KEPPEL DC REIT | BUY
TARGET PRICE: S$1.30
JAN 24 CLOSE: S$1.205
DBS Group Research, Jan 24
Keppel DC Reit remains one of the few Reits in Singapore that has the ability to acquire at a lower cost of capital.
The Reit is projected to deliver a solid 5 per cent compound annual growth rate in distributions supported by positive market dynamics.
Low gearing of 30 per cent and low cost of capital empower the Reit with financial capacity to acquire accretive assets.
Maintain "buy" with a revised target price of S$1.30 after pricing in a dip in rental in Singapore.
BUMITAMA AGRI | BUY
TARGET PRICE: S$0.97
JAN 24 CLOSE: S$0.785
Maybank Kim Eng Research, Jan 23
After three consecutive quarters of year-on-year decline, Bumitama Agri finally posted its first quarterly yield recovery for Q4 2016, a sign that the worst is likely over. Its better-than-expected Q4 yield recovery will lift our 2016 earnings estimate.
At about 11 times 2017 earnings, it currently trades at -2 standard deviations of its historical mean.
"Buy" with a target price of S$0.97 based on 14 times 2017 earnings (pegged at -1 standard deviation of four-year historical mean).
FRASERS LOGISTICS AND INDUSTRIAL TRUST | BUY
TARGET PRICE: S$1.06
JAN 24 CLOSE: S$0.94
Citi Research, Jan 23
We hosted Frasers Logistics & Industrial Trust (FLT) management meetings in Hong Kong.
Overall, investors remained generally receptive to FLT's story, but given that all three of its call option properties are now acquired, investors questioned the forward growth outlook.
Management shared that its right of first refusal over assets, nine as at listing, have now increased to 11, with a total valuation of more than A$200 million (S$215 million).
Together with the A$850 million of pipeline assets under development by the sponsor up until 2020, these would form the main inorganic growth drivers for FLT.
Management put the kibosh on concerns that the sponsor's recent acquisition of a stake in Thai industrial property developer Ticon could lead FLT to extend its geographical reach into Thailand.
Aside from sufficient growth runway (see previous point) that FLT sees in Australia, Ticon also already has its own listed real estate investment trust, and current Thai regulations prevent foreign entities from owning 100 per cent of Thai assets.
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