Brokers' take

Compiled by Cai Haoxiang

SINGAPORE STRATEGY

Deutsche Bank, June 9

While a broad-based recovery in the economy is still gradual, asset reflation and mergers and acquisitions will remain the two key themes for Singapore.

We are confident on our positive view of the real estate sector, and we see a synchronised recovery across all sub-sectors.

We add City Developments to our top picks, replacing SATS, so that our top picks are now CapitaLand, City Developments, DBS, Sembcorp Marine and SingTel.

SINGAPORE REITS

DBS Group Research, June 12

We believe that the Singapore property market is approaching a cyclical bottom in 2018 on the back of abating supply risk.

With GDP (gross domestic product) projected to continue growing at 2.5-2.8 per cent per annum over the next two years, this bodes well for cyclical sectors like hotels and office space where demand correlates more closely to a more buoyant economic environment.

We also expect better prospects for industrial real estate investment trusts (Reits) in 2018 given improving business expectations from manufacturers which could result in expansionary demand ahead.

The sweet spot appears to be in the business parks space where firms in the technology, media and telecom sector continue to drive demand for space.

We expect buying interest for Singapore Reits will continue in the immediate term driven by (i) high yield spread of 4.4 per cent, and (ii) attractiveness from the continued strength of the Singapore dollar.

We like CDL Hospitality Trusts given the expected turnaround in its earnings.

We continue to be vested in landlords like Keppel Reit and Reits with attractive acquisition prospects like Mapletree Logistics Trust and Frasers Logistics and Industrial Trust.

LIPPO MALLS | BUY

JUNE 12 CLOSE: $0.43

TARGET PRICE: $0.435

OCBC Investment Research, June 12

Lippo Malls Indonesia Retail Trust (LMIRT) recently entered into conditional share purchase agreements to acquire the entire issued share capital of PT MASB for about $33.2 million which is to be financed from debt and/or perpetual securities.

PT MASB in turn owns a Kendari shopping mall under a 30-year Build-Operate-Transfer agreement with the government of South-east Sulawesi.

Upon completion of the acquisition, LMIRT's portfolio is estimated to increase by about 1.6 per cent.

While the acquisition is relatively small, we see the acquisition of an asset outside Jakarta as being in line with LMIRT's strategy for tapping Indonesia's continued urbanisation.

Pending the fulfilment of the conditions precedent to the acquisition's completion, we keep our forecasts for now.

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 arising from any use of the information published herein.