Singapore Property
S-REIT
CITY DEVELOPMENTS LIMITED
C09.SI
UOL GROUP LIMITED
U14.SI
CAPITALAND COMMERCIAL TRUST
C61U.SI
KEPPEL REIT
K71U.SI
ASCENDAS REAL ESTATE INV TRUST
A17U.SI
Singapore Property - Hong Kong Marketing Feedback
On the supply outlook and other policy measures
- We met with investors in HK following our recent property sector upgrade. Discussions centred on the (improving) supply outlook across the various sub-sectors in supporting prices and rents, and the broader demand drivers (affordability ratios, new economy industries).
- Despite the strong YTD share price rally, we believe investors were anticipating incremental policy measures to drive further sector re-rating.
- In general, investors appear to demonstrate a relative preference for developers, followed by commercial and lastly industrial REITs. Our large-cap BUYs are City Developments (CDL), UOL Group, CapitaLand Commercial Trust (CCT), Keppel REIT (KREIT), Ascendas REIT (AREIT) and Mapletree Industrial Trust (MINT).
Hesitant to chase developer stocks
- While there was little push back on our POSITIVE stance on Property Developers (Singapore Property: Price Inflection Point; U/G to POSITIVE, dated 29 May 2017), we sense that clients are hesitant to raise exposure aggressively following the strong YTD rally for developer stocks.
- Nonetheless, we continue to see an upwards bias for developer stocks and reiterate that an impending rebound in home prices is a sector catalyst to watch.
- Other discussion points around our view on policy measures, participation of foreign capital, redevelopment activities amidst elevated land prices and M&A deals in the sector. Investors agree that despite a still weak rental market, downside risks to home prices will be mitigated by ample liquidity and healthy affordability ratios.
Strong asset values for offices a consensus view
- Investors agree that an improving supply outlook and the sharp fall in office rents in recent years suggest that downside may be limited. However, questions were raised about the overall demand outlook, changing tenant profiles and the impact of flight to quality on older properties.
- We note that there is consensus that high replacement cost of office buildings (due to elevated land prices) and keen interest in office assets will continue to support valuations of office REITs.
Focus on the logistics industrial sub-segment
- Interest in the industrial REITs was relatively subdued, except amongst the logistics players including Frasers Logistics Trust (FLT) (not-rated) for its Australian growth profile, and Global Logistics Properties (GLP) (not-rated), likely spurred by the impending privatization, as it enters the final evaluation process.
- Discussion topics were aligned to the broad themes in our earlier sector initiation (Singapore REITs: Compounding Industrious Assets, 18 Apr 2017). Investors generally acknowledged that a waning supply surplus should underpin an improvement in sector fundamentals, and mostly concurred with our positive bias towards the business park sub segment and its large-cap proxies (Ascendas REIT (AREIT), Mapletree Industrial Trust (MINT)). Investors were more appreciative of the longer term structural demand drivers vs inorganic growth led demand.
- Meanwhile interest in the small-caps was notably absent.
Derrick Heng CFA
Maybank Kim Eng
|
Chua Su Tye
Maybank Kim Eng
|
http://www.maybank-ke.com.sg/
2017-07-06
Maybank Kim Eng
SGX Stock
Analyst Report
12.050
Same
12.050
9.050
Same
9.050
1.810
Same
1.810
1.180
Same
1.180
2.900
Same
2.900
