Business

Brokers' take

Compiled by Cai Haoxiang

CAPITALAND RETAIL CHINA TRUST | HOLD (DOWNGRADE)

JULY 12 CLOSE: $1.625

TARGET PRICE: $1.58

OCBC Investment Research, July 12

In our previous report, we highlighted the recovery of CapitaMall Minzhongleyuan (MZLY) and contributions from recently acquired CapitaMall Xinnan as two key catalysts for CapitaLand Retail China Trust (CRCT) going forward.

While we continue to see some upside from MZLY and Xinnan, we note that current price levels are more reasonable than the depressed levels we previously saw.

Since we upgraded CRCT from a "hold" to a "buy" on Jan 27, the unit price has increased 14.2 per cent to Tuesday's closing price.

Since the start of the year, the RMB (renminbi) has weakened slightly. According to our dividend forecasts, CRCT is trading at a 6.7 per cent 2017 forecast yield.

Given the current price levels, we downgrade CRCT to "hold" with an unchanged fair value of $1.58.

SINGAPORE PROPERTY

DBS Group Research, July 12

There is a record bid again at the Bidadari Estate at $1,110 psf ppr (per square foot per plot ratio) by a Chip Eng Seng consortium.

Key interesting trends to note: Local developers are more aggressive in their bids, there were fewer foreign developers bidding for this site, and joint ventures were formed to bid for the land (risk sharing?) with City Dev bidding twice.

The aggressive bid shows that developers remain optimistic and are keen to replenish their land banks.

As mentioned previously, UOL stands to benefit again with its Raintree Gardens site.

The next tender closing soon would be for the nearby Serangoon North Avenue 1 site (Serangoon Gardens) on July 27.

SEMBCORP INDUSTRIES

JULY 12 CLOSE: $3.09

TARGET PRICE: $3.48

OCBC Investment Research, July 12

Sembcorp Industries (SCI) announced that it has added two operating rooftop solar facilities in Singapore to its global renewable energy portfolio.

Though the acquisition consideration may not be as substantial as its usual power projects, it is significant as it reinforces the group's commitment to further developing its renewable energy portfolio in Singapore, as the power market here moves towards full retail competition.

Maintain "buy" with $3.48 fair value estimate.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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