (TP: $2.59, "hold").
Instead, our preferred picks are Frasers Logistics & Industrial Trust (TP: $1.10, "add"), Mapletree Greater China Commercial Trust (TP: $1.14; "add") and Mapletree Commercial Trust (TP: $1.70; "add"), partly due to relative performance and year-to-date performance.
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