Compiled by Jamie Lee, The Business Times
DBS Group Research, March 17
The US Federal Reserve's guidance in keeping to a gradual pace of two more hikes is in line with expectations, and we see it as positive for S-Reits.
We expect prices to be supported in the near term given earlier fears the Fed would be more hawkish.
On the back of better gross domestic product growth prospects for Singapore, we recommend investors to position themselves in more cyclical sectors in the office and industrial Reits, namely in business parks and high-tech industrials.
We see a potential mega consolidation of almost all mid-cap industrial Reits with the emergence of a new significant investor in the space, E-Shang Redwood, which is backed by Warburg Pincus.
E-Shang recently acquired an 80 per cent stake in the manager of Cambridge Reit, a 12 per cent stake in the Reit and a 5 per cent stake in Sabana Reit.
In addition, Warburg Pincus has an interest in the manager of Cache Logistics Trust and is reportedly bidding for Global Logistic Properties.
The catalyst to a merger would emerge if E-Shang and Warburg Pincus partner Tong Jinquan - a significant shareholder of Cambridge, Sabana and two other mid-cap industrial Reits - to consolidate their stakes in all the industrial Reits they own, which would be the largest consolidation of almost all the mid-cap industrial Reits.
SINGAPORE TELCOS | NEUTRAL
OCBC Investment Research, March 17
Time for a switch: Singapore's telecom sector ended 2016 with lacklustre earnings, as only Singtel reported in-line 9MFY17 results.
With TPG expected to launch mobile services in 2018, competition in Singapore's mobile industry is set to intensify as incumbents will likely take action to gain market share.
We also expect TPG to start offering fibre broadband services before the launch of its mobile services.
Consequently, we believe competition is set to heighten and forecast for average revenue per user to decline by 11-16 per cent over the next five years.
We downgrade M1 from "hold" to "sell" with a lower fair value of $1.75, and maintain sell on StarHub on lower fair value of $2.50.
We remain positive on Singtel's long-term outlook given its growing presence in cyber security segment and exposure to regional mobile associates.
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