Compiled by Claire Huang
FIRST REIT | HOLD
JULY 19 CLOSE: $1.345
TARGET PRICE: $1.38
OCBC Investment Research, July 19
First Reit (Freit) reported an in-line set of results for Q2-2017, with gross revenue and net property income growing 3.3 per cent year-on-year and 3.2 per cent year-on-year to $27.5 million and $27.2m, respectively.
Distribution per unit (DPU) increased 1.4 per cent year-on-year to 2.14 Singapore cents, forming 25.6 per cent of our full-year projection.
Looking ahead, we are encouraged by positive Singapore inflation data, which should augur well for Freit's base rental revisions in Indonesia. Further ahead, gross revenue is projected to receive a boost in H2-2020, on the back of the Siloam Hospitals Surabaya asset swop.
We note that Freit's gearing ratio of 31 per cent, as at June 30, 2017, leaves it with ample debt headroom for accretive acquisitions. We deem such developments likely in H2-2017, which would boost our DPU estimates accordingly.
For now, we maintain our "hold" rating, but increase our fair value estimate from $1.32 to $1.38.
KEPPEL REIT | BUY
JULY 19 CLOSE: $1.15
TARGET PRICE: $1.30
UOB Kay Hian, July 19
Results were slightly below expectations on fewer one-off distributions and weaker contribution from Bugis Junction Towers. However, pressure on rental reversions has eased following a nascent recovery in the office sector.
Positive reversions in the second quarter offset negative rent reversions in the first quarter. Maintain "buy" and target price of $1.30.
M1 LIMITED | REDUCE
JULY 19 CLOSE: $1.935
TARGET PRICE: $1.70
CIMB Research, July 19
We believe M1's share price could see some weakness after its three major shareholders announced that they will not proceed to sell their stakes, as the proposals received did not meet the minimum criteria.
M1's share price was at $1.97 (March 16), before their announcement on March 17 of a strategic review exercise.
Its Q2-2017 results are in line. H1-2017 core earnings per share is at 47/48 per cent of our/consensus FY17 forecasts.
Earnings before interest, tax, depreciation and amortisation (Ebitda) fell 9.1 per cent year on year due to a rise in subscriber acquisition cost on higher recontracting activities.
Maintain "reduce", with an unchanged discounted cash flow-based target price of $1.70.
SOILBUILD BUSINESS SPACE REIT | HOLD
JULY 19 CLOSE: $0.715
TARGET PRICE: $0.73
DBS Group Research, July 19
Still very attractive yield. Second quarter 2017 DPU down 6 per cent as anticipated, but recovery seen at 76 Loyang Way's non-anchor space, though still a key challenge.
Occupancy rate found to be a key determinant of DPU and price. Downgrade to "hold" as target price has been reached.
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