KEPPEL REIT
K71U.SI
Keppel REIT - No Change to NEUTRAL rating
- We make no change to our NEUTRAL rating, forecast and DDM-derived TP (CoE: 7.3%, Tg: 1%) of SGD0.83, FY16 dividend yield of 7.0%.
- 1QFY16 DPU declined 1.2% YoY meeting 25% of our full year forecasts, while its achieved an average positive rental reversion of 7% for leases inked in 1Q16. Its overall portfolio occupancy inched up marginally to 99.4%.
- While management has commented that it expects the SG office leasing market to remain challenging in these two years, we also take a pessimistic view of the Singapore office market as we note that most of the large supply will only be completed in 4Q16. Therefore, we expect pessimism to prolonged into 2017.
- We also want to highlight that the current office leasing environment is challenging, as proven by the low pre-commitment level (18%) at the upcoming Guoco Tower.
- Additionally, Keppel REIT (KREIT SP) remains one of the most aggressively leveraged office REIT (39%) and is highly exposed to the cyclical banking sector.
Ivan Looi
RHB Invest
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http://www.rhbinvest.com.sg/
2016-04-15
RHB Invest
SGX Stock
Analyst Report
0.83
Same
0.83
