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UOB KAYHIAN |
UOB KAYHIAN |
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REITs Value Emerges With Expanded Yield Spread
Highlights • Social unrest and street protests have erupted across many cities in France and Italy. Ironically, 10-year government bond yields across the Eurozone have eased 19bp to 3.40% in October due to tightening of monetary policies by central banks and the pullback in AI funding. • Yield spreads for S-REITs have expanded by 29bp to 4.06%, which is 2SD above long-term mean, as unit prices and 10Y Singapore bond yield pulled back concurrently in Oct 26. We cut DPU forecast for FLT by 1.5%, CLAS by 0.7%, KDCREIT by 0.3% and LREIT by 0.3% due to weakness in the euro.
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Contemporary Amperex Technology Co (300750 CH) 3Q26: Earnings Miss Due To Delayed Pass-through Of Tax Hikes
Highlights • 3Q26 net profit missed expectations at Rmb21.25b (+14.5% yoy/-5.8% qoq), as CATL bore the export VAT hikes and 2% consumption tax, and had not passed on to customers yet. • We expect margins to recover in 3Q26, as the tax rate hikes will be partly passed through to customers via higher battery prices. Having said that, the further roll-back of tax concession in 2027 will remain a drag on margins. • We cut our 2026-28 net profit forecasts by 5%/10%/16% to Rmb89,121m/Rmb104,895m/Rmb116,370m respectively, as we now expect CATL to bear part of the tax hikes. • Maintain BUY and cut target price from Rmb585.00 to Rmb470.00.
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| MAYBANK SECURITIES | MAYBANK SECURITIES |
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Keppel Ltd (KEP SP) Steady execution
Steadily increasing FUM and divesting non-core assets KEP will divest its 51% stake in Keppel South Central (KSC) for SGD611m. The proposed divestment brings KEP's announced YTD asset monetisation to SGD3.7b. With KEP continuing to be the asset manager, the transaction also boosts FUM and adds to the recurring fee base. In this note, we also summarise key takeaways from our site visit of the recently commissioned Keppel Sakra power plant in Singapore. All in, KEP continues to execute its strategy combining the unique capabilities of asset management and operations. Maintain BUY and SOTP-based TP of SGD13.0.
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Keppel REIT (KREIT SP) Deepening Singapore footprint
Accretive acquisition of quality CBD office KREIT bought a 51% stake in a 70-year leasehold, newly constructed Singapore CBD office for SGD627.1m. Healthy lease momentum and visibility from the guaranteed income in initial years gives a good mix of growth and stability. The deal will be funded by a mix of debt, perpetual notes, internal cash and/or equity financing. Pro-forma DPU accretion and gearing are 2.01% and 39.2%, respectively. Maintain BUY on back of attractive valuation (6.3% yield, 0.7x P/BV) and favourable demand-supply dynamics with an unchanged DDM-based TP of SGD1.00.
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| LIM & TAN | LIM & TAN |
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OUE REIT (S$0.33, down 1 ct) announces that revenue and NPI increased by 3.1% and 4.6% YoY to S$72.6 million and S$59.6 million respecti vely, for the fi nancial period 1 July 2026 to 30 September 2026 (“3Q 2026”). OUE REIT’s market cap stands at S$1.8bln, and trades at 0.6x P/B with a dividend yield of 7.3%. OUE REIT delivered a resilient 3Q26 with strong performance coming from its hospitality portfolio of Hilton Singapore Orchard and Crowne Plaza Changi Airport. This more than offsets lower contributions from the commercial portf olio due to tenant transition activities. Newly acquired Salesforce Tower since March also contributed to the results. Consensus TP of $0.43 represents a potential 30% upside. We maintain Accumulate on OUE REIT in view of its improving DPUs, value-unlocking eff orts, low P/B and backed by an attractive yield.
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Frasers Centrepoint Trust / FCT ($2.06, up 2 cents) delivered a record distribution per unit (DPU) of 12.35 Singapore cents for FY2026, up 2.0% YoY, marking its highest annual distribution since listing in July 2006. The strong performance was driven by a full-year contribution from Northpoint City South Wing, positive rental reversions and resilient operating metrics across its suburban retail portfolio. Despite double-digit growth in revenue and net property income (NPI), DPU growth was more modest, reflecting the difference between property level earnings growth and distributions available per unit. FCT’s market cap stands at S$4.2bln and currently trades at 15.7x PE and 0.9x PB with a dividend yield of 6%. Consensus target price stands at S$2.54 representi ng 23.3% upside from current share price. While outlook remains positive DPU growth is slowing (2% growth vs NPI growth 15.7%) but FCT’s high occupancy, healthy rental reversions and exposure to necessity-driven suburban retail spending should continue supporting earnings resilience. The completion of ongoing AEIs, lower borrowing costs and future contribution from Bayshore provide additional medium-term growth catalysts. FCT remains well-positioned for gradual DPU growth, supported by its defensive portfolio, proactive capital recycling and improving financial flexibility. Given the slightly hawkish environment, price has re-rated downwards and we continue to have an Accumulate on weakness recommendation on FCT. |
