ASCENDAS INDIA TRUST
CY6U.SI
Ascendas India Trust - Next Leg of Growth
- 4Q17 DPU of 1.54 Scts (+10% y-o-y) in line with expectations.
- Strong growth on the back of past acquisitions and positive rental reversions.
- Exciting times ahead - potential acquisition of aVance 5 and 6, and expansion into the warehouse market.
Still has legs to run.
- We maintain our BUY call on Ascendas India Trust (a-iTrust), with a revised TP of S$1.20.
- While a-iTrust has rallied over 30% since we upgraded the stock to BUY twelve months ago, and investor interest has picked up, we believe aiTrust’s growth story has yet to gain recognition among investors at large.
- With Singapore-focused REITs increasingly facing headwinds translating into slowing DPU growth (average DPU CAGR of 1%), we anticipate investors will gravitate to aiTrust given its healthy 2-year DPU CAGR of 8%.
Clear growth drivers with prospects of healthy rental reversions ahead.
- Over the past year, a-iTrust has announced several developments including the construction of The V, a new 408k square feet (sqft) IT building, as well as acquisitions of CyberVale, aVance 3 & 4, and BlueRidge Phase 2.
- Coupled with the potential for healthy rental reversions of 15-20% in Chennai and up to 5% in Hyderabad and Bangalore, we have confidence over a-iTrust’s ability to deliver robust 9% DPU CAGR over the next two years.
Untapped land bank and move into the warehouse industry.
- Through its untapped land bank and sponsor pipeline, a-iTrust has access to c.5.3m sqft of floor area. Combined with the potential expansion into the Indian modern warehouse space, the trust has a visible and sustainable source of growth over the long term. The ability to execute on these growth opportunities is also supported by its healthy balance sheet.
- Currently, a-iTrust has a low gearing of 29%.
Valuation
- After incorporating our new SGDINR exchange rate assumptions, we raised our DDM-based TP to S$1.20 from S$1.12.
Key Risks to Our View
- The key risk to our bullish stance is a significant depreciation of the INR, downturn in the Indian economy which will depress rents or delays in the completion of announced acquisitions and development projects.
Mervin Song CFA
DBS Vickers
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Derek Tan
DBS Vickers
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http://www.dbsvickers.com/
2017-04-27
DBS Vickers
SGX Stock
Analyst Report
1.20
Up
1.120
