Sabana REIT: HSBC starts at Overweight with $1.12 TP. Note that house likes REIT for its steady income profile and current pricing. While project flattish DPU over the next 3yrs (distribution yield: 8.2%), note that Sabana is trading at a 10% discount to diluted FY11 NAV of $1.11 and at a 12% discount to DDM valuation of $1.14, suggesting valuations are attractive….
The price target implies a 12-month potential return of 20% including distributions. Highlight that risks are master lessees defaulting on their lease obligations, REITbeing unable to exercise options to renew land leases and compliance-related risks.
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