Compiled by Kenneth Lim
OUE COMMERCIAL REIT | HOLD
TARGET PRICE: $0.68
AUG 28 CLOSE: $0.72
OCBC Investment Research, Aug 28
OUE Commercial Reit (OUECT) recently announced that it has successfully priced $150 million 3.03 per cent fixed rate notes due 2020 under its $1.5 billion multicurrency debt issuance programme.
The notes drew strong interest, with the final order book attracting funds in excess of $400 million.
OUECT has no refinancing requirement in 2017, and from what we understand, the notes will be used to partially refinance the Singapore dollar term loan due in 2018.
We are positive on OUECT's foray into unsecured borrowings, which is part of the manager's capital management strategy to harness greater financial flexibility and diversify its funding sources in the current low interest rate environment.
We are also aware that the notes are priced at a rate that is in line with some of the recent note issuances by other S-Reits.
We maintain "hold" and our fair value estimate of $0.68.
SINGAPORE TELCOS | OVERWEIGHT
UOB Kay Hian, Aug 28
TPG Telecom's positioning in the budget segment does not overlap with M1's and StarHub's focus on high-value subscribers, especially those with high-intensity usage of data.
Australia is TPG's primary market for mobile.
Here, TPG faces challenges from the high capex required to cover the huge but sparsely-populated land mass.
Its core fixed line business is also under tremendous pressure.
Reiterate "buy" for M1 (target price: $1.98) and "hold" for StarHub (entry price: $2.38).
SINGAPORE PROPERTY | POSITIVE
Maybank Kim Eng, Aug 25
We believe investors are increasingly concerned that escalating land prices could lead to a margin squeeze for property developers.
While it is a valid concern, we opine that the resurgent en bloc market offers alternative land banking opportunities for developers and could ease upward pressure on land prices.
Furthermore, it effectively front-loads demand and pushes out supply.
We raised our target price for UOL to $9.43 (from $9.05) to reflect higher target price for UOB and market value of United Industrial Corp.
UOL and City Developments continue to be the best large-cap picks to an impending rebound in Singapore's property prices.
For investors with lower liquidity thresholds, recently initiated GuocoLand offers compelling relative value with improving fundamentals.
Maintain "positive" view on developers.
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