ASCENDAS REAL ESTATE INV TRUST (SGX:A17U)
S-REITs Weekly - Gained 9.3% Last Week
- S-REITs gained 9.3% last week. Gilead released results of a trial that demonstrated its antiviral drug Remdesivir shortens recovery time for COVID-19 patients by 31%.
- Keppel Pacific Oak US REIT (SGX:CMOU) was the top gainer (+15.3%). Retail-related REITs Suntec REIT (SGX:T82U) (+13.8%), CapitaLand Mall Trust (SGX:C38U) (+12.5%), Mapletree Commercial Trust (SGX:N2IU) (+11.4%) and Mapletree North Asia Commercial Trust (SGX:RW0U) (+8.6%) outperformed.
- We turn the spotlight on Ascendas REIT (SGX:A17U). It reported positive business update with strong positive reversion of 8.0% on a portfolio-wide basis and portfolio occupancy improving 0.8ppt q-o-q to 91.7%.
WHAT HAPPENED LAST WEEK
UOBKH S-REIT Index gained 9.3% to 231.5 last week.
- Gilead announced results from its phase 3 trial of antiviral drug Remdesivir on Wednesday and US FDA authorised emergency use of Remdesivir for COVID-19 patients on Friday.
- Ascendas REIT provided a positive business update.
- Mapletree Industrial Trust (SGX:ME8U) maintained 4QFY20 DPU.
- CapitaLand Commercial Trust (SGX:C61U) and CapitaLand Mall Trust (SGX:C38U) reported lower DPU by withholding distribution due to an uncertain operating environment.
Top outperformer:
- Keppel Pacific Oak US REIT (SGX:CMOU) was the top gainer (+15.3%) due to the easing of lockdown in the US. Laggards are catching up.
- Notable gainers were retail-related REITs Suntec REIT (SGX:T82U) (+13.8%), CapitaLand Mall Trust (SGX:C38U) (+12.5%), Mapletree Commercial Trust (SGX:N2IU) (+11.4%) and Mapletree North Asia Commercial Trust (SGX:RW0U) (+8.6%). Ascendas REIT (SGX:A17U) gained 9.6%.
Top underperformer:
- Keppel DC REIT (SGX:AJBU) and Parkway Life REIT (SGX:C2PU) succumbed to mild profit taking and corrected 2.9% and 0.3% respectively.
SPOTLIGHT – Ascendas REIT (SGX:A17U)
Impeccable execution with strong positive reversion of 8.0%.
- In Singapore, reversion stood at 7.7% driven by Business & Science Parks (+7.0%) and High-specifications Industrial & Data Centres (+12.2%). Rental reversion for Australia remains high at 13.7% due to healthy demand for logistics properties and suburban offices in Sydney. Rental reversion in the US was healthy at 7.4% (renewed one lease at Portland).
Portfolio occupancy improved 0.8ppt q-o-q to 91.7%.
- Singapore occupancy improved by 1.4ppt q-o-q to 88.6%, benefitting from higher demand for logistics space. Occupancies in Australia and the UK were stable at 97.3% and 97.5% respectively.
Diversified customer base of 1,490 tenants.
- Industries that are relatively more resilient, such as financial services, government, data centres and biomedical, contributed about 50% of Ascendas REIT’s gross revenue. Industries that are more affected by the COVID-19 pandemic, such as retail, aviation, oil & gas and hospitality & leisure, made up less than 15% of gross revenue. SMEs accounted for less than 20% of gross revenue.
Maintain BUY.
- Our target price of S$3.35 is based on DDM (required rate of return: 6.0%, terminal growth: 1.0%).
- See report: Ascendas REIT 1Q20 - UOB Kay Hian 2020-04-29: Potent Combination Of Diversified Asset Mix & Defensive Balance Sheet.
See attached PDF report for S-REIT peer comparison table.
Jonathan KOH CFA
UOB Kay Hian Research
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Peihao LOKE
UOB Kay Hian
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https://research.uobkayhian.com/
2020-05-04
SGX Stock
Analyst Report
3.350
SAME
3.350
