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UOB KAYHIAN |
UOB KAYHIAN |
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REITs New Normal Of Higher Bond Yields… Elsewhere
Highlights • The risk-free rate for our DDM is now based on each country’s 10-year government bond yield weighted by the REIT’s geographical disposition. Target prices for CICT, FCT, LREIT are relatively unchanged due to their outsized exposure to home base in Singapore at 93%, 100% and 91% respectively. Target price for CLAS was cut severely by 27.5% due to exposures to Australia (10.5%), the UK (11.5%) and the US (18.4%), while FLT was cut by 27.8% due to exposures to Australia (46.8%) and the UK (9.8%). • Maintain OVERWEIGHT. BUY CICT (Target: S$3.06), MPACT (Target: S$1.71), NTTDCR (Target: US$1.29) and UIBREIT (Target: S$1.16).
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Centurion Accommodation REIT (CAREIT SP) Capacity Growth Largely Completed; Expanded Pipeline In Progress
Highlights • Westlite Toh Guan and Westlite Mandai added 1,764 and 3,696 beds respectively, after construction was completed in Oct 25 and Jan 26. In total, the two new blocks expanded PBWA bed capacity by 25.7%. CAREIT has also commenced construction of a new block with 540 beds at Westlite Ubi after obtaining provisional planning permission in Feb 26. • Sponsor Centurion Corporation has secured two 30-year leasehold sites at Kranji Close and Lok Yang Way with planned capacities of 7,000 and 5,000 beds in Aug 26. The sponsor has also acquired a 65% stake in a site at Kim Chuan Lane for development of PBWA, subject to regulatory approvals. • Regulatory capacity loss has resulted in shortage of PBWA beds. CAREIT provides a DPU yield of 7.3% in 2027F. Maintain BUY. Target price: S$1.39.
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| UOB KAYHIAN | LIM & TAN |
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Plantation EUDR Update: Key Facts Before December Implementation
Highlights • The EUDR applies to large and medium operators from 30 Dec 26 and to micro and small enterprises from 30 Jun 27. • With MSPO being the only national scheme recognised by the EU, Malaysian plantation companies are poised to benefit from a higher share of exports to the EU. • Maintain OVERWEIGHT. EU palm oil imports keep shrinking on biofuel policy, not EUDR, leaving a smaller food-and-oleochemical pool where verified traceability earns market share. SD Guthrie and KL Kepong remain our top picks.
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A lawsuit has been filed by Affinity Equity International Partners Limited (in liquidation), Blackrock Commodities (Global) Limited (in liquidation), Platinum Global Luxury Services Limited (in liquidation), TKIL Global Investments Limited (in liquidation) (collectively, the “Companies”) and Given the already comprehensive and thorough investigation done by Singapore’s Monetary Authority of Singapore as shown above, we believe that DBS’s refute of the allegations of claims could likely have good grounds and while investigations are ongoing, we think that weakness attributable to the above news could be used as opportunities to “Accumulate on Weakness” for DBS shares although on a fundamental basis we think a “HOLD” is justified given that its valuations currently are quite fair with PE at 19x, yield at 4%, price to book at 3.1x and consensus 1 year target price at $78/share. |
| LIM & TAN | DBS VICKERS |
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Gulf Development (Gulf) and Singtel ($4.56, up 2 cts) today announced a strategic partnership to develop new submarine cable connectivity between Thailand and Singapore, reinforcing the two countries’ positions as leading digital economies in Southeast Asia. Singtel’s is capitalized at $74.3bln, trades at forward PE of 23.9x, yields 4.1% while 1 year consensus target price of $5.36 implies a potential upside of 18%. We like Singtel’s continued monetization plans of matured assets to recycle into faster growing assets in the data centre space while at the same time increasing dividend payments to shareholders via share buy backs and special dividends on top of their normal dividend payments. We maintain an Accumulate rating on Singtel given its attractive yields, continued share buy backs coupled with asset monetization plans to realize value for shareholders.
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CENTURION CORP Scaling up in Johor Acquisition of a 7,974-bed Pasir Gudang PBWA asset for RM214.5mn (c.SGD67.2mn), lifting Centurion’s Malaysia bed capacity by 22% to c.43,980 beds Immediate earnings accretion upon deal completion from the operational and tenanted first parcel, with further upside from the progressive lease-up of the newly completed second parcel Provides exposure to a growing manufacturing and port-related catchment, while an asset yield of >7.5% versus debt cost of <5% Maintain BUY with unchanged TP of SGD1.86. Read more.. |
