SOILBUILD BUSINESS SPACE REIT | BUY
FAIR VALUE: $0.71
APRIL 18 CLOSE: $0.655
OCBC Investment Research, April 18
Soilbuild Reit's Q1 2018 results were within expectations.
Gross revenue dropped 11.5 per cent year-on-year to $19.4 million or 24.4 per cent of our initial full-year forecast, mainly due to lower contributions from 72 Loyang Way, West Park BizCentral, Eightrium, as well as KTL Offshore, which was divested in February.
Q1 2018 distribution per unit dropped 11.1 per cent to 1.324 cents or 25.9 per cent of our initial full-year forecast.
After adjustments, our fair value increases slightly from $0.70 to $0.71.
We continue to expect the operating environment in the industrial space to remain challenging for much of this year.
Yet, while bearing in mind this backdrop, we see upside to our fair value as of Tuesday's close.
We see the Reit as being in a stronger position after the KTL Offshore disposal as well as the latest update on the NK Ingredients issue.
The Reit manager had confirmed at the end of March the receipt of the amounts billed to NK Ingredients between Jan 11 and March 26 as well as the receipt of a top-up of security deposit. As of Tuesday's close of $0.66, Soilbuild Reit is trading at a 7.7 per cent FY18 yield.
SINGAPORE GROCERY RETAIL
DBS Group Research, April 17
Earnings for the Asean grocery retailers in the December-ended quarter saw Thailand exceeding expectations, Singapore-listed grocers' earnings in line, Indonesia and Philippines grocers underperforming.
The varied country performances were largely a function of domestic consumption fundamentals and operating environments.
Domestic fundamentals for grocery retail in Singapore and Thailand remain strong, while that for Indonesia and Philippines were weaker.
In Singapore, there is more room for growth as HDB has lined up at least 11 new supermarket properties for bidding over the next six months.
Although online grocery retail is a fast-growing segment, its market share remains low at less than 3 per cent of the whole grocery market.
Sector valuations are at 27 times forward price-to-earnings ratio. Top picks in Singapore are Dairy Farm and Sheng Siong.
We upgraded Dairy Farm's target price to US$9.77 from US$9.54 previously.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision.
The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
Compiled by Lee Meixian