CAPITALAND COMMERCIAL TRUST | NEUTRAL
TARGET PRICE: S$1.54
Credit Suisse Research, July 14
Further details regarding the redevelopment of Golden Shoe Car Park (GSCP) were finally announced.
The joint venture is targeting a yield on cost of 5 per cent for the development based on office rents of S$12-14 per sq ft per month, which we believe may be difficult to achieve as we expect a moderate recovery in rents.
We assume rents of S$11.50 psf/m and yield on cost of 4.5 per cent. Maintain "neutral". We lower our 2017-2019 estimated distribution per unit (DPU) by 1.7-6.8 per cent as we believe the accretion from GSCP-redevelopment will come in from only 2022 onwards. Our new dividend discount model-based target price is S$1.54 (from S$1.51). We view the redevelopment as positive in the longer term but it will dampen DPU in the near term.
DUTY FREE INTERNATIONAL | HOLD (DOWNGRADE)
TARGET PRICE: S$0.33
CIMB Research, July 13
A series of exogenous events (weak ringgit, southern Thai flooding, unexpected GST rollout) continued to plague Duty Free International's Q1 2018 bottom line, which fell 18.1 per cent year on year.
There is a slight earnings miss from lower-than-expected gross margins due to unfavourable foreign exchange.
Synergies from Heinemann partnership may need more time to materialise, which led to us cutting our 2018-20 earnings and dividend forecasts.
We downgrade from "add" to "hold", with a 4-6 per cent dividend yield as share price support in the near term.
To better reflect its earnings profile we switch from a discounted cash flow to a price to earnings valuation, resulting in a lower target price of S$0.33 (based on 18 times 2018 earnings, 0.5 standard deviation above its five-year historical mean). - Compiled by Cai Haoxiang
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