Singapore REITs - Maybank Kim Eng 2021-03-17: Fast-Forward, Not Rewind

Singapore REITs - Maybank Kim Eng Research | SGinvestors.io ASCENDAS REAL ESTATE INV TRUST (SGX:A17U) KEPPEL REIT (SGX:K71U) MAPLETREE INDUSTRIAL TRUST (SGX:ME8U) MAPLETREE LOGISTICS TRUST (SGX:M44U) MANULIFE US REIT (SGX:BTOU) SUNTEC REAL ESTATE INV TRUST (SGX:T82U)

Singapore REITs - Fast-Forward, Not Rewind


Volatility ahead, prefer Retail REITs > Industrial REITs > Office REITs > Hospitality REITs




Revisiting estimates and target price of S-REITs, working in sensitivities

  • We revisited estimates as we move past 2020 numbers and factor in recent acquisitions that were announced post-results. Our FY21 DPUs forecast were adjusted by -4% to +5%.
  • While long term interest rates have lately risen, our sensitivity analysis suggest that every 50bps change in refinancing costs would impact our DPUs by 1-6%. Our DDM valuation methodology stays consistent across the sector with changes to our target prices (-10% to +6%) reflecting adjustments to our COE assumptions.
  • Our sensitivity analysis suggests that every 50bps change in our risk-free rate assumption leads to a 3-12% change in valuations. See report attached below for details.


DPUs to accelerate at a 2-year CAGR of 12%

  • We reiterate our positive view on industrial REITs; they have on average returned all their gains in 2020, but are set to deliver positive DPU growth and accretive acquisitions as these pick up pace from 2Q.
  • We forecast 8-20% 2-year DPU CAGR for retail REITs, implying FY21 dividend yields of 5-7%.
  • With 11-34% appreciation since Nov 2020, risk-reward for hospitality REITs is less compelling. Progress on vaccine rollout and progressive border reopening towards year-end are catalysts, but RevPAR visibility is poor, while the street and us have penciled in ~25% RevPAR growth in 2021 and 15% in 2022.
  • We remain negative on office REITs given tenant downsizing risk, exacerbated by increasing remote work practices.

Not a replay of 2013 taper tantrums






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-03-17
SGX Stock Analyst Report BUY MAINTAIN BUY 3.600 DOWN 4.00
SELL MAINTAIN SELL 0.95 UP 0.900
BUY MAINTAIN BUY 3.100 DOWN 3.400
BUY MAINTAIN BUY 2.200 DOWN 2.400
BUY MAINTAIN BUY 1.00 DOWN 1.100
SELL MAINTAIN SELL 1.250 UP 1.200



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