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UOB KAYHIAN |
UOB KAYHIAN |
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Digital Core REIT (DCREIT SP) Successful Backfilling At Toronto And Los Angeles Not Fully Appreciated
Investors overlooked positive developments announced in Dec 24: a) acquisition of 15.1% interest in the Frankfurt data centre, which is accretive to DPU by 3.1%; and b) an AI computing developer taking up 33% of its Toronto data centre’s capacity, restoring occupancy to 100%. We expect downtime of six months and a new tenant at Linton Hall Road to start contributing in 1Q26. DCREIT provides 2025 distribution yield of 6.8% (KDCREIT: 4.7%, MINT: 6.2%, Digital Realty: 2.7% and Equinix: 1.8%). Maintain BUY. Target price: US$0.99.
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STRATEGY – MALAYSIA JS-SEZ: Fostering Win-Win Cross-Border Prosperity
Poised to emerge as a regional economic powerhouse, JS-SEZ spearheads high-value economic growth by integrating resources and capitalising on the distinct advantages of both regions. Strategic initiatives, such as pro-business policies, targeted incentives, government support, and improved connectivity, lay a robust foundation for sustainable development. We are positive on the JS-SEZ's potential to unlock transformative opportunities. BUY on weakness on fundamentally strong names.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Johor-Singapore Special Economic Zone Singapore winners
A partnership bigger than the sum-of-its-parts? The JS-SEZ announced at the Singapore-Malaysia leaders retreat has significant potential to deliver value creation for both sides. While details on incentives and execution is still limited, conceptually it has the ability to leverage Singapore’s global finance and logistics centre capabilities with Johor’s access to competitive land, labour and energy to deliver a differentiated proposition – especially for supply chains looking for alternatives to North Asia amidst the US-China Trade War. Banks, Gaming, Industrials, Tech, Telecom are likely to benefit the most in Singapore. Top stocks: AEM, CICT, FRKN, GENS, MLT, OCBC, SCI, ST, TMG, UMS, UOB, VMS.
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ComfortDelGro (CD SP) Stuck in comfort zone
Maintain HOLD as we await for better entry price CD has partnered with Zurich Insurance to launch travel insurance (singletrip travel policy for individuals and groups) that can be purchased via its Zig app. This covers travel disruptions caused by vehicle breakdown enroute to Changi Airport, reimbursing customers up to SGD1,000 to cover additional accommodation or travel expenses. Separately, the Employment Appeal Tribunal in England ruled that drivers for Addison Lee (AL) are considered workers and not self-employed. CD said it has adjusted its pricing to reflect higher costs and does not see any material financial impact. Our FY24-26E EPS and TP of SGD1.60 are unchanged. HOLD.
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LIM & TAN |
LIM & TAN |
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The government has issued Singapore Post ($0.555, up 0.5 cents) an advisory to uphold proper corporate governance and processes after the whistle-blowing incident alleging falsification of international e-commerce shipment data. SingPost’s market cap stands at S$1.2bln and currently trades at 18x forward PE and 1X P/B. Bloomberg 1 year consensus target price of 74 cents implies a potential upside of 32%. We continue to believe that the “endgame” of eventually selling/monetizing its assets and returning the proceeds to shareholders remains intact.
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Centurion Corp (S$0.96, up 1.5 cents) wishes to announce that the Company is currently exploring a proposed transaction involving the establishment of a real estate investment trust (“REIT”) which would comprise some of the Group’s workers accommodation assets and student accommodation assets. At S$0.96, Centurion is capitalized at S$807mln and trades at 8.7x core forward P/E and 0.86x P/B with a dividend yield of 3.1%. The exploration of a REIT listing is in line with Centurion’s shift towards an asset-light strategy through value-unlocking opportunities. Over the past 2-3 years, Centurion’s PBWA and PBSA assets have seen significant capital appreciation arising from strong rental reversions and sky-high occupancy rates. Given the resilient demand for workers and student accommodation, spinning-off some of these mature assets at decent valuations could be a way to unlock value for shareholders. The company is also proposing to effect a dividend in specie of REIT units. We continue to await further details on the REIT listing and valuations. Consensus TP of S$1.05 represents a 9.4% potential upside. |
