Compiled by Kenneth Lim, The Business Times
Deutsche Bank, Feb 28
Singapore Real Estate Investment Trusts (Reits) are the best-performing Reit market year to date globally.
But we struggle to justify out-performance given a mediocre fundamental outlook and cautious management statements coming from the recent results season.
While we do expect the physical rental market to bottom out for most sectors, we see very modest distribution per unit (DPU) growth, especially as we factor in increases in interest expenses.
We see acquisition, fund-raising and mergers and acquisition as key catalysts and expect range trading with downside risks. We set out prospective trading ranges for Reits under our coverage - we prefer stocks that offer stable operating DPU growth.
Mapletree Commercial Trust is our top pick, and we prefer CapitaLand and City Developments in the sector.
HOTEL PROPERTIES LTD | BUY
TARGET PRICE: $4.83
FEB 28 CLOSE: $3.72
OCBC Investment Research, Feb 28
Hotel Properties' FY16 profit after tax and minority interests increased 27 per cent to $103.5 million mainly due to disposal gains from the sale of two land sites in Bangkok and lower interest costs, partially offset by lower gross margins and weaker share of results of joint venture/associates (smaller contributions from the Interlace and d'Leedon condominiums).
Looking ahead, the management team sees a challenging year due to economic and political uncertainties but expects recurring income streams from the group's hotel and resort assets to buttress earnings.
In addition, the group also reports that its Holland Park Villas and Burlington Gate developments in London are expected to be completed this year.
The group has proposed a final dividend of eight Singapore cents per share. Maintain "buy" with an unchanged fair value estimate of $4.83.
HATTEN LAND LIMITED | OVERWEIGHT
TARGET PRICE: $0.44
FEB 28 CLOSE: $0.285
NRA Capital, Feb 28
On balance, we rate Hatten Land "overweight" with a high return or high risk classification.
We like the company for its visible pipeline of value-accretive projects.
Potential catalysts include any future partnerships with high-profile funds or institutions and the completion of on-going acquisitions.
We understand that Hatten Land is considering the payment of dividends at the end of each financial year.
Assuming a 10 per cent payout ratio, dividend yield is expected to rise from 0.7 per cent for FY17 to 1.5 per cent for FY18.
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.