M1 | BUY
TARGET PRICE: S$2.48
JAN 25 CLOSE: S$2.05
UOB Kay Hian Research, Jan 25
M1's Q4 2016 results were in line with expectations.
We believe the chances of M1 and StarHub sharing a common radio access network and backhaul transmission for 5G are high, as both companies share the same set of equipment vendors, namely Huawei and Nokia.
Reiterate "buy" with target price at S$2.48.
KEPPEL REIT | BUY
TARGET PRICE: S$1.18
JAN 25 CLOSE: S$1.015
Maybank Kim Eng Research, Jan 25
FY 2016 was a marginal miss due to lower-than-expected capital distributions.
We cut 2017-18 estimated distribution per unit (DPU) by 2 per cent each to reflect slightly higher vacancy and lower rents, as evidenced by the negative rental reversions reported.
This led to a slight cut in our target price to S$1.18 (from S$1.21), based on a target yield of 5.25 per cent.
Nonetheless, reiterate "buy" as elevated prices for office assets in the physical market will continue to support the sector's valuation.
Our target yield is close to its historic low to reflect strong capital value support and incorporates our relative preference amongst office real estate investment trusts (Reits). Risks to our view include sharper-than-expected decline in office rents and overpaying for acquisitions.
ASCENDAS REIT | BUY
TARGET PRICE: S$2.65
JAN 25 CLOSE: S$2.40
DBS Group Research, Jan 25
Ascendas Reit (A-Reit) offers attractive yields of more than 6.5 per cent to investors looking for steady returns.
A low leverage of 35 per cent supports any potential mergers and acquisitions activities.
We continue to like A-Reit for its exposure in the Business Parks/Science Parks Space segment. The recent acquisition of three properties at a price of S$420 million ticks most of the boxes - long lease tenure (16.5 years with annual escalations of 2-2.5 per cent), long unexpired land lease tenure (65.7 years) - and offers investors a deeper exposure to a sector (research and development) that continues to grow.
A-Reit stands tall in the face of rising interest rates this year with a spread-out debt expiry profile of 3.8 years, implying that it does not face any major refinancing in any one year.
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