Monday, July 31, 2017

SG Market (31 Jul 17)

- Property counters may draw interest on continued appetite for new sale launches and en-bloc tenders. MKE views UOL (Buy, TP $9.05) and City Dev (Buy, TP $12.05) as the best proxies for a home price rebound.
- Technically, STI faces topside resistance at 3,360 with downside support at 3,275.

*Mapletree Greater China Commercial Trust
- Flat 1QFY18 DPU of 1.851¢ was in line with estimates.
- Gross revenue and NPI grew to $88.9m (+4.6%) and $72m (+3.7%) from increased rental rates at all three properties.
- Distributable income of $51.9m (+1.3%) was dented by higher finance costs (+2.4%).
- Portfolio occupancy ticked higher to 98.8% (+0.2ppt q/q), while aggregate leverage stood at 39.4% (+0.2ppt q/q).
- NAV/unit slid 4.4% to $1.244 due to FX loss on investment properties due to weaker HKD and CNY against SGD.
- Last traded at 1Q annualised yield of 6.7% and 0.89x P/B.

*Frasers Logistics & Industrial Trust
- 3QFY17 DPU of 1.75¢ beat estimates and came in 6.7% above IPO forecast on interest savings and lower withholding tax.
- Gross revenue and adjusted NPI of A$40.2m and A$30.8m were largely in line with projections. Two leases at Adelaide Airport and Queensland were renewed during the quarter.
- Portfolio occupancy was stable at 99.3%, while aggregate leverage inched up 0.4ppts q/q to 29.3%.
- Recent acquisition of seven properties for A$169.3m is expected to strengthen its portfolio and contribute to future income.
- Trading at annualised yield of 8% and 1.2x P/B.

*Starhill Global REIT
- 4QFY17 DPU slumped 8.5% to 1.18¢, bringing FY17 DPU to 4.92¢ (-5%) or 3.5% shy of full-year estimate.
- Gross revenue and NPI stayed flat at $53.7m (+0.1%) and $41.4m (unch), as positive contributions from master leases were offset by income disruption from asset redevelopment (Plaza Arcade), weaker contribution from Wisma Atria Retail, lower occupancy for offices and loss of income from Japan divestment.
- Occupancy rose 0.4ppt q/q to 95.5%, while aggregate leverage was unchanged q/q at 35.3%.
- NAV/unit at $0.92.

*Raffles Medical
- 2Q17 net profit of $16.8m (+0.5%) took 1H17 earnings of $32.3m to 45% of full-year consensus estimate.
- Revenue crept up 1% to $120.1m on higher patient load despite softer-than-expected demand from foreign patients.
- However, operating margin of 16.3% (-0.5ppt) was squeezed by increased staff costs in preparation for opening of Raffles Hospital extension in 4Q17.
- Trades at 31x forward P/E. MKE last had a Buy with TP of $1.54.

*Fortune REIT
- 1H17 DPU grew 3% to HK25.52¢, in line with estimates and in tandem with 3.7% increase in distributable income to HK$487.3m.
- Revenue rose 2.5% to HK$1b on positive 10.7% rental reversion, while NPI climbed 3% to HK$727m on lower electricity consumption and one-off rebates.
- Portfolio occupancy held steady at 96.6% (FY16: 96.7%); aggregate leverage slipped to 28.4% (FY16: 29.5%).
- Trades at 5.2% annualised yield and 0.73x P/B.

- 2Q17 net profit slumped 33% to $74.7m as it took a fair value loss of $3m on investment properties, reversing from a $51.5m gain last year.
- Stripping out these effects, earnings would have been 29% higher at $77.7m.
- Revenue surged 53% to $361.9m on higher sales in Pollen & Bleu and progressive sales recognition for V on Shenton, while rental income from investment properties remained stable and hotel operations dipped 1%.
- Gross margin contracted 4ppt to 30%, while bottom line was further pressured by a surge in selling & distribution costs (+103%).
- NAV/share at $4.44.

*Sing Investments & Finance
- 2Q17 net profit almost doubled from a low base to $6m (+96.2%), mainly due to a $2.4m gain from sale of SG government bonds.
- While interest income slipped 5.4% on a lower loan balance, net interest income jumped 16.3% to $10.7m due to lower interest cost (-27%).
- Net interest margin widened 0.09ppt to 0.57%.
- Valued at 0.72x P/B, slightly above its 10-year historical mean and 40% discount to banking peers.

- Sold 89 units of its luxury Martin Modern development over the weekend, above initial plan to launch 50-60 units.
- Sale prices range from $2,009-2,500 psf, with total takings above $220m.
- The stock is valued at 0.65x P/B.

*Profit warnings:
- Declout
- Procurri
- New Toyo
- Global Palm Resources
- Gaylin

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