ANALYSTS SAY: Buy, Sell, Hold (27 Apr '20)

PHILLIP SECURITIES

Singapore Exchange

Reaching new highs

■ 3QFY6/20F net profit rose to S$137.5m (+38.0% yoy, +38.8% qoq), due to robust growth in SDAV (S$1.61bn) and derivatives volumes (76.4m).

■ We expect market volatility to persist in the near-term, with rising interest and funds to be deployed into the market. SGX is still our more defensive pick.

■ Maintain Add with a higher TP of S$10.50, now pegged to 24.4x FY21F P/E, 0.5 s.d. above its 10-year historical mean and c.3% dividend yield.

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Frasers Centrepoint Trust

Navigating choppy cashflows

SINGAPORE | REAL ESTATE (REIT) | 2Q20 RESULTS

 DPU of 1.61cents was 48.7% lower YoY due to retention of 50% of 2Q20’s distributable income ($18mn).

 Lower rental reversions and longer negotiation periods expected on the remaining 11% of GRI due for renewal in FY20; portfolio reversions for leases concluded came in at c.5%

 Maintain ACCUMULATE with a lower TP of S$2.24. We lower our forecast to reflect the rental rebates and weaker retail outlook and increase our cost of equity assumption by 105bps to 7.6%. FY20e DPU cut by 2.88cents (-22.6%).

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PHILLIP SECURITIES

Singapore REITs Sector

Master lease exposures

SINGAPORE | REAL ESTATE (REITS) | UPDATE

 Sponsor of Eagle Hospitality Trust failed to make timely rental payments of its master lease

 Healthcare and Hospitality REITs are most reliant on master leases
Background After defaulting on a US$314mn loan, trading of Eagle Hospitality Trust (Eagle) was voluntarily suspended on 24 March 2020. It followed the failure of its sponsor and master lessee, Urban Commons LLC to place the full sum of the security deposit under the master lease agreements and make timely rental payments since December 2019. Eventually, dividends due for distribution on 30 March 2020 were not paid out to unitholders. The master lease agreements have an initial term of 20 years from the Listing Date and the stipulated security deposit is equivalent to nine months of the monthly fixed rent. The fixed rent was 66% of the total rent projected for the year 2020.

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Mapletree Logistics Trust (MLT SP)

Stable Qtr, Slower Visibility

Results in line, stay at HOLD

MLT saw another stable quarter in its 4Q20 as DPU rose 1.2% YoY with higher rental income and earlier acquisitions offsetting its divestments. FY20 DPU was in line with our estimates. Management remains cautious on lower demand visibility with heightened government-led measures (in SG and M’sia) and expects a slower acquisition growth profile in FY21. We see low downside risk on its diversified AUM and well-sited logistics assets, but also limited DPU growth upside to its 5.0% div yield valuation and DDM-based SGD1.85 TP (COE: 6.5%, LTG: 2.0%). Our top industrialsector pick remains the business-park-focused AREIT (AREIT SP, BUY, TP SGD3.35), which trades at a higher 6.5% yield with stronger DPU growth prospects and the balance sheet for acquisitions. Stay at HOLD.

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