ANALYSTS SAY: Buy, Sell, Hold (15 Jan '18)

Far East Hospitality Trust

Oasia Hotel Downtown has crystallised

■ FEHT has proposed the acquisition of sponsor’s Oasia Hotel Downtown for S$210m (3.7% disc. to avg. independent valuation) which translates to attractive c.S$669k/key.

■ Funded by c.90% debt at 2.5% interest cost, the manager expects a 4% DPU accretion. The entry NPI yield for the property is 4.6%.

■ We see significant growth potential for Oasia Hotel Downtown, which is yielding S$170 RevPAR currently.

■ At S$210 RevPAR, which is what the industry average is generating, we forecast a c.5% yield on cost for what a more matured Oasia Downtown could achieve.

■ Reiterate Add with lower TP of S$0.82. We project c.19% total returns for 2018F

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Singapore Press Holdings

Easing pressure

■ 1Q18 core net profit of S$57m formed 26%/27% of our/consensus full-year numbers.

■ Structural headwinds remain unabated, but we saw 1Q18 media revenue of S$174m stabilise on a qoq basis (-13.9% yoy).

■ Apart from S$11.6m retrenchment costs (which we expected) and S$15m divestment gain, there was no further impairment on SPH’s media business.

■ Share price lost 25% since the start of 2017. Upgrade from Reduce to Hold as we think the downside has largely been priced in, with c.5% dividend yield.

■ Likely to turn positive upon successful execution of strategy for media disruption.

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City Developments Limited: Fundamental outlook constructive

According to flash estimates, URA’s overall private residential price index increased 0.7% QoQ with prices all rising across all three sub-segments. We see the Singapore residential sector to be in the early stages of sustained upturn, and expect home prices to rally 3% - 8% in 2018. This will be supported by a recovery in housing rents which are forecasted to increase 5% - 10%, a neutral legislative stance from the authorities and a buoyant en-bloc market. As a major proxy to the domestic housing market, the group is poised to benefit from stronger home sales at their launch pipeline ahead, including New Futura and a 861-unit condominium project at Tampines Ave 10. Given stronger market conditions, we update our model for firmer ASP assumptions and lower our discount to RNAV from 20% to 10%, and fair value estimate increases from S$13.50 to S$15.30. Maintain BUY.

Singapore REITs: Robust Nov Singapore retail sales

According to the Department of Statistics of Singapore, retail sales jumped by a robust 5.3% YoY and 5.1% MoM for the month of Nov. Excluding motor vehicles, retail sales improved 4.7% YoY. Growth was largely driven by Computer & Telecommunication Equipment (+16.6% YoY) and Supermarkets (+9.7% YoY). This was also the second strongest YoY growth (excluding motor vehicles) in a month for 11M17 (Apr: +4.8% YoY), which we believe is a reflection of the more positive consumer sentiment on the ground. The share prices of retail REITs have been laggards within the REITs sector due to concerns over the e-commerce threat and softer rental reversion figures. We still see value in selective names, and highlight our preference for Frasers Centrepoint Trust [BUY; FV: S$2.40] and CapitaLand Mall Trust [BUY; FV: S$2.20]. Maintain NEUTRAL on the broader S-REITs sector.

 RHB

HRnetgroup

Expanding Its Footprint In China

After Indonesia, HRnetgroup has just announced entering into a binding term sheet on 11 Jan to set up a JV in China, in which they will acquire a 51% stake in REForce and its relevant assets and affiliates in cash. We are positive on this acquisition, as it would hasten expansion of its footprint in China, especially in new cities like Suzhou. With SGD200m budgeted for M&As, we think more acquisitions are likely – which would bump up its NPAT. With a positive 4Q17 due to Christmas and the New Year, we maintain our BUY call and SGD1.14 TP (37% upside).

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