Compiled by Andrea Soh
MANULIFE US REIT | BUY
JUNE 21 CLOSE: US$0.89
TARGET PRICE: US$0.99
RHB, June 21
Manulife US Reit announced its maiden acquisition of a prime Class-A freehold office asset, Plaza, located in New Jersey.
We like the deal as:
- It is yield-accretive with an estimated net property income yield of about 7.5 per cent;
- Plaza has a high occupancy rate (98.9 per cent) and a weighted average lease expiry of 9.2 years;
- It also has an excellent location and property attributes;
- A diversified tenant base and a geographical presence.
The Reit offers high yields of over 7 per cent, which we deem as highly attractive. Manulife US Reit is our top pick of the mid-cap Reits for its high yield offering, organic rental growth and exposure to the rebounding US economy and office market.
Key risks are ability to retain key tenants, changes in underlying tax structure and the US economic growth faltering.
HATTEN LAND | ADD (INITIATE)
JUNE 21 CLOSE: $0.192
TARGET PRICE: $0.38
CIMB Research, June 20
Hatten Land is a developer of integrated developments headquartered in Malacca (Melaka). The group has four ongoing projects in its initial portfolio and recently acquired three land parcels.
Underpinning our projected core net profit (before restructuring expenses), CAGR of 28.5 per cent for FY16-19F are these ongoing development projects (excluding landbank) with a remaining potential gross development value of about RM1.65 billion (S$540.4 million). Of this, RM660 million is locked as yet-to-be-recognised presales, which we expect to be largely booked in FY17F-18F.
To date, Hatten has exercised its right of first refusal for three land parcels within the MOU period with its sponsor. There are two remaining land parcels measuring 74.86 acres.
We estimate net debt-to-equity ratio to decline from 2.78 times now to below 0.31 times by FY6/19F.
This puts the group in a strong position to acquire land for growth.
We like Hatten for its exposure to the growth market of Malacca, which is likely to benefit in the medium term from the mega infrastructure projects now underway.
Key risks include unfavourable forex translation and changes in local government policies on the property market.
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