Compiled by Kenneth Lim
LIPPO MALLS INDONESIA RETAIL TRUST | BUY
TARGET PRICE: $0.455
AUG 30 CLOSE: $0.435
OCBC Investment Research, Aug 30
In our last report, we noted that the land leases for Java Supermall units and the Mall WTC Matahari units were due to expire on Sept 24 and April 8 respectively.
Together, the assets made up 0.8 per cent of Lippo Malls Indonesia Retail Trust's (LMIRT) portfolio valuation as at end-2016 and contributed 1.9 per cent of net property income in FY16.
To be conservative in our valuations, we assumed that these leases would not be renewed.
Since then, LMIRT has announced that the HGB (right to use) title for the underlying land of the Java Supermall units has been extended, and LMIRT's strata title certificates are now registered until Sept 24, 2037.
We made adjustments to our valuation accordingly.
As for the Mall WTC Matahari units, we believe that any announcements regarding the leases will be made about two months before its current expiry next year.
After the adjustments above, our dividend discount model-based fair value increases from $0.45 to $0.455.
Our fair value of $0.455 is currently about 6 per cent above LMIRT's last closing price, and the real estate investment trust is trading at a FY17 forecast dividend yield of 7.9 per cent.
Given that other retail S-Reits are trading at dividend yields up to 270 basis points lower (ranging from 5.2 per cent to 6.7 per cent), we believe that LMIRT has once again become an attractive opportunity for investors at current unit price levels.
We upgrade LMIRT from a "hold" to a "buy" with a fair value of $0.455.
SING HOLDINGS | BUY
TARGET PRICE: $0.54
AUG 30 CLOSE: $0.415
KGI Securities Research, Aug 30
Sing Holdings is expected to launch it 735-unit private residential project at Fernvale Road in the next two quarters.
Going by the recent upturn in new property sales transactions, we expect its upcoming launch to be able to sell well.
High Park Residences - located just next to Sing Holding's project - sold all 1,399 units within 20 months of the launch despite a weak property market in 2015 and 2016.
We estimate Sing Holding's revalued net asset value (RNAV) to be $0.77 following the sale of its BizTech Centre, Robin Residences and its private residential project at Fernvale Road
We recommend a "buy" with a fair value of $0.54, based on a 30 per cent discount to its RNAV of $0.77.
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