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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – SINGAPORE Alpha Picks: Outperforming For Sep 24 And 3Q24
Our Alpha Picks portfolio outperformed in Sep 24, rising 5.4% mom on an equalweighted basis and beating the STI by 1.3ppt. On a quarterly basis, our portfolio also outperformed the STI by 0.3ppt for 3Q24. The outperformance in Sep 24 was driven by STM, SCI and GENS, while CSE and MINT underperformed. Our Alpha Picks portfolio has now outperformed the STI in 11 out of the past 12 months and six out of the past eight quarters.
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Mapletree Industrial Trust (MINT SP) Further Expansion In Japan With Potential For Redevelopment
MINT is acquiring an effective interest of 98.47% in a mixed-use facility in West Tokyo, Japan for ¥14.5b (S$129.8m). The property has the potential to be redeveloped into a multi-storey core & shell data centre with capacity for 30-40MW of IT workload at a cost of S$200m-300m. The redevelopment could enhance yield on cost to 5.5-6.0%. MINT provides a FY26 distribution yield of 5.6% (DCREIT: 5.9% and KDCREIT: 4.4%). Maintain BUY. Target price: S$3.05.
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CGS CIMB |
CGS CIMB |
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AIA Group Tailwinds continue to build
■ We now expect currency tailwinds for AIA’s FY25F VONB growth to be the strongest since FY11, given recent US$ weakness against Asian currencies. ■ AIA’s exposure to HK, mainland China and Thailand also sees its investment income benefitting from better-performing share markets within Asia in 3Q24. ■ We see AIA as a key beneficiary of returning global investor interest in HKlisted shares, which we think is one of the keys to its sustainable rerating. ■ Reiterate Add rating; we raise our TP to HK$111 on higher FY24F-26F EPS. AIA remains our top sector pick on a 12-month basis.
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ST Engineering Armed and ready for growth
■ New foreign ammunition contracts and larger defence contracts are possible in the coming months, while defence OPM should sustain at c.13%, we think. ■ MRO tailwinds remain intact, backed by optimistic commentary from peer AAR Corp and ongoing slow pace of new aircraft deliveries. ■ We continue to like STE as a rate cut beneficiary with healthy earnings tailwinds. Reiterate Add, with a higher TP of S$5.30 (20x CY25F P/E).
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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CapitaLand Ascott Trust (CLAS SP) Adding lyf to portfolio
EBITDA yield of 4.7%; maintain BUY CLAS is acquiring hotel-licensed lyf Funan Singapore for SGD263m, or an attractive SGD800k per key. The deal offers DPU accretion of 1.5%, assuming 50% of management fees in units. YTD, CLAS has divested SGD340m of SR and hotels in SG, Japan and Australia, at exit yields between 3.2-4.4%. Meanwhile, CLAS added SGD221.9m of student/rental housing in the US and Japan at NPI/EBITDA yields of 4-7% in 1H24. We like its execution in searching for higher yields. We raise our FY24-25E NPI forecasts 0.1-1.5% and lift our TP to SGD1.15 from SGD1.10 on a lower riskfree rate of 2.75%.
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Mapletree Industrial Trust (MINT SP) Revived animal spirits
Redevelopment opportunity; upgrade to BUY Upgrade to BUY from HOLD and increase our TP to SGD2.60 from SGD2.15, applying a lower risk-free rate of 2.75% (previous: 3%). MINT is acquiring a mixed-use industrial facility in Tokyo, Japan for JPY14.5b (~SGD127.8m). The freehold asset bodes redevelopment potential when the existing lease rolls off. We like the potential upside from the redevelopment potential, and an NPI yield of 4%, which offers downside protection. Factoring in topline contribution, we increase our forecasts by 0.2-0.5% for FY25-26E. Management is open to value-creation and a slightly more opportunistic risk-return profile. Supported by falling interest rates, its sponsor and divestment pipeline, we expect more acquisitions with a stable income stream and growth potential.
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