CAPITALAND MALL TRUST | BUY
SEPT 10 CLOSE: $2.09
TARGET PRICE: $2.45
DBS Group Research, Sept 10
Anchored by resilient yields, CapitaLand Mall Trust (CMT) has been a safe harbour for investors and is starting to emerge as a growth play.
While the street remains divided on the stock given the uncertainty over the impact of the surge in new retail supply over 2018-2019, we believe that the new supply is not a big threat to CMT given strong pre-commitments ahead of completion.
Meanwhile, higher contributions from Westgate and Funan will help drive up distributions per unit in a sustained manner.
Expectations for CMT are low, as investors are barely anticipating any rental reversion growth, in our view.
The recent uptick in retail sales, if sustained, could mean that downside to rental reversions is likely to be minimal and may trigger a re-rating of its share price.
The utilisation of its balance sheet to fund further acquisitions also offers an upside surprise to our estimates.
Maintain "buy" with higher target price of $2.45 after raising estimates to reflect the higher growth outlook.
KEPPEL CORPORATION | BUY
SEPT 10 CLOSE: $6.36
TARGET PRICE: $8.38
OCBC Investment Research, Sept 10
Oil and gas news provider Upstream recently reported that Golar LNG is evaluating alternative shipyards to build future floating liquefied natural gas (FLNG) vessels.
In July 2014, December 2014 and July 2015, Golar LNG contracted with Keppel to convert three existing vessels into FLNG vessels.
Golar mentioned that other shipyards may offer "more attractive payment terms and long-term financing packages", and it has "confidence that a Chinese solution for FLNG is viable".
While there has been some market worry for Keppel, it appears that the discussion with non-Singaporean yards are based on using Golar's Mark 2 design.
Keppel's work, on the other hand, involves the conversion of vessels.
On the property side, it was disclosed last week that another plot of land in the Sino-Singapore Tianjin Eco-city has been successfully bid for.
The plot is meant for residential use, with a total site area of 8.77ha, and was won by Tianjin Yeshine Group at 1.46 billion yuan (S$293 million).
This translates into about 6,700 yuan per sq m of gross floor area (GFA), or 166 million yuan/hectare.
Comparing the price based on area, the transacted land plot has fetched higher values than previous transactions.
However, on a GFA basis, the price is lower.
Meanwhile, we update our sum-of-the-parts-based fair value and also account for the group's latest sale of its direct stake in Keppel DC Reit.
Thus, our fair value estimate slips from $8.70 to $8.38.
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