Re: Singapore - Comm Properties & REITS 02 (Jan 13 - Dec 18)
Posted: Tue Sep 04, 2018 9:28 am
Singapore REITs: A defensive armour despite some chinks
All the 23 S-REITs under our coverage reported 2QCY18 results which met our expectations.
The average DPU growth came in at -0.8% on a YoY basis, versus -2.6% in 1QCY18.
Looking ahead, we are projecting stable DPU growth (market-cap weighted) of 1.7% for the current financial year (FY18/19F) and 1.6% for the next financial year (FY19/20F).
From a balance sheet perspective, the S-REITs under our coverage have remained prudent on their capital management.
Although the current yield spread remains relatively tight at 363 bps, or 1.1 standard deviations below the 5-year mean, the ongoing macroeconomic uncertainties has resulted in a flight to defensive ideas.
We thus believe S-REITs can have a strategic position in investors’ portfolio, but in a selective manner.
Source: OCBC
All the 23 S-REITs under our coverage reported 2QCY18 results which met our expectations.
The average DPU growth came in at -0.8% on a YoY basis, versus -2.6% in 1QCY18.
Looking ahead, we are projecting stable DPU growth (market-cap weighted) of 1.7% for the current financial year (FY18/19F) and 1.6% for the next financial year (FY19/20F).
From a balance sheet perspective, the S-REITs under our coverage have remained prudent on their capital management.
Although the current yield spread remains relatively tight at 363 bps, or 1.1 standard deviations below the 5-year mean, the ongoing macroeconomic uncertainties has resulted in a flight to defensive ideas.
We thus believe S-REITs can have a strategic position in investors’ portfolio, but in a selective manner.
Maintain NEUTRAL on S-REITs. Our preferred picks are MAGIC [BUY; FV: S$1.42], KDCREIT [BUY; FV: S$1.54], FCT [BUY; FV: S$2.49] and FLT [BUY; FV: S$1.18].
Source: OCBC