FRASERS LOGISTICS & COMMERCIAL TRUST (SGX:BUOU)
JARDINE STRATEGIC HLDGS LTD (SGX:J37)
JARDINE MATHESON HLDGS LTD (SGX:J36)
Straits Times Index - Frasers Logistics & Commercial Trust Could Replace Jardine Strategic
- We believe Frasers Logistics & Commercial Trust (SGX:BUOU) (free float market cap: S$3.2bn) could replace Jardine Strategic (SGX:J37) in the next STI review in Jun 21.
- Other STI reserves are Frasers Centrepoint Trust (SGX:J69U), Keppel REIT (SGX:K71U), Suntec REIT (SGX:T82U) and NetLink Trust (SGX:CJLU), by market cap.
- Frasers Logistics & Commercial Trust and Frasers Centrepoint Trust, are our country top picks on inorganic growth and income resilience.
Jardine Matheson’s acquisition of Jardine Strategic shares
- Jardine Matheson (SGX:J36) announced that the group is acquiring the 15% of Jardine Strategic (SGX:J37)’s shares that it does not already own at US$33.00 per share in cash. Under Bermuda law, Jardine Strategic shareholders will vote on the proposed deal at a special general meeting which is expected to be held in early-Apr 2021. See report: Jardine Matheson - CGS-CIMB Research 2021-03-08: Announces Privatisation Offer For Jardine Strategic.
- Since Jardine Matheson owns 85% of Jardine Strategic, we believe the deal will go through. The offer is priced at a premium of 20/29/43% to the last price/1-month VWAP/-6 month VWAP.
- Post-acquisition, Jardine Matheson will own 100% of Jardine Strategic. Jardine Matheson will cancel the shares which Jardine Strategic holds in Jardine Matheson at Jardine Matheson’s 2022 AGM. Principal shareholders will own ~43% of Jardine Matheson post the transaction. As of 5 Mar 21, Jardine Matheson and Jardine Strategic’s weights are 6.3% and 2.1% in FSSTI, respectively.
Frasers Logistics & Commercial Trust the next likely candidate to replace Jardine Strategic on FSSTI in June
- The next FSSTI review will take place on 3 Jun 2021. Based on the free-float and market-cap size, we believe Frasers Logistics & Commercial Trust is likely to replace Jardine Strategic in the index. As of 5 Mar, Frasers Logistics & Commercial Trust’s free-float market cap was S$3.2bn.
- Other companies under FSSTI reserve list are Frasers Centrepoint Trust (SGX:J69U), Keppel REIT (SGX:K71U), Suntec REIT (SGX:T82U) and NetLink Trust (SGX:CJLU), based on market cap size.
- Based on market cap size, Frasers Centrepoint Trust (free-float market cap: S$2.5bn) could be the next candidate in line while Keppel REIT could be a candidate based on a 3-month ADV of S$12.1m.
- While the appetite for REITs could diminish on the back of steepening yield curve, we continue to like Frasers Logistics & Commercial Trust (as one of our country top picks) for visible inorganic growth potential and income resilience. If included, we estimate Frasers Logistics & Commercial Trust’s weight in FSSTI to be 1.1%.
- We like Frasers Logistics & Commercial Trust for its exposure to the logistics warehouse sector that will continue to ride on the e-commerce uptrend as well as its visible inorganic growth potential. As part of its long-term growth strategy, Frasers Logistics & Commercial Trust will continue to manage its assets actively as well as seek inorganic growth via selective development opportunities and tap on acquisition growth opportunities from both its sponsor’s ROFR pipeline and third-party acquisitions.
- Frasers Centrepoint Trust is a new company added to the FSSTI reserve list following the latest review on 4 Mar. It is also one of our REITs top picks in Singapore. Fundamentally, we like it for its faster recovery from COVID-19 vs peers given its pure exposure to suburban malls.
- See also recent SGX market update: S-REITs Yielding 6% & Leading the STI Reserve List.
FSSTI end-2021 target at 3,140 points
- Our end-2021 FSSTI target remains at 3,140 points, still based on 14.2x 12-month forward P/E.
Top Singapore Stock Picks
- Our Singapore large-cap stock picks are:
- Our Singapore small-cap stock picks are:
LIM Siew Khee
CGS-CIMB Research
|
https://www.cgs-cimb.com
2021-03-08
SGX Stock
Analyst Report
1.570
SAME
1.570
99998.000
SAME
99998.000
54.680
SAME
54.680
