Compiled by Stephanie Luo, The Business Times
CAPITALAND MALL TRUST | BUY
OCT 23 CLOSE: $2.06
FAIR VALUE: $2.20
OCBC Investment Research, Oct 23
CapitaLand Mall Trust (CMT) reported a stable set of Q3 17 results that met our expectations.
Although gross revenue fell marginally by 0.2 per cent yoy (year-on-year) to $169.4 million, NPI (net property income) rose 1.6 per cent to $121.4 million due to lower property tax and utility expenses. This translated into an NPI margin of 71.6 per cent. DPU (distribution per unit) was unchanged at 2.78 Singapore cents.
We fine-tune our assumptions, which include lowering our finance cost projections due to the expected repayment of borrowings from CMT's divestment of the serviced residence component in the Funan integrated development.
Our FY17 and FY18 DPU forecasts are lifted by 0.5 per cent and 0.4 per cent, respectively.
CAPITALAND COMMERCIAL TRUST | BUY
OCT 23 CLOSE: $1.67
TARGET PRICE: $1.77
Maybank Kim Eng Research, Oct 20
While the office market has reached a turning point, we expect negative rental reversions to persist in the near term as expiring rents remain higher than what is achievable in the market today.
However, with 10 per cent/33 per cent of office space due for renewal in 2018/19, a stronger-than-expected market recovery could present upside to income.
We believe active asset management of Asia Square Tower 2 will offset negatives from the slight distribution per unit dilution from this acquisition.
CCT will be acquiring the property at a discount to comparable properties in the vicinity and our estimated replacement cost of a new office building in the CBD. Successful redevelopment of the Golden Shoe Carpark will crystallise 2.9 cents of development surplus when completed in 2021.
FRASERS COMMERCIAL TRUST | HOLD
OCT 23 CLOSE: $1.42
TARGET PRICE: $1.46
CIMB Research, Oct 20
We project near-term income volatility for Alexandra Technopark due to income vacuum from the expiry of Hewlett Packard Enterprise's lease.
FCOT plans to conduct a$38 million asset enhancement initiative (AEI) at China Square Central to increase the asset's retail NLA (net lettable area) by 17 per cent and to reposition the retail podium to focus on food and beverage, wellness and services.
FCOT expects this exercise to complete around mid-2019, in time for the opening of the new Capri by Fraser hotel there. While FCOT shared no return on investment targets, we believe a larger retail footprint would enable it to expand retail offerings and attract more footfall into the property.
We have factored in lower occupancy during the AEI period.
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