Valuetronics Holding Ltd - FY15 results at higher end of expectation.
- Recommendation: BUY
- Target price: SGD 0.600
- Closing price: SGD 0.515
- Reiterate "Buy" with TP of 0.60 SGD based on 8x PE with 60% idle cash added.
- Valuetronics (VALUE SP Equity - Bloomberg, BN2 - SGX), beats our defensive net profit forecast. Suffers no disruption due to major MNC corporate restructuring.
- Earnings consolidation to continue. FY16e/FY15 EPS lowered by -8%.
- Still a cash-rich, well run, dividend machine (6.7% yield) with potential growth in FY17.
Singapore REITs - State of the industry
- We remain overweight on S-REITs even though we acknowledge valuations are catching up.
- Sector outperformance vs STI to slow; stick to REITs operating within resilient industries/geographical regions.
- Fundamental growth drivers for our top picks remain intact.
- Impending rise in 10y bond yields to lead to compressing spreads, but S-REITs still offer better spreads vs US and Japan peers. S-REITs also offer better exposure to more diversified sectors and geographical regions vs HK-REITs.
- Headwinds remain across the sectors such as looming huge supply of commercial space, lacklustre general retail sales and slow rebound in tourist arrivals.
Soilbuild Business Space REIT
- 4.5% y-o-y DPU growth achieved with acquisitions completed in FY 2014.
- Average rental reversions of 9.3% for lease renewals in 1Q FY15.
- Portfolio remains 100% occupied.
- Maintaining our DDM valuation of S$0.995 on SBREIT. BUY.
Croesus Retail Trust
- Transformation of Mallage Shobu to drive rental growth
- Strong fundamentals and Japan’s promising macro-environment to sustain high dividend yield
- Maintain BUY with TP$1.08
Source: http://www.phillip.com/
