Compiled by Stephanie Luo, The Business Times
SINGAPORE MEDICAL GROUP | BUY
APRIL 24 CLOSE: $0.60
TARGET PRICE: $0.79
RHB, APRIL 24
Singapore Medical Group (SMG) announced the acquisition of two paediatric clinics in Toa Payoh and Bishan for $25.3 million, with a profit guarantee of $2.3 million pa implying a valuation of 11x P/E (price/earnings ratio).
This acquisition - to be funded by an issuance of 21 million new shares at $0.54/share and $13.9 million cash - would be done in three tranches.
It also marks the group's initial foray into paediatrics that would provide synergies and cross-selling opportunities to its obstetrics and gynaecology segment.
CAPITALAND RETAIL CHINA TRUST | BUY
APRIL 24 CLOSE: $1.495
TARGET PRICE: $1.68
DBS GROUP RESEARCH, APRIL 24
CapitaLand Retail China Trust (CRCT) will face headwinds in the form of a weaker RMB exchange rate, higher property taxes in Beijing, and an increase in interest rates over the next few quarters, but we believe these risks are largely priced in.
The steady performance in Q1 17 leads us to believe that the market had underestimated the impact of positive rental reversions at key assets - namely Xizhimen and Wangjing - in the previous quarters.
The potential of CRCT's malls has not been maximised as several properties are still ramping up or are in a transition phase.
These include Grand Canyon, which is generating annualised net property income yield of only about 5.3 per cent (based on the original acquisition price) versus the target of 7-8 per cent, Minzhongleyuan and Wuhu, which are incurring losses due to road closures nearby and repositioning works respectively, and the recently announced acquisition of Galleria mall, whose margins are sub-optimal owing to previous management by third-party operators.
VIVA INDUSTRIAL TRUST |
APRIL 24 CLOSE: $0.805
TARGET PRICE: $0.80
OCBC INVESTMENT RESEARCH, APRIL 24
Viva Industrial Trust (VIT) announced on Sunday that Jackson International Private Limited (JIPL), which has agreed to provide rental income support to VIT in respect of Jackson Square, has filed for liquidation.
VIT does not expect the matter to have a material impact on the financials or distributions for FY17, primarily due to the Rental Support Bank Guarantee of approximately $3.87 million.
We projected $2.4 million and $900,000 in rental support for Jackson Square in FY18 and FY19.
We expect the impact on VIT to be minimal barring drastic changes in our occupancy assumptions, but would like to revisit our assumptions.
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