Brokers' take

SINGAPORE PRESS HOLDINGS | HOLD (UPGRADE)

JUNE 22 CLOSE: $3.20

TARGET PRICE: $3.34

OCBC Investment Research, June 22

SPH announced that, together with its JV partner Kajima, its consortium has been awarded for $1.132 billion the HDB tender for a 99Y leasehold site at Upper Serangoon Road at the Bidadari Estate.

The mixed site has a land area of about 25.4k sqm (with a max gross floor area of 958.5k sq ft) and the consortium plans to develop over 600 homes with a 310k sq ft commercial component.

While the consortium's bid was deemed to be bullish by the market, we note that its bid was only 1.1 per cent higher than the second highest bidder and believe the project will likely be accretive, particularly given improved sentiments in the domestic residential sector.

Given the uncertain economic outlook and the continuing disruption of the media industry, we expect conditions to remain challenging for the group's media business.

VALUETRONICS | NEUTRAL

JUNE 22 CLOSE: $0.80

TARGET PRICE: $0.85

We recently visited Valuetronics' factories in China.

There, we took note of the encouraging signs of improvement in its activity, as well as in its automated and semi-automated processes.

New machines for an additional line for its automotive segment have also arrived.

It is on the lookout for M&A targets, either vertically downstream or horizontal businesses that fit and synergise with its existing units.

SINGAPORE REITS | POSITIVE

Maybank Kim Eng, June 22

We remain confident that a firmer rate regime poses no immediate threat to Singapore industrial Reits.

S-Reits are up 11.2 per cent year-to-date, in line with the market.

Valuations are well supported by strong investor appetite for yield amid ample liquidity in the system.

This is also reflected in the robust demand for perpetual securities, whose issuances were up 115 per cent y-o-y to date.

Mapletree Logistics Trust is a clear beneficiary among the industrial Reit names.

Potential interest savings from refinancing its first perpetual when due in September 2017 should boost DPU by an estimated 1-2 per cent.

Low leverage for the large-cap Reits and depressed cost of capital should quicken the pace of acquisitions in H2, driving upside to our DPU forecasts and valuations. DPU yield have so far compressed despite firmer rates.

Ascendas Reit (TP: $2.90, "buy") remains our top sector pick.

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