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CDL Hospitality Trust Divesting Novotel Brisbane
■ CDLHT is divesting Novotel Brisbane for S$66.4m. The exit yield of 7.3% appears high, but yield based on underlying performance is much lower. ■ We think this is a good move amid uncertainties surrounding Covid-19, the strong competition in Brisbane, and an expiring master lease in Apr 2021. ■ Reiterate Add. The stock is currently trading at 0.7x FY20 P/BV, which has priced in about 20% asset devaluation.
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Banks 3Q20F: Key focus on moratorium trends
■ We expect a more pronounced credit cost improvement for DBS/OCBC. UOB should have upper hand in qoq NIMs (+2bp) compared to c.-10bp at peers. ■ Updates on post-moratorium repayment trends in MY will be key focal point. UOB could see largest reduction given its higher-tiered client segment there. ■ Maintain Neutral. We prefer UOB for comparably steady treasury income and bottomed-out NIMs, buoyed by optimism of moderation in NPL guidance.
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UOB KAYHIAN |
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Dairy Farm (DFI SP) The New “Normal”; Keep BUY
Maintain BUY and USD4.47 TP on Dairy Farm, c.20% upside and a 4% yield. Hong Kong retail sales have remained fairly stable in July and August despite tightened restrictions during the period. We think this sets the new minimum benchmark for Hong Kong retail sales as tourism spending diminishes and locals decrease their discretionary spending. With the COVID-19 situation stabilising in Hong Kong, retail sales should bottom-out from here. Dairy Farm, with its large exposure to Hong Kong, should see an improving risk-reward ratio at the current share price.
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CapitaLand Commercial Trust (CCT SP) 3Q20: Goodbye CCT, Welcome CICT
CCT benefitted from the full-quarter contribution at the newly-acquired MAC and the sequential rebound of 12.2% qoq at RCS. However, the asset enhancements at Six Battery Road and 21 Collyer Quay remain a drag. WeWork, the sole tenant at 21 Collyer Quay, is now financially more stable, but the pre-commitment at CapitaSpring remains low at 34.9%. Unitholders will be paid a cash consideration and allocated new CMT shares on 28 Oct 20. CCT is scheduled to be delisted from the SGX Main Board on 30 Nov 20. Maintain HOLD with target price of S$1.63.
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Check out our compilation of Target Prices
