Singapore REITs - DBS Research 2020-02-04: When The World Sneezes…

Singapore REITs - DBS Research  | SGinvestors.io ASCENDAS REAL ESTATE INV TRUST (SGX:A17U) KEPPEL DC REIT (SGX:AJBU) MAPLETREE INDUSTRIAL TRUST (SGX:ME8U) ASCENDAS INDIA TRUST (SGX:CY6U) KEPPEL REIT (SGX:K71U)

Singapore REITs - When The World Sneezes…




Preferred picks holding up despite uncertainty.

  • The New Year cheer was very soon thwarted with a turn in sentiment following the outbreak of the coronavirus in the middle of January. While FSTREI Index (REIT Index) rose 6.6% since the low in December 2019, it has fallen 3.5% since 17 January 2020, when a few cases of coronavirus outside China were reported. At this point, the FSTREI index is up 2.0% since the start of 2020, outperforming the STI which is down 2.1%. Its relative high yield spreads of 3.1%, coupled with c.3.0% growth, will continue to attract investors to seek shelter in S-REITs in the mist of heightened volatility.
  • Given the uncertainty brought about by the recent travel ban and likely lower growth prospects going forward, we maintain our preference for subsectors with structural growth themes in place and are less elastic to economic gyrations.
  • We maintain our preference for industrial REITs (Ascendas REIT (SGX:A17U), Mapletree Industrial Trust (SGX:ME8U), Mapletree Logistics Trust (SGX:M44U) and Keppel DC REIT (SGX:AJBU)) while remaining cautious on hospitality and selected retail S-REITs which are more sensitive to tourist arrivals.
  • Selectively, we prefer Frasers Centrepoint Trust (SGX:J69U) for its resilience as a pure play suburban landlord and Ascendas India Trust (SGX:CY6U) for its robust inorganic growth pipeline. We like Keppel REIT (SGX:K71U) for its pure office play and its relative value amongst its peers. The ability to deploy capital to accretive acquisitions or developments will surprise investors, underpinning longer-term NAV growth.


Industrial sector remains our favourite; offering a potent mix of earnings growth and resilience.



Wait for a better entry opportunity for Hospitality S-REITs.

  • While we had previously pitched Hospitality as a “dark horse” for 2020, the onset of the virus spread made us relook this call as we see near-term earnings risks given the vulnerability of the sector to tourism demand. While share prices have fallen by an average of 7.6% since 20 January 2020, we will only turn buyers near the -1 SD P/NAV level which, based on our current levels. See S-REITs share price performance.





Derek TAN DBS Group Research | Singapore Research Team DBS Research | Rachel TAN DBS Research | https://www.dbsvickers.com/ 2020-02-04
SGX Stock Analyst Report BUY MAINTAIN BUY 3.450 SAME 3.450
BUY MAINTAIN BUY 2.400 SAME 2.400
BUY MAINTAIN BUY 3.000 SAME 3.000
BUY MAINTAIN BUY 1.650 SAME 1.650
BUY MAINTAIN BUY 1.450 SAME 1.450



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......