buy sell hold 2021



Digital Core REIT (DCREIT SP)

Overhang Crystalises, Working On Backfilling Vacant Space


Cyxtera, DCREIT’s second-largest tenant accounting for 22.4% of annualised rent, has filed for chapter 11 bankruptcy protection. We expect Cyxtera to reject the two leases for data centres in Los Angeles as occupancy is low at 57%. We cut our 2024 DPU forecast by 15% to 3.5 US cents assuming DCREIT backfills half of the data centre spaces vacated by Cyxtera. DCREIT provides 2024 distribution yield of 8.4% (KDCREIT: 5.1% and MINT: 6.2%). Maintain BUY. Target price: US$0.67.


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Media – Thailand

Earnings Hit Bottom; Positive On Cinema Players Going Forward


We believe the earnings of Thai media players, including TV broadcasters and cinemas, have already bottomed out. However, yoy earnings of TV broadcasters might not have recovered due to weak TV adex, which still pressured advertising income per minute and utilisation rate. Therefore, we maintain MARKET WEIGHT on the sector. Nevertheless, we recommend cinema players instead as we believe 2023 earnings would surge on a robust number of movies. 


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Sembcorp Industries

Multiple re-rating catalysts visible


■ SCI is exploring the potential divestment of SembWaste, and EfW plant. We estimate the former to be worth S$306m-340m (9-10x FY22 EV/EBITDA).

■ We estimate divestment gains of S$215m-250m or S$0.12-0.14/share, to be used to fund its growing RE business and dividend payout (by S$0.05-0.06).

■ We see multiple catalysts for SCI including 1) strong 1H23F earnings from high Singapore spot power, 2) inclusion in MSCI SG, and 3) new RE target.

■ We raise our TP to S$6.20, now based on FY24F P/E of 14x (previously 12x), in line with regional peers. Reiterate Add.


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Access Thai stocks with Singapore Depository Receipts

CP All Public Co. Ltd. the largest convenience store chain operations under the 7-Eleven trademark in Thailand, operating over 11,000 7-Eleven stores throughout the country. The company operates through the following segments: Convenience Stores, Cash and Carry and Others. If you wish to invest in CP All, you can consider investing through the CP All Singapore Depository Receipts (stock code: TCPD), listed on SGX. It offers investors an attractive combination of stability, liquidity, and convenience.


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Singapore Airlines

On cloud nine


• Further near-term travel demand recovery supported by peak travel season in the Northern hemisphere and more meaningful outbound travel from China

• Strong brand image lends greater resilience against normalising demand and prices

• Risk-reward profile has moderated, with much of recovery having been priced in


Investment thesis Singapore Airline’s (SIA) share price has performed well, rallying 20.2% year to date (YTD) as of last close price on 1 Jun 2023, surpassing pre-pandemic levels and hitting fresh 52-week highs. Much of the outperformance and market exuberance came within the past month after SIA announced a record revenue of SGD17.8b for FY23 (financial year ending 31 Mar 2023). Group operating performance and net performance also made a turnaround to profit, coming in at a record SGD2.7b and SGD2.16b respectively. Going forward, near-term travel demand remains more robust than expected. SIA’s commitment to service quality could differentiate it from competitors and allow it to defend its market share with greater success. While these could translate to further upside, we also note that the regional landscape is expected to become more competitive as regional airlines return more international capacity to the market, while a recessionary outlook remains a key overhang for discretionary travel expenditure. All things in balance, we increase our fair value estimate to SGD7.18.



Lendlease Global Commercial REIT

Gaining a toehold in Parkway Parade


■ LREIT will acquire a 7.71% effective stake in Parkway Parade (PP) for S$88.9m. LREIT has pre-emptive rights to acquire up to 77.09% stake in PP.

■ The acquisition is 0.82% DPU-accretive on a predominantly debt-funded pro forma basis. We expect pro forma gearing to increase from 39.2% to 40.4%.

■ Reiterate Add. We expect valuation uplift for LREIT’s FYE June revaluation, which will ease gearing, albeit this is still likely to be in the high 30% region.


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