1. Healthcare

Asia Pacific Equity Research
31 January 2015
SREITs Results Wrap
Yield volatility takes precedence
REITs’ results were mostly in line, with office and industrial showing
promising signs. Headwinds in retail and hospitality persist. Monetary
Authority of Singapore’s (MAS) unexpected easing and bond yield
volatility suggest REITs will continue to trade sideways in 2015. Sector
yield/yield spread of 5.4%/3.5% seems fair vs. a mean of 5.9%/4.0%. Our
top OWs are AREIT, SUN, CRCT and ART.
 Forex concerns compound interest rate volatility. Bond yields could
remain volatile, in the face of the improving US economy and uncertain
growth in EU/China. The Treasury curve's continued flattening implies
that lower oil prices and a stronger USD will reduce how much the Fed
could tighten over time. While our Fixed Income Team has lowered
their 10-year US bond yield forecasts by ~40 bps, we have maintained
our risk-free rate assumption for REITs’ valuation at a conservative 3%.
Further, MAS’ unexpected easing will lead to a weaker SGD currency
and rise in interest rates, which are both negative for REITs.
 REITs results in line, as DPUs of 9 (out of 11) REITs we covered were
within our estimates, driven by acquisitions and positive rent reversions.
While we saw interest savings from refinancing of loans issued 3-5 years
ago at higher cost, impact is mitigated by longer debt tenures.
 Office rent growth is healthy, as office REITs posted strong positive
rent reversions in 2014 amid high retention rates. Limited supply in
2015-2H16 should see Grade A rent growth of 5% in 2015.
 Industrial occupancies improved, underpinned by business parks and
hi-tech space. Rent reversions were better than expected. Acquisition
outlook is mixed, with smaller deals and sponsor pipeline more likely.
Singapore
REITs
Brandon Lee
AC
(65) 6882-7073
[email protected]
J.P. Morgan Securities Singapore Private
Limited
Cusson Leung
(852) 2800-8526
[email protected]
J.P. Morgan Securities (Asia Pacific) Limited
Terence M Khi
(65) 6882-1518
[email protected]
J.P. Morgan Securities Singapore Private
Limited
FSTREI vs FSTREH vs FSSTI
FSSTI (LHS) / FSTREI, FSTREH (RHS)
3,500
900
3,400
850
800
3,300
750
3,200
700
3,100
650
3,000
Dec-12
FSSTI
600
Dec-13
FSTREI
Dec-14
FSTREH
Source: Bloomberg.
 Retail occupancy cost on the rise, implying landlords need to cut rents
given tenant sales decline across suburban and urban malls. Rent
reversion will slow as more retailers consolidate in a challenging climate.
 Hotel RevPAR continued to fall, with mid-tier segment seeing greater
declines. A doubling in supply and lesser China/Indo tourists imply
sustained downside pressures on room rates and occupancies in 2015.
 Strategy and stock picks. We expect REITs to trade sideways in 2015,
given the volatile bond yield movements. Sector yield/yield spread of
5.4%/3.5% seems fair vs. mean of 5.9%/4.0%. We prefer REITs with
strong sponsor pipelines, good sub-sector fundamentals and/or
undemanding P/B ratios. Our top OWs are AREIT, SUN, CRCT and
ART. UWs include CDREIT, FEHT, MCT and FCT.
See page 51 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Equity Ratings and Price Targets
Company
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trusts
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Ticker
AREIT SP
ART SP
CCT SP
CT SP
CRCT SP
CDREIT SP
FEHT SP
FCT SP
KREIT SP
MCT SP
MINT SP
SUN SP
Mkt Cap
(S$ mn)
5,918.04
1,941.80
5,212.38
7,235.96
1,420.22
1,765.18
1,499.57
1,895.66
3,915.49
3,187.23
2,650.42
4,704.22
Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 30 Jan 15.
2
Rating
Price (S$)
2.46
1.27
1.77
2.09
1.72
1.80
0.85
2.07
1.24
1.52
1.53
1.88
Cur
OW
OW
N
N
OW
UW
UW
UW
N
UW
N
OW
Prev
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
Price Target
Cur
Prev
2.55
n/c
1.40
n/c
1.75
n/c
2.15
n/c
1.80
n/c
1.70
n/c
0.80
n/c
1.85
n/c
1.25
n/c
1.40
n/c
1.55
n/c
2.10
n/c
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Table of Contents
Interest rate still the swing factor ...........................................4
Office: Strong rental reversions............................................11
Retail: Occupancy cost concerns surface ...........................13
Industrial: Spillover from higher office rents .......................15
Hospitality: Supply concerns still weighing.........................17
Appendix .................................................................................19
A-REIT .....................................................................................27
Ascott Residence Trust .........................................................29
CapitaCommercial Trust ........................................................31
CapitaMall Trust......................................................................33
CapitaRetail China Trust........................................................35
CDL Hospitality Trusts...........................................................37
Far East Hospitality Trust ......................................................39
Frasers Centrepoint Trust .....................................................41
Keppel REIT ............................................................................43
Mapletree Commercial Trust .................................................45
Mapletree Industrial Trust......................................................47
Suntec REIT ............................................................................49
3
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Interest rate still the swing factor
Treasury volatilities weigh on yield-driven REITs
Ten-year SG bond yield has fallen 37 bps to 1.91% YTD, slightly
lower than the 45 bps decline in 10-year US bond yield to 1.72%. The
unexpected yield compression started with the sharp decline in oil
prices, which gave rise to concerns over inflation. Weakening growth
resulted in the ECB announcing its €1.1tn QE plan, which was on a
larger scale and longer-time horizon than what our Fixed Income Team
had expected.
Elsewhere, both Bank of Canada and Reserve Bank of India also
surprised markets with interest rate cuts of 25 bps to address sluggish
growth. While these global developments were pivotal in driving bond
yields lower, recent data in the US have not helped, i.e., weakness in
Dec-14 average hourly earnings, core CPI and retail sales.
In the latest FOMC statement on 28-Jan-15, the Fed reiterated that it
will be “patient” before raising interest rates and delivered a rather
mixed message on the factors determining liftoff. Its improved
upbeatness on the domestic economy was hawkish. A dovish stance
was presented when the Fed noted that "international developments"
will be a factor in deciding the first rate hike, given global economic
risks and pace of USD appreciation. The continued flattening of the
Treasury curve suggests that lower oil prices and a stronger USD will
reduce how much the Fed will need to tighten over time.
Given that the influence of lower inflation expectations is unlikely to
reverse in the near term, our Fixed Income Team made material
revisions to their interest rate forecasts. The 10-year US bond yield
should reach 2.25% (vs. 2.70% previously) by 2Q15E and rise 15 bps
to 2.40% (vs. 2.80% previously) by 4Q15E. While US Treasuries have
historically served as an upper bound for Singapore bonds, this has
gone the opposite direction over the past year or so, with the 10-year
SG bond yield trading at 5-40 bps over the 10-year US bond yield.
4
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Figure 1: 10-yr SG bond yield vs. 10-yr US bond yield
%
Figure 2: Spread between 10-yr SG bond yield and 10-yr US bond
yield
bps
6.0%
50
5.0%
0
4.0%
(50)
3.0%
(100)
2.0%
(150)
1.0%
(200)
0.0%
(250)
10-Year Bond Singapore
10-Year Bond US
Spread SG-US bond yield
Source: Bloomberg.
Source: Bloomberg.
Table 1: JPM 10-yr US bond yield (old vs. new)
%
Mar-15
Jun-15
Sep-15
Dec-15
Old*
2.55%
2.70%
2.75%
2.80%
US 10-yr bond yield estimates
New
2.10%
2.25%
2.30%
2.40%
Change
-0.45%
-0.45%
-0.45%
-0.40%
Source: J.P. Morgan estimates.*Old estimates as of 12-Dec-2014.
Maintaining a conservative stance on risk-free rate
Our Dec-15 PTs are based on the average of our DDM and RNAV
valuation estimates. Our DDM is predicated on our three-year DPU
estimates, discount rate assumption and forecasted long-term growth
rate (LTGR). Our present discount rate assumptions factor in a riskfree rate of 3%. As both cap rates and rent growth have not deviated
from our current forecasts, we maintain our RNAVs. The table below
illustrates our discount rate assumptions for the 12 REITs under our
coverage.
5
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 2: SREITs valuation assumptions
Specified
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trust
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Total / weighted average
Share price
30-Jan-15
(S$)
2.47
1.27
1.80
2.14
1.73
1.80
0.84
2.01
1.25
1.54
1.53
1.91
Current
Mkt cap
(S$ MM)
5,942
1,949
5,286
7,409
1,433
1,765
1,491
1,841
3,963
3,229
2,642
4,775
41,726
Beta
0.92
1.14
0.92
0.76
1.36
1.24
1.36
1.00
1.00
0.82
1.10
0.80
0.95
Discount
rate
(%)
7.6%
8.7%
7.6%
6.8%
9.8%
9.2%
9.8%
8.0%
8.0%
7.1%
8.5%
7.0%
7.7%
LT growth
rate
(%)
1.0%
2.0%
2.0%
1.0%
3.0%
1.5%
1.5%
1.5%
2.0%
1.5%
1.0%
2.0%
1.6%
Terminal
cap rate
(%)
6.6%
6.7%
5.6%
5.8%
6.8%
7.7%
8.3%
6.5%
6.0%
5.6%
7.5%
5.0%
6.2%
Implied LT
growth rate
(%)
1.3%
2.2%
2.9%
1.5%
3.1%
3.2%
4.0%
2.7%
2.9%
2.1%
1.4%
1.7%
2.1%
NPV
Current
(S$)
2.40
1.23
1.55
1.99
1.72
1.48
0.62
1.71
1.09
1.39
1.46
2.00
Disc./Prem to
NPV Current
(%)
3.0%
3.1%
16.0%
7.7%
0.9%
21.8%
34.4%
17.6%
15.2%
10.6%
4.5%
-4.9%
8.9%
Source: Bloomberg, J.P. Morgan estimates.
While the unexpected compression in bond yields did make us
consider tweaking our risk-free rate, we decided to remain
conservative and stick with our existing assumptions. Assuming the
highest end of the premium spread, the revised 10-year SG bond yield
of 2.80% is not too far from our current assumptions. Given the
uncertain global macroeconomic outlook and interest rate volatility,
we are mindful of unexpected changes in 10-year bond yields. Our
sensitivity analysis shows that for every 20 bps rise in risk-free rate,
our PTs would decrease by 1.7%.
Table 3: Sensitivity analysis of PTs to risk-free rates
S$
AREIT
ART
CCT
CT
CRCT
CDREIT
FEHT
FCT
KREIT
MCT
MINT
SUN
TP
$2.55
$1.40
$1.75
$2.15
$1.80
$1.70
$0.80
$1.85
$1.25
$1.40
$1.55
$2.10
2.6%
2.60
1.40
1.80
2.20
1.85
1.75
0.80
1.90
1.30
1.45
1.55
2.20
Sensitivity analysis of PTs to risk-free rate*
2.8%
3.0%
3.2%
2.55
2.55
2.50
1.40
1.40
1.35
1.75
1.75
1.70
2.20
2.15
2.10
1.85
1.80
1.80
1.70
1.70
1.70
0.80
0.80
0.80
1.90
1.85
1.85
1.25
1.25
1.25
1.45
1.40
1.40
1.55
1.55
1.50
2.15
2.10
2.05
Source: J.P. Morgan estimates. *Refers to 10-yr Singapore bond yield.
6
3.4%
2.45
1.35
1.70
2.10
1.75
1.65
0.80
1.80
1.20
1.35
1.50
2.00
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 4: Sensitivity analysis of PTs to risk-free rates
%
TP
$2.55
$1.40
$1.75
$2.15
$1.80
$1.70
$0.80
$1.85
$1.25
$1.40
$1.55
$2.10
AREIT
ART
CCT
CT
CRCT
CDREIT
FEHT
FCT
KREIT
MCT
MINT
SUN
Wght Avg
2.6%
2.0%
0.0%
2.9%
2.3%
2.8%
2.9%
0.0%
2.7%
4.0%
3.6%
0.0%
4.8%
2.6%
Sensitivity analysis of PTs to risk-free rate*
2.8%
3.0%
3.2%
0.0%
0.0%
-2.0%
0.0%
0.0%
-3.6%
0.0%
0.0%
-2.9%
2.3%
0.0%
-2.3%
2.8%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2.7%
0.0%
0.0%
0.0%
0.0%
0.0%
3.6%
0.0%
0.0%
0.0%
0.0%
-3.2%
2.4%
0.0%
-2.4%
1.2%
0.0%
-1.7%
3.4%
-3.9%
-3.6%
-2.9%
-2.3%
-2.8%
-2.9%
0.0%
-2.7%
-4.0%
-3.6%
-3.2%
-4.8%
-3.2%
Source: J.P. Morgan estimates. *Refers to 10-yr Singapore bond yield.
MAS easing policy to hit REITs on double fronts
Citing moderating inflationary pressures, the Monetary Authority of
Singapore's (MAS) unexpectedly adjusted its prevailing monetary
policy stance on 28-Jan-15 by reducing the slope of the S$NEER
policy band. The immediate impact is a weakening in SGD (against
USD), which has a strong positive co-relationship (86%) with REITs.
In fact, the SGD has already weakened by a respective 3.3% and 4.7%
in 2013 and 2014, respectively. Subsequent to the MAS easing, SGD
weakened by a further 2% to 1.35. Our FX Team is forecasting USDSGD of 1.36 by end of Dec-15, representing a YoY decline of 2.6%.
Figure 3: FSTREI vs. USD:SGD
Figure 4: JPM forecasted USD:SGD
Index (LHS) / S$ (RHS)
S$
1,200
1,000
800
600
400
FSTREI Index
Source: Bloomberg.
Jul-14
Jul-13
Jul-12
Jul-11
Jul-10
Jul-09
Jul-08
Jul-07
Jul-06
Jul-05
Jul-04
Jul-03
0
Jul-02
200
1.800
1.700
1.600
1.500
1.400
1.300
1.200
1.100
1.000
1.37
1.36
1.36
1.36
1.35
1.35
1.34
1.35
1.35
Jun-15
Sep-15
1.34
1.34
1.33
Mar-15
USDSGD
Dec-15
USD:SGD
Source: J.P. Morgan estimates.
We believe this will be a negative for REITs, evidenced by the
difference in returns an investor could make by factoring in any
potential SGD appreciation. For example in 2012, REITs’ total return
in SGD was 46.2%, but a relatively higher 55.1% after factoring in the
SGD appreciation.
7
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Figure 5: REITs’ (FSTREI Index) total return in SGD vs. USD
%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
-80.0%
87.3% 91.5%
17.7%
46.2%
28.8%
55.1%
16.4% 10.9%
3.9% 1.5%
-3.8% -6.9%
-10.7% -11.6%
-55.9% -55.8%
2008
2009
2010
2011
SGD
2012
2013
2014
YTD
USD
Source: J.P. Morgan estimates, Bloomberg.
Secondly, because of Singapore's exchange rate-based monetary policy
and the uncovered interest rate parity theory, the weakening SGD
would result in upward pressure on interest rates, including SIBOR
and SOR. The former is the floating rate pegged to residential
mortgage loans while the latter is the floating rate pegged to
corporates' (including REITs’) loans.
Based on Bloomberg consensus, SIBOR is expected to rise to 0.85%
by end-15 from 0.67% currently while yields on 10Y SGS are also
expected to increase to 2.58% from their current 1.83%. While SIBOR
has been trading below SOR, SOR should trade down to the same level
as SIBOR, given that the SGD depreciation theme is already well
priced-in by the market and MAS also expects the forex volatility to
ease in a few days.
Table 5: Consensus forecast for 3M-SIBOR and 10Y SGS
%
30-Jan
Mar-15
Jun-15
Sep-15
Dec-15
3M SIBOR
0.67%
0.66%
0.66%
0.76%
0.85%
10Y SGS
1.83%
2.24%
2.34%
2.46%
2.58%
Source: Bloomberg. (Weighted Average Forecast as of 30 Jan 15).
Aside from medium-term notes and convertible bonds which are
generally on fixed rates, REITs’ other loan facilities are structured as
floating plus an interest spread margin. We understand a majority of
REITs utilize SOR as their floating rates, which suggests any spike in
SOR will affect DPUs. Nonetheless, REIT managers have been
prudent in their capital management, by entering into interest rate
swaps to have majority of their loans on fixed rates. According to our
8
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
estimates, ~75% of REITs' loans are on fixed rates, which mean that
for every 100 bps rise in interest rate, DPU falls by 2.7%.
Table 6: Sensitivity analysis of DPUs to interest rates
%
FY2014E/15E
AREIT
ART
CCT
CT
CRCT
CDREIT
FEHT
FCT
KREIT
MCT
MINT
SUN
Wght Avg
DPUs from 100 bps rise in debt cost
FY2015E/16E
-2.7%
-2.5%
-2.9%
-3.5%
-1.0%
-0.9%
-3.5%
-3.4%
-1.8%
-1.5%
-3.5%
-3.4%
-3.2%
-3.4%
-1.5%
-1.4%
-3.5%
-3.2%
-2.8%
-2.7%
-1.9%
-2.0%
-4.8%
-4.2%
-2.9%
-2.7%
FY2016E/17E
-2.5%
-3.4%
-0.9%
-3.2%
-1.5%
-3.3%
-3.2%
-1.4%
-3.2%
-2.6%
-2.1%
-4.1%
-2.7%
Source: J.P. Morgan estimates.
Additionally, the DPU change could affect our PTs, which are derived
from the average of our DDM and RNAV valuations. Based on our
estimates, our DDM valuations would drop by 1.2% for every 50 bps
rise in interest rates.
Table 7: Sensitivity analysis of DDM to interest rates
%
AREIT
ART
CCT
CT
CRCT
CDREIT
FEHT
FCT
KREIT
MCT
MINT
SUN
Wght Avg
-1.50%
-3.9%
-0.6%
-1.0%
-3.4%
-1.8%
-4.6%
-4.7%
-1.0%
-6.0%
-3.5%
-1.8%
-7.1%
-3.5%
-1.00%
-2.6%
-0.4%
-0.7%
-2.2%
-1.2%
-3.1%
-3.2%
-0.7%
-4.0%
-2.3%
-1.2%
-4.7%
-2.4%
Sensitivity analysis of DDM to interest rate
-0.50%
0.00%
0.50%
-1.3%
0.0%
1.3%
-0.2%
0.0%
0.2%
-0.3%
0.0%
0.3%
-1.1%
0.0%
1.1%
-0.6%
0.0%
0.6%
-1.5%
0.0%
1.5%
-1.6%
0.0%
1.6%
-0.3%
0.0%
0.3%
-2.0%
0.0%
2.0%
-1.2%
0.0%
1.2%
-0.6%
0.0%
0.6%
-2.4%
0.0%
2.4%
-1.2%
0.0%
1.2%
1.00%
2.6%
0.4%
0.7%
2.2%
1.2%
3.1%
3.2%
0.7%
4.0%
2.3%
1.2%
4.7%
2.4%
1.50%
3.9%
0.6%
1.0%
3.4%
1.8%
4.6%
4.7%
1.0%
6.0%
3.5%
1.8%
7.1%
3.5%
Source: J.P. Morgan estimates.
We also illustrate the impact of interest rates on book values, via a
sensitivity analysis of RNAVs to changes in cap rates, which have a
positive co-relationship with rates. For every 50 bps change in cap
rates, our RNAVs would vary by ~10%.
9
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Table 8: Sensitivity analysis of RNAVs to cap rates
%
AREIT
ART
CCT
CT
CRCT
CDREIT
FEHT
FCT
KREIT
MCT
MINT
SUN
Wght Avg
-0.75%
17.8%
27.9%
20.0%
16.0%
20.8%
-15.3%
23.1%
22.1%
36.9%
17.0%
18.8%
7.8%
18.0%
Source: J.P. Morgan estimates.
10
-0.50%
11.4%
17.6%
12.3%
10.1%
13.2%
-10.2%
14.6%
14.0%
22.8%
10.7%
12.0%
4.9%
11.3%
Sensitivity analysis of RNAVs to cap rates
-0.25%
0.00%
0.25%
5.5%
0.0%
-5.1%
8.4%
0.0%
-7.6%
5.7%
0.0%
-5.0%
4.8%
0.0%
-4.4%
6.3%
0.0%
-5.8%
-5.1%
0.0%
5.1%
6.9%
0.0%
-6.3%
6.6%
0.0%
-6.1%
10.6%
0.0%
-9.3%
5.1%
0.0%
-4.6%
5.8%
0.0%
-5.4%
2.3%
0.0%
-2.1%
5.3%
0.0%
-4.8%
0.50%
-9.8%
-14.5%
-9.5%
-8.4%
-11.1%
10.2%
-12.0%
-11.6%
-17.5%
-8.8%
-10.4%
-4.0%
-9.1%
0.75%
-14.1%
-20.8%
-13.5%
-12.1%
-16.1%
15.3%
-17.2%
-16.7%
-24.9%
-12.7%
-15.0%
-5.8%
-13.1%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Office: Strong rental reversions
Results takeaways: strong rent reversion persists
Aside from KREIT whose results missed our forecasts by 5% (due to
higher interest cost and lower income support), CCT and SUN were
both in line with our estimates.
Healthy occupancies, resilient tenant retention rates (CCT: 86% and
KREIT: 85%) and strong positive rental reversions reflected the
limited supply through 1H16. KREIT and OUECT posted FY14
positive rent reversions of 17% and 15%, respectively while Suntec
City Office's secured leases in 4Q14 were up 3% YoY to S$8.92
psf/mth. CCT's portfolio passing rent was up 6% YoY to S$8.61 psf,
with expired spaces secured at improved rates in Six Battery Road
(renewed: S$11.40-14.20 psf vs. expired: S$11.23 psf) and One
George Street (renewed: S$10.20-11.90 psf vs. expired: S$10.00 psf).
Cap rate movements were mixed, but upward revisions YoY were
more than offset by improved rentals. Grade A buildings were
generally valued at 3.75%.
Table 9: Historical office occupancy
%
CCT
SUN
KREIT
OUECT
31-Mar-13
95.3%
99.7%
-
30-Jun-13
95.8%
99.7%
99.2%
-
30-Sep-13
97.6%
99.8%
99.5%
-
31-Dec-13
98.7%
99.6%
100.0%
-
31-Mar-14
99.4%
99.4%
100.0%
100.0%
30-Jun-14
99.4%
99.7%
99.8%
100.0%
30-Sep-14
99.4%
100.0%
99.8%
100.0%
31-Dec-14
96.8%
100.0%
99.5%
100.0%
Source: Company data.
Table 10: Historical cap rate
%
CCT
SUN
KREIT
OUECT
31-Dec-08
4.50%
4.93%
NA
NA
31-Dec-09
4.25%
4.75%
NA
NA
31-Dec-10
4.09%
4.61%
NA
NA
31-Dec-11
4.00%
4.54%
NA
NA
31-Dec-12
3.75%
4.33%
NA
NA
31-Dec-13
3.75%
4.46%
4.00%
3.50%
31-Dec-14
3.82%
4.32%
3.75%
3.75%
Source: Company data.
Outlook: landlords still enjoy limited supply story
With CapitaGreen now 69.4% pre-committed and South Beach Tower
expected to hit 90%, the amount of new vacant Grade A office space
equates to 0.3m sqf over the next 18 months, vs. average net
absorption of 0.9m sqf. However, a majority of demand continues to
be underpinned by relocation (due to competitive rents) than
expansion.
While the new pool of diversified tenants (commodities, energy, legal
and IT) has helped to offset the drop in demand from traditional large
occupiers in the finance sector (which continues to downsize with the
11
Brandon Lee
(65) 6882-7073
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Asia Pacific Equity Research
31 January 2015
latest being Standard Chartered Bank and RBS), the size which they
require remains comparatively smaller at the 2,000-10,000 sqf level.
Coupled with the estimated 0.5m sqf of secondary space, we expect
Grade A rents to grow by a slower 5% in 2015 (vs. 15% in 2014).
12
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Retail: Occupancy cost concerns surface
Results takeaways: operating stats paint a tepid picture
Results of all domestic retail REITs under our coverage (CT, MCT and
FCT) were all within our projections, largely driven by acquisitions.
On the flipside, major operating statistics continue to weaken across
both suburban and urban malls. MCT's VivoCity and SGREIT's
Wisma Atria posted a respective 2.8% YoY and 5.6% drop in Dec-14
quarter tenant sales, despite the traditionally busier 4Q14 holiday
period. CT also recorded FY14 tenant sales decline of 1.9%.
While the positive rent reversion trend remains, the pace has
moderated. FCT’s +7.7% was a tad lower than the preceding quarter’s
+10.9%, while CT’s +6.1% in FY14 is slightly below FY13’s +6.3%.
Similarly for MCT, 9MFY15 rent reversion slowed to +15.1% from
+37.6% in FY14.
Occupancies generally improved QoQ, except FCT which saw 2.5%pts
decline due to tenant remixing.
Table 11: Retail occupancy
%
CT
MCT
FCT
SGREIT*
CRCT
31-Mar-13
98.3%
97.7%
98.2%
100.0%
96.5%
30-Jun-13
99.1%
98.3%
98.4%
99.5%
96.5%
30-Sep-13
99.5%
98.9%
98.4%
100.0%
98.3%
31-Dec-13
98.5%
98.7%
96.7%
99.9%
98.2%
31-Mar-14
98.8%
98.2%
96.8%
99.3%
98.4%
30-Jun-14
98.6%
99.0%
98.5%
99.5%
98.1%
30-Sep-14
98.5%
98.5%
98.9%
99.8%
97.6%
31-Dec-14
98.8%
99.5%
96.4%
100.0%
95.9%
31-Mar-13
6.2%
33.1%
10.2%
NA
14.9%
30-Jun-13
6.4%
42.8%
9.4%
NA
17.3%
30-Sep-13
6.3%
37.1%
10.8%
NA
10.0%
31-Dec-13
6.3%
38.7%
2.5%
NA
17.5%
31-Mar-14
6.2%
37.6%
9.3%
8.9%
23.0%
30-Jun-14
6.6%
16.2%
7.8%
12.3%
24.9%
30-Sep-14
6.3%
16.5%
10.9%
6.7%
22.6%
31-Dec-14
6.1%
15.1%
7.7%
17.0%
20.6%
30-Jun-13
3.3%
NA
5.5%
-30.2%
9.5%
30-Sep-13
2.8%
NA
5.7%
9.4%
5.6%
31-Dec-13
2.5%
NA
7.7%
-8.2%
10.5%
31-Mar-14
-4.0%
NA
2.4%
-3.3%
14.3%
30-Jun-14
-3.7%
NA
4.9%
-0.4%
13.6%
30-Sep-14
-3.0%
0.6%
0.2%
-7.5%
16.1%
31-Dec-14
-1.9%
NA
-2.8%
-5.6%
21.3%
Source: Company data. *Singapore retail only.
Table 12: Retail rent reversions
%
CT1
MCT1
FCT
SGREIT*
CRCT
Source: Company data. *Singapore retail only. 1Cumulative
Table 13: Tenant sales growth (YoY)
%
CT
MCT
FCT
SGREIT
CRCT
31-Mar-13
2.4%
NA
5.4%
11.3%
Source: J.P. Morgan, Company data.
Retail sentiments where CRCT operates continue to remain healthy, as
tenant sales rose across all trade sectors, with 4Q14 YoY growth of
13
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
21% exceeding the preceding quarter’s +16%, which translates to a
full-year increase of 16% (vs. +9% in FY13). Rent reversion for the
quarter continued to be strong at +20.6%, led by CapitaMall Wangjing
(+35.3%) and CapitaMall Saihan (+16.7%).
Outlook: Occupancy cost is a worry
A combination of tenant sales decline and rental increases (albeit at a
slower pace) has naturally led to a rise in occupancy cost, which is best
evidenced by CT’s 1.8%pts YoY rise to 17.6% and representing a
record high. In fact, earlier signs have already emerged as MCT's
occupancy cost crept upwards from 15.9% in FY12 to 17.0% in FY14.
With islandwide sales turnover on a downward trend and more
retailers consolidating their stores, we expect landlords to start
adjusting downwards their rent expectations. Based on our estimates,
Suntec City Mall Phase 3 revised its expected rent for part of the precommitted space. According to JLL, suburban rent fell 0.5% YoY in
2014, the first decline since 2009. However, prime rent rose 0.8%.
Going forward, we expect existing headwinds in the retail sector to
worsen, namely lower rents and tenant sales, as well as more
consolidation among retailers.
14
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Industrial: Spillover from higher office rents
Results takeaways: Improved occupancies
MINT’s results were in line with our projections, although AREIT
slightly missed due to higher operating expenses and property taxes.
AREIT (+1.2%pts QoQ) recorded a turnaround in portfolio occupancy
after six quarters of decline, while occupancy for MLT declined
(-0.3%pts) on single-user asset (SUA) to multi-tenanted (MTB)
conversions. Occupancy at MINT (-0.7%pts) was impacted by
redevelopment of its Telok Blangah Cluster. Both AREIT (+1.5%pts
to 88%) and MINT (+2 pts to 81%) saw a pickup in business park
occupancy, due to additional take-up at Aperia and The Signature.
Table 14: Industrial occupancy
%
AREIT
MINT
MLT
CACHE
31-Mar-13
94.0%
95.4%
98.5%
100.0%
30-Jun-13
93.6%
95.5%
98.2%
100.0%
30-Sep-13
90.1%
93.9%
98.7%
100.0%
31-Dec-13
89.7%
92.5%
98.4%
100.0%
31-Mar-14
89.6%
91.3%
98.3%
100.0%
30-Jun-14
88.1%
90.7%
97.6%
99.6%
30-Sep-14
85.6%
91.5%
97.2%
99.5%
31-Dec-14
86.8%
90.8%
96.9%
97.9%
31-Mar-13
14.5%
NA
14.0%
30-Jun-13
9.6%
NA
17.0%
30-Sep-13
10.8%
26.5%
24.0%
31-Dec-13
9.7%
23.6%
23.0%
31-Mar-14
NA
17.7%
17.0%
30-Jun-14
11.8%
17.1%
12.0%
30-Sep-14
6.3%
5.3%
9.0%
31-Dec-14
7.7%
5.8%
9.0%
Source: Company data.
Table 15: Industrial rent reversions
%
AREIT
MINT
MLT
Source: Company data.
Outlook: Mixed acquisition and rent growth outlook
Vacancies are expected to rise on more SUA-MTB conversions,
namely MLT (over half of 16 SUAs expiring in FY16 to convert to
MTBs), CACHE (MTB conversions for three properties). AREIT also
anticipates at least three of 16 buildings to convert in the next two
years, though its SUA space due for renewal is substantially down
(3QFY15: 9.6% of NPI over three years vs. 15.6% in 3QFY14).
Acquisition and development outlook remain mixed, with MLT
looking to reduce exposure to Sale and Leaseback transactions,
especially for tenants seeking to recycle capital. Larger REITs may
also slow development (BTS) activities as competitive 7% yield-oncost is deemed unattractive. Larger REITs (e.g., AREIT and MLT) are
still looking to tap sponsor pipelines and overseas assets for
acquisitions. Despite competition, smaller REITs (e.g., SSREIT,
CREIT and VIT) are able to acquire third-party assets locally due to
smaller transaction sizes, with CREIT and AAREIT slowing overseas
expansion plans due to currency volatility and falling cap rates.
15
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(65) 6882-7073
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Asia Pacific Equity Research
31 January 2015
We expect business park rents to rise 2-3% in 2015 even with overall
occupancy at 80% on spillover demand from rising office rent and
strong pre-commitment (70-95%) of recent completions, i.e.,
Fusionopolis Phase 2 and Galaxis. Logistics rents should edge down
3% in 2015 on the back of a 9% supply growth in 2014. Factory rent is
also expected to decline 5% in 2015 as REITs trim rentals to secure
anchor tenants in large spaces, coupled with smaller strata-titled spaces
competing for non-anchor tenants.
16
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Hospitality: Supply concerns still weighing
Results takeaways: RevPAR decline continues
Results for CDREIT and ART were in line with our forecasts, though
the former’s Singapore RevPar fell 1.6% YoY to S$188 in 2014 as
ADR was cut by 3.7% to improve occupancy by 1.7 %pts to 89.1%.
Mid-tier hotels (e.g., CDREIT’s Copthorne Kings and Studio M)
appeared to be the most impacted by RevPAR weakness, as islandwide
RevPAR was down 4.6% in 11M14 (vs. single-digit improvements in
other segments). Similarly for serviced apartments, ART’s Singapore
RevPAU declined 3% YoY to S$211 in 2014.
While impact of slowing Chinese arrivals may be reversing, this is
being offset by slowing arrivals from Indonesia. OUEHT reported that
Mandarin Orchard Singapore’s contribution from Indonesians had
dipped to 26% in 2014 from 30% in 2013.
Table 16: Hospitality occupancy
%
CDREIT
ART*
OUEHT1
31-Mar-13
87.0%
NA
94.1%
30-Jun-13
87.7%
NA
NA
30-Sep-13
87.6%
NA
NA
31-Dec-13
87.0%
NA
NA
31-Mar-14
88.2%
NA
NA
30-Jun-14
86.1%
NA
NA
30-Sep-14
92.0%
NA
NA
31-Dec-14
90.0%
NA
NA
30-Sep-13
191
230
261
31-Dec-13
187
220
249
31-Mar-14
192
205
248
30-Jun-14
181
207
242
30-Sep-14
192
225
252
31-Dec-14
185
205
255
30-Sep-13
-8.6%
-3.8%
NA
31-Dec-13
-10.5%
-2.7%
2.5%
31-Mar-14
0.5%
6.2%
-1.0%
30-Jun-14
-6.2%
-9.2%
-4.7%
30-Sep-14
0.5%
-2.2%
-3.4%
31-Dec-14
-1.1%
-6.8%
2.4%
Source: Company data. *Singapore serviced residences. 1Mandarin Orchard Singapore
Table 17: Hospitality RevPAR
S$
CDREIT
ART*
OUEHT1
31-Mar-13
191
193
251
30-Jun-13
193
228
254
Source: Company data. *Singapore serviced residences. 1Mandarin Orchard Singapore
Table 18: Hospitality RevPAR growth (YoY)
%
CDREIT
ART*
OUEHT1
31-Mar-13
-10.3%
-17.9%
NA
30-Jun-13
-11.1%
-8.1%
NA
Source: Company data. *Singapore serviced residences. 1Mandarin Orchard Singapore
Outlook: Headwinds yet to dissipate
Hospitality should remain challenging in the near term as both
CDREIT and OUEHT guided for a weaker 1Q15 due to the absence of
the biennial Air Show, the longer lead-up to the Chinese New Year
and impact of latest AirAsia disaster.
Room supply is expected to grow 5.7% (3,258 rooms) in 2015, almost
double the 3.3% (1,789 rooms) rise in 2014, with growth in Orchard
17
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Asia Pacific Equity Research
31 January 2015
(Hotel Grand Chancellor: 488 rooms), City Fringe (South Beach: 654
rooms) and Suburbs (Genting Singapore: 550 rooms).
Chinese visitor growth picked up in Oct/Nov-14 (+13.5%/+9.9%),
although arrivals are still down 26% YoY in 11M14. Notably,
Indonesians, which form the largest group of visitors at 25% of total,
slowed in late-2014, with Aug-Nov14 arrivals down 14% YoY over
the same period in 2013.
Hotel demand could, however, pick up by 2Q15, helped by SEA
Games (Jun-15) and SG 50 Celebrations (3Q15). Nonetheless, this is
balanced against the large upcoming supply of rooms. In the longer
term, the government’s efforts to stem the new supply of hotel rooms
and curb short-term home rentals will work toward alleviating the
oversupply situation.
18
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Appendix
Table 19: SREITs results summary
Specified
DPU
CapitaMall Trust
QoQ
%
5.1%
Ascendas REIT
CapitaCommercial Trust
Suntec REIT
-1.9%
2.4%
10.7%
Keppel REIT
Mapletree Commercial
Trust
Mapletree Industrial
Trust
Ascott Residence Trust
Frasers Centrepoint
Trust
CDL Hospitality Trusts
CapitaRetail China Trust
-18.4%
YoY
4Q14 4Q13
4Q14 Commentary
%
5.1% 2.86
2.72 DPU up on higher occupancies, completion of AEIs and positive reversions.
DPU slightly missed but is up YoY on the back of positive reversions, improving occupancies and new
1.4% 3.59
3.54 completions.
2.9% 2.15
2.09 DPU up on strong office reversions, lower financing costs, improved occupancies and completion of AEIs.
0.6% 2.58
2.56 DPU impacted by ongoing AEI works at Suntec City mitigated by capital distributions.
DPU missed due to income loss on Prudential Tower divestment and enlarged unit base post-placement and
-23.4% 1.51
1.97 acquisition of MBFC T3.
5.6%
11.5%
2.08
1.865 Higher DPU on positive reversions and improved NPI margins
2.7%
-16.6%
6.4%
12.8%
2.67
1.76
2.51 DPU supported by positive reversions, improved NPI margins, lower borrowing costs and AEI completions.
1.56 Post-rights and one-off adjustments, DPU up on nine properties acquired and stronger performance in UK.
-1.3%
19.9%
5.5%
10.0%
7.2%
12.7%
2.75
3.13
2.48
2.5 Higher DPU on positive reversions, acquisition of CCP and lower funding costs.
2.92 Higher income from Maldives offset against reduced rents in Singapore and Australia.
2.2 Higher DPU from Grand Canyon and strong rental reversions.
Source: J.P. Morgan estimates, Company data.
Table 20: SREITs valuation summary
Specified
SREITs
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trust
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Total / Weighted Average
JPM
Rating
OW
OW
N
N
OW
UW
UW
UW
N
UW
N
OW
Mkt
Cap
(S$m)
5,990
1,934
5,242
7,305
1,429
1,765
1,482
1,851
3,947
3,229
2,633
4,812
41,620
Share
Price
Price
Target Upside Book P/B
29-Jan-15
Value
(S$)
(S$)
(%)
(S$) (x)
2.49
2.55
2.4% 2.03 1.23
1.26
1.40 11.1% 1.37 0.92
1.78
1.75
-1.7% 1.75 1.02
2.11
2.15
1.9% 1.81 1.17
1.73
1.80
4.3% 1.63 1.06
1.80
1.70
-5.6% 1.65 1.09
0.84
0.80
-4.2% 0.98 0.86
2.02
1.85
-8.4% 1.85 1.09
1.25
1.25
0.4% 1.41 0.88
1.54
1.40
-8.8% 1.17 1.31
1.52
1.55
2.0% 1.21 1.26
1.92
2.10
9.4% 2.12 0.91
0.9%
1.08
Implied
Yield
Implied yield
P/B
FY15E FY16E FY15E FY16E
(x)
1.26
1.02
1.00
1.19
1.10
1.03
0.82
1.00
0.89
1.20
1.28
0.99
1.09
(%)
6.0%
6.8%
4.8%
5.4%
6.2%
6.3%
6.2%
5.7%
5.7%
5.1%
6.8%
5.4%
5.7%
(%)
6.3%
6.9%
5.2%
5.6%
6.4%
6.3%
6.4%
5.8%
5.7%
5.2%
6.9%
5.5%
5.8%
(%)
5.9%
6.1%
4.9%
5.3%
5.9%
6.7%
6.5%
6.3%
5.7%
5.6%
6.6%
4.9%
5.6%
(%)
6.2%
6.2%
5.3%
5.5%
6.2%
6.7%
6.7%
6.3%
5.6%
5.7%
6.8%
5.0%
5.8%
Implied
Cap Rate
(%)
5.4%
5.9%
5.6%
5.7%
6.7%
5.6%
5.0%
4.9%
4.4%
4.3%
6.1%
3.7%
5.2%
20 Day
YTD Sh
ADTV Gearing
Perf
(S$m)
24.2
1.9
19.9
30.9
1.5
2.2
0.3
3.2
7.8
3.5
3.7
14.5
(%)
34%
39%
29%
34%
29%
32%
31%
29%
43%
38%
33%
35%
34%
(%)
3%
0%
1%
3%
6%
4%
4%
9%
2%
8%
4%
-3%
3%
Source: J.P. Morgan estimates, Bloomberg, Company data.
19
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 21: SREITs sub-sector valuation – Industrial (Part 1)
Specified
SREITs
INDUSTRIAL SREITS
Ascendas REIT
Mapletree Industrial Trust
Mapletree Logistics Trust
Cache Logistics Trust
AIMS AMP Capital Industrial
REIT
Keppel DC REIT
Cambridge Industrial Trust
Sabana Shari'ah Compliant REIT
Soilbuild Business Space REIT
VIVA Industrial Trust
Total / Wgt avg
Mkt
Cap*
Price
Target
Upside
(S$m)
Share
Price*
29-Jan-15
(S$)
(S$)
(%)
5,990
2,633
2,987
930
2.49
1.52
1.21
1.19
2.55
1.55
2.4%
2.0%
919
896
852
663
634
499
17,004
1.47
1.02
0.67
0.92
0.78
0.81
JPM
Rating
OW
N
Book
Value
P/B
(S$)
(x)
2.03
1.21
0.98
0.98
1.22
1.26
1.24
1.21
1.7
4.1
2.5
2.6
9.3
5.8
3.0
2.6
5.6
8.8
3.9
(1.7)
15.5
17.6
20.4
8.7
1.52
0.87
0.68
1.08
0.80
0.76
0.97
1.17
0.98
0.84
0.97
1.06
1.11
3.5
5.2
0.0
(2.7)
0.6
1.3
2.2
(0.3)
NA
(2.9)
(8.0)
1.9
0.0
4.5
(1.7)
NA
(7.5)
(11.2)
(3.1)
(1.8)
2.9
5.0
NA
(1.4)
(13.7)
5.3
3.9
12.2
1
3
Performance
6
12
Mth
(%)
ADTV
20
Day
(S$m)
FY14
3.4
3.7
2.1
2.6
24
4
5
1
14.2
10.0
7.2
8.7
15.0
10.3
7.7
8.8
15.7
10.5
7.8
9.5
16.1
10.6
8.0
9.6
5%
3%
7%
1%
5%
2%
1%
8%
2%
1%
3%
1%
3.5
4.6
0.0
(2.7)
0.0
1.3
2.6
0
5
1
1
1
0
10
11.0
6.1
5.0
7.7
6.2
NA
10.0
11.0
6.6
5.2
7.8
6.3
NA
10.5
11.5
6.9
5.3
7.8
6.4
NA
10.8
11.5
7.0
5.5
NA
6.3
NA
10.7
0%
8%
4%
1%
2%
NA
4%
5%
5%
2%
0%
2%
NA
3%
0%
1%
4%
NA
-2%
NA
2%
YTD
FY15E
FY16E
DPU
FY17E
FY15E
FY16E
FY17E
DPU Growth
(S cts)
(%)
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 22: SREITs sub-sector valuation – Industrial (Part 2)
Specified
SREITs
Mkt
Cap*
(S$m)
Share
Price*
29-Jan-15
(S$)
INDUSTRIAL SREITS
Ascendas REIT
Mapletree Industrial Trust
Mapletree Logistics Trust
Cache Logistics Trust
AIMS AMP Capital Industrial REIT
Keppel DC REIT
5,990
2,633
2,987
930
919
896
2.49
1.52
1.21
1.19
1.47
1.02
Cambridge Industrial Trust
Sabana Shari'ah Compliant REIT
Soilbuild Business Space REIT
VIVA Industrial Trust
Total / Wgt avg
852
663
634
499
17,004
0.67
0.92
0.78
0.81
Price
Target
Upside
(S$)
(%)
2.55
1.55
2.4%
2.0%
JPM
Rating
FY16E
Yield
FY17E
SGS 10Y
Yield
(%)
OW
N
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
20
FY15E
FY15E
FY17E
Gearing
(%)
FY16E
Yield
Spread
(%)
(%)
(%)
5.7%
6.6%
6.0%
7.3%
7.5%
6.0%
6.0%
6.8%
6.4%
7.4%
7.5%
6.5%
6.3%
6.9%
6.4%
8.0%
7.8%
6.8%
1.91%
1.91%
1.91%
1.91%
1.91%
1.91%
3.8%
4.7%
4.0%
5.4%
5.6%
4.1%
4.1%
4.9%
4.5%
5.5%
5.6%
4.6%
4.4%
5.0%
4.5%
6.1%
5.9%
4.9%
29.6%
34.4%
33.1%
30.7%
31.5%
NA
7.5%
8.4%
7.9%
NA
6.2%
7.8%
8.5%
8.1%
NA
6.5%
7.9%
8.5%
8.2%
NA
6.7%
1.91%
1.91%
1.91%
1.91%
1.91%
5.6%
6.5%
6.0%
NA
4.3%
5.9%
6.6%
6.2%
NA
4.6%
6.0%
6.6%
6.3%
NA
4.8%
28.1%
36.2%
35.0%
43.7%
30.4%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 23: SREITs sub-sector valuation – Retail (Part 1)
Specified
SREITs
Mkt
Cap*
(S$m)
RETAIL SREITS
CapitaMall Trust
Mapletree Commercial Trust
Frasers Centrepoint Trust
Starhill Global REIT
SPH REIT
Total / Wgt avg
7,305
3,229
1,851
1,787
2,660
16,833
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
2.11
1.54
2.02
0.83
1.06
2.15
1.40
1.85
1.9%
(8.8%)
(8.4%)
JPM
Rating
N
UW
UW
Book
Value
P/B
(S$)
(x)
1.81
1.17
1.85
0.92
0.93
1.16
1.32
1.09
0.90
1.13
1.15
1
3.9
7.4
8.4
4.4
1.4
4.7
3
Performance
6
12
Mth
(%)
7.9
7.4
7.6
3.7
0.0
6.1
6.6
8.2
6.5
-0.6
-0.5
5.0
12.8
30.9
21.2
9.2
7.7
16.0
YTD
3.4
8.2
8.7
4.4
1.4
4.7
ADTV
20
Day
(S$m)
FY14
31
3
3
2
2
15
10.8
7.4
11.2
5.0
5.4
8.7
FY15E
FY16E
FY17E
DPU
(S cts)
11.3
7.9
11.6
5.1
5.4
9.1
11.7
7.9
11.7
5.2
5.7
9.4
12.1
8.2
11.8
5.4
5.9
9.6
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 24: SREITs sub-sector valuation – Retail (Part 2)
Specified
SREITs
Mkt
Cap*
(S$m)
RETAIL SREITS
CapitaMall Trust
Mapletree Commercial Trust
Frasers Centrepoint Trust
Starhill Global REIT
SPH REIT
Total / Wgt avg
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
2.11
1.54
2.02
0.83
1.06
2.15
1.40
1.85
1.9%
(8.8%)
(8.4%)
7,305
3,229
1,851
1,787
2,660
16,833
JPM
Rating
FY15E
FY16E
Yield
FY17E
SGS 10Y
Yield
FY15E
FY17E
Gearing
(%)
FY16E
Yield
Spread
(%)
(%)
(%)
3.2%
2.9%
3.6%
4.1%
3.2%
3.3%
3.4%
3.2%
3.8%
4.2%
3.2%
3.5%
3.6%
3.3%
3.9%
4.4%
3.5%
3.7%
32.1%
38.6%
29.3%
28.7%
25.8%
31.7%
(%)
N
UW
UW
5.1%
4.8%
5.5%
6.0%
5.1%
5.2%
5.4%
5.1%
5.7%
6.1%
5.1%
5.4%
5.6%
5.2%
5.8%
6.3%
5.4%
5.6%
1.91%
1.91%
1.91%
1.91%
1.91%
1.91%
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 25: SREITs sub-sector valuation – Office (Part 1)
Specified
SREITs
Mkt
Cap*
(S$m)
OFFICE SREITS
CapitaCommercial Trust
Suntec REIT
Keppel REIT
OUE Commercial REIT*
Frasers Commercial Trust*
Total / Wgt avg
5,242
4,812
3,947
722
1,012
15,736
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
1.78
1.92
1.25
0.83
1.49
1.75
2.10
1.25
(1.7%)
9.4%
0.4%
0.00
JPM
Rating
N
OW
N
Book
Value
P/B
(S$)
(x)
1.75
2.12
1.41
1.10
1.59
1.02
0.91
0.89
0.75
0.94
0.93
1
3.2
-3.6
2.5
0.0
4.2
0.9
3
8.2
6.8
1.6
0.6
5.0
5.6
Performance
6
12
Mth
(%)
5.6
5.0
-2.0
-3.0
5.3
3.1
25.4
17.7
10.7
1.3
18.4
17.8
YTD
1.4
-3.3
2.0
0.0
4.6
0.3
ADTV
20
Day
(S$m)
FY14
20
14
8
1
2
13
8.5
9.4
7.2
5.4
8.4
8.3
FY15E
FY16E
FY17E
DPU
(S cts)
8.6
10.3
7.1
5.5
9.8
8.7
9.2
10.5
7.0
5.5
10.0
9.0
9.3
10.8
6.8
5.3
10.0
9.0
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
21
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 26: SREITs sub-sector valuation – Office (Part 2)
Specified
SREITs
Mkt
Cap*
(S$m)
OFFICE SREITS
CapitaCommercial Trust
Suntec REIT
Keppel REIT
OUE Commercial REIT*
Frasers Commercial Trust*
Total / Wgt avg
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
1.78
1.92
1.25
0.83
1.49
1.75
2.10
1.25
(1.7%)
9.4%
0.4%
5,242
4,812
3,947
722
1,012
15,736
JPM
Rating
FY15E
FY16E
Yield
FY17E
SGS 10Y
Yield
FY15E
FY17E
Gearing
(%)
FY16E
Yield
Spread
(%)
(%)
(%)
2.8%
3.0%
3.9%
4.6%
3.7%
3.3%
2.9%
3.5%
3.8%
4.7%
4.7%
3.5%
3.3%
3.6%
3.8%
4.7%
4.8%
3.6%
16.4%
34.7%
36.4%
41.9%
36.8%
29.5%
(%)
N
OW
N
4.8%
4.9%
5.8%
6.5%
5.6%
5.2%
0.00
4.8%
5.4%
5.7%
6.6%
6.6%
5.4%
5.2%
5.5%
5.7%
6.6%
6.7%
5.6%
1.91%
1.91%
1.91%
1.91%
1.91%
1.91%
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 27: SREITs sub-sector valuation – Hospitality (Part 1)
Specified
SREITs
Mkt
Cap*
(S$m)
HOSPITALITY SREITS
Ascott Residence Trust
CDL Hospitality Trusts
Far East Hospitality Trust
OUE Hospitality Trust
Ascendas Hospitality Trust
Total / Wgt avg
1,934
1,765
1,482
1,238
756
7,175
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
1.26
1.80
0.84
0.94
0.68
1.40
1.70
0.80
11.1%
(5.6%)
(4.2%)
JPM
Rating
OW
UW
UW
Book
Value
P/B
(S$)
(x)
1.37
1.65
1.00
0.90
0.77
0.92
1.09
0.84
1.03
0.88
0.96
1
0.8
4.3
3.0
3.3
0.7
2.6
3
Performance
6
12
Mth
(%)
3.7
5.6
3.7
3.9
-2.8
3.5
2.0
2.3
-3.4
5.0
-9.9
0.2
7.2
12.5
7.6
7.4
-5.5
7.3
YTD
0.0
3.7
3.7
3.9
0.7
2.4
ADTV
20
Day
(S$m)
FY14
2
2
0
1
0
1
8.2
11.0
5.4
6.7
5.8
7.8
FY15E
FY16E
FY17E
DPU
(S cts)
8.6
11.4
5.2
6.9
5.5
7.9
8.7
11.4
5.4
7.1
6.2
8.1
8.9
11.7
0.0
7.1
6.2
7.1
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 28: SREITs sub-sector valuation – Hospitality (Part 2)
Specified
SREITs
Mkt
Cap*
(S$m)
HOSPITALITY SREITS
Ascott Residence Trust
CDL Hospitality Trusts
Far East Hospitality Trust
OUE Hospitality Trust
Ascendas Hospitality Trust
Total / Wgt avg
1,934
1,765
1,482
1,238
756
7,175
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
1.26
1.80
0.84
0.94
0.68
1.40
1.70
0.80
11.1%
(5.6%)
(4.2%)
JPM
Rating
FY16E
Yield
FY17E
SGS 10Y
Yield
(%)
OW
UW
UW
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
22
FY15E
6.5%
6.1%
6.5%
7.2%
8.5%
6.7%
6.8%
6.3%
6.2%
7.4%
8.1%
6.8%
6.9%
6.3%
6.4%
7.6%
9.1%
7.0%
1.91%
1.91%
1.91%
1.91%
1.91%
1.91%
FY15E
FY17E
Gearing
(%)
FY16E
Yield
Spread
(%)
(%)
(%)
4.6%
4.2%
4.6%
5.3%
6.6%
4.8%
4.9%
4.4%
4.3%
5.5%
6.2%
4.9%
5.0%
4.4%
4.5%
5.7%
7.2%
5.1%
37.6%
31.6%
30.9%
31.7%
35.6%
33.5%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 29: SREITs sub-sector valuation – Healthcare (Part 1)
Specified
SREITs
Mkt
Cap*
(S$m)
HEALTHCARE SREITS
Parkway Life REIT
First REIT
Religare Health Trust
Total / Wgt avg
1,452
978
811
3,240
Share
Price*
29-Jan-15
(S$)
Price
Target
Upside
(S$)
(%)
JPM
Rating
2.40
1.33
1.02
Book
Value
P/B
(S$)
(x)
1.71
1.02
0.89
1.40
1.30
1.14
1.31
1
1.7
4.8
4.0
3.2
3
Performance
6
12
Mth
(%)
1.3
6.9
5.6
4.1
0.8
7.8
10.8
5.4
7.1
26.4
35.5
20.0
YTD
1.7
4.8
3.0
2.9
ADTV
20
Day
(S$m)
FY14
1
1
2
1
12.0
8.1
7.9
9.8
FY15E
FY16E
FY17E
DPU
(S cts)
12.6
8.5
7.6
10.1
12.4
8.8
8.1
10.2
12.3
9.3
8.8
10.5
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 30: SREITs sub-sector valuation – Healthcare (Part 2)
Specified
SREITs
Mkt
Cap*
Share
Price*
29-Jan-15
(S$)
(S$m)
HEALTHCARE SREITS
Parkway Life REIT
First REIT
Religare Health Trust
Total / Wgt avg
1,452
978
811
3,240
Price
Target
Upside
(S$)
(%)
JPM
Rating
FY15E
FY16E
Yield
FY17E
SGS 10Y
Yield
FY15E
FY17E
Gearing
(%)
FY16E
Yield
Spread
(%)
(%)
(%)
3.1%
4.2%
5.8%
4.1%
3.3%
4.5%
5.5%
4.2%
3.3%
4.7%
6.0%
4.4%
35.0%
32.7%
6.7%
27.2%
(%)
2.40
1.33
1.02
5.0%
6.1%
7.7%
6.0%
5.3%
6.4%
7.5%
6.2%
5.2%
6.6%
7.9%
6.3%
1.91%
1.91%
1.91%
1.91%
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 31: SREITs sub-sector valuation – International (Part 1)
Specified
SREITs
INTERNATIONAL SREITS
Ascendas India Trust
CapitaRetail China Trust
Mapletree Greater China Commercial
Trust
Fortune REIT (HK$)
Croesus Retail Trust
Lippo Malls Indonesia Retail Trust
Total / Wgt avg
Mkt
Cap*
(S$m)
Share
Price*
29-Jan-15
(S$)
806
1,429
0.88
1.73
2,754
16,418
481
932
22,819
1.02
8.75
0.94
0.35
Price
Target
Upside
(S$)
(%)
1.80
4.3%
JPM
Rating
OW
Book
Value
P/B
(S$)
(x)
0.60
1.49
1.46
1.16
9.4
6.5
8.1
7.2
4.8
1.5
27.0
29.9
1.06
11.93
0.83
0.41
0.96
0.73
1.13
0.83
0.83
7.4
13.5
2.2
4.4
11.5
9.7
25.5
0.0
-5.3
20.0
11.5
19.6
-7.4
-13.4
15.1
25.2
46.4
7.4
-13.4
38.9
1
3
Performance
6
12
Mth
(%)
ADTV
20
Day
(S$m)
FY14
6.1
6.2
1
1
4.5
9.8
4.8
10.6
5.3
11.1
5.4
11.4
7.4
13.0
1.6
4.4
11.1
4
6
0
1
5
5.9
41.8
7.4
2.8
31.8
6.3
45.1
8.5
3.1
34.3
6.7
46.9
8.6
3.1
35.7
6.7
51.0
7.8
NA
38.6
YTD
FY15E
FY16E
FY17E
DPU
(S cts)
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
23
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 32: SREITs sub-sector valuation – Hospitality (Part 2)
Specified
SREITs
Mkt
Cap*
INTERNATIONAL SREITS
Ascendas India Trust
CapitaRetail China Trust
Mapletree Greater China Commercial
Trust
Fortune REIT (HK$)
Croesus Retail Trust
Lippo Malls Indonesia Retail Trust
Total / Wgt avg
(S$m)
Share
Price*
29-Jan-15
(S$)
806
1,429
0.88
1.73
2,754
16,418
481
932
22,819
1.02
8.75
0.94
0.35
Price
Target
Upside
(S$)
(%)
1.80
4.3%
JPM
Rating
FY15E
FY16E
Yield
FY17E
SGS 10Y
Yield
(%)
OW
FY15E
FY17E
Gearing
(%)
FY16E
Yield
Spread
(%)
(%)
(%)
5.1%
5.7%
5.5%
6.2%
6.1%
6.4%
1.91%
1.91%
3.2%
3.8%
3.6%
4.2%
4.1%
4.5%
22.1%
28.5%
5.8%
4.8%
7.9%
8.1%
5.2%
6.2%
5.2%
9.0%
9.0%
5.6%
6.6%
5.4%
9.1%
9.0%
5.8%
1.91%
1.91%
1.91%
1.91%
1.91%
3.9%
2.9%
6.0%
6.2%
3.3%
4.3%
3.2%
7.1%
7.1%
3.7%
4.7%
3.5%
7.2%
7.1%
3.9%
38.0%
29.2%
51.7%
34.0%
30.7%
Source: J.P. Morgan estimates, Bloomberg, Company data. Note DPU forecast for non-covered companies based on Bloomberg consensus.
Table 33: SREITs trading range (Part 1)
Specified
SREITs
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trusts
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Total / Weighted Average
Mkt
Cap*
Current
Implied
(S$m)
5,990
1,934
5,242
7,305
1,429
1,765
1,482
1,851
3,947
3,229
2,633
4,812
41,620
1.25
0.97
1.06
1.26
1.18
1.13
0.84
1.30
0.97
1.44
1.38
0.92
1.15
1.25
1.02
1.00
1.18
1.21
1.03
0.80
1.00
0.89
1.20
1.28
0.99
1.09
Source: J.P. Morgan estimates, Bloomberg, Company data.
24
P/B
Mean
Mean
ex-GFC
(x)
1.31
1.34
0.88
0.92
0.88
0.91
1.27
1.30
1.27
1.32
1.20
1.25
0.94
0.94
1.10
1.14
0.82
0.86
1.11
1.11
1.23
1.23
0.80
0.83
1.08
1.10
Trough
Peak
Current
Implied
0.60
0.24
0.20
0.47
0.45
0.30
0.79
0.46
0.22
0.89
1.08
0.25
0.47
2.11
1.57
1.68
2.25
3.31
2.54
1.31
1.70
1.63
1.44
1.43
1.30
1.83
5.8%
6.5%
4.6%
5.1%
5.5%
6.1%
6.6%
5.5%
6.2%
4.7%
6.5%
4.9%
5.5%
5.8%
5.7%
4.7%
5.1%
5.7%
6.5%
6.8%
6.1%
6.1%
4.7%
6.6%
4.5%
5.5%
Dividend Yield
Mean
Mean
ex-GFC
(%)
6.6%
6.4%
7.4%
6.8%
5.8%
5.4%
5.2%
5.1%
6.4%
6.0%
6.5%
5.8%
6.4%
6.4%
6.0%
5.6%
6.6%
6.1%
5.4%
5.4%
7.0%
7.0%
7.0%
6.4%
6.2%
5.9%
Trough
Peak
Current
Implied
13.7%
23.7%
17.4%
11.0%
16.2%
23.5%
7.2%
12.9%
17.8%
6.2%
7.9%
22.7%
14.9%
4.2%
3.2%
2.8%
2.9%
2.1%
2.9%
5.0%
3.4%
2.3%
4.3%
5.9%
3.8%
3.5%
6.3%
6.7%
4.7%
5.3%
6.4%
6.3%
6.2%
5.8%
5.7%
4.7%
6.9%
5.4%
5.7%
6.1%
6.1%
4.8%
5.2%
6.1%
6.7%
6.5%
6.3%
5.7%
5.2%
6.7%
4.9%
5.6%
Forward Yield
Mean
Mean
ex-GFC
(%)
6.9%
6.8%
7.5%
7.0%
5.9%
5.6%
5.4%
5.4%
6.8%
6.3%
6.7%
6.2%
6.0%
6.0%
6.4%
6.1%
6.5%
6.1%
5.9%
5.9%
7.5%
7.5%
7.2%
6.6%
6.4%
6.2%
Trough
Peak
12.0%
20.4%
15.9%
8.8%
17.7%
19.5%
7.0%
13.6%
15.7%
7.4%
8.6%
22.3%
13.7%
4.6%
3.8%
2.9%
3.2%
2.1%
3.7%
4.6%
3.7%
2.9%
4.6%
6.3%
4.6%
3.9%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 34: SREITs trading range (Part 2)
Specified
SREITs
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trusts
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Total / Weighted Average
Mkt
Cap*
(S$m)
5,990
1,934
5,242
7,305
1,429
1,765
1,482
1,851
3,947
3,229
2,633
4,812
41,620
10Y SGS
Yield
(%)
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
Current
Implied
3.9%
4.6%
2.7%
3.2%
3.6%
4.2%
4.7%
3.6%
4.3%
2.8%
4.6%
3.0%
3.6%
3.9%
3.8%
2.8%
3.2%
3.8%
4.6%
4.9%
4.2%
4.1%
2.8%
4.7%
2.6%
3.6%
Dividend Yield Spread
Mean
Mean
4.7%
5.5%
3.8%
3.3%
4.5%
4.6%
4.5%
4.1%
4.7%
3.5%
5.1%
5.1%
4.3%
4.5%
4.9%
3.5%
3.2%
4.1%
3.9%
4.5%
3.7%
4.2%
3.5%
5.1%
4.5%
4.0%
Trough
Peak
Current
Implied
11.8%
21.8%
15.5%
9.0%
14.3%
21.6%
5.3%
11.0%
15.9%
4.3%
6.0%
20.8%
13.0%
2.3%
1.3%
0.9%
1.0%
0.2%
1.0%
3.1%
1.5%
0.4%
2.4%
4.0%
1.9%
1.6%
4.4%
4.8%
2.8%
3.4%
4.4%
4.4%
4.3%
3.9%
3.8%
2.8%
5.0%
3.5%
3.8%
4.2%
4.2%
2.9%
3.3%
4.2%
4.8%
4.6%
4.4%
3.8%
3.2%
4.8%
3.0%
3.7%
Forward Yield Spread
Mean
Mean
5.0%
5.6%
4.0%
3.5%
4.9%
4.7%
4.1%
4.5%
4.6%
4.0%
5.6%
5.3%
4.5%
4.9%
5.1%
3.7%
3.5%
4.4%
4.3%
4.1%
4.2%
4.2%
4.0%
5.6%
4.7%
4.3%
Trough
Peak
10.1%
18.5%
13.9%
6.9%
15.8%
17.5%
5.0%
11.6%
13.8%
5.5%
6.7%
20.4%
11.8%
2.7%
1.9%
1.0%
1.3%
0.2%
1.8%
2.7%
1.8%
0.9%
2.7%
4.4%
2.6%
2.0%
Source: J.P. Morgan estimates, Bloomberg, Company data.
25
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Table 35: S-REITs Credit profile
Specified
CapitaMall Trust
Ascendas REIT
CapitaCommercial Trust
Suntec REIT
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Ascott Residence Trust
Frasers Centrepoint Trust
CDL Hospitality Trusts
Far East Hospitality Trust
CapitaRetail China Trust
Covered Stocks
Share price
30-Jan-15
(S$)
2.11
2.46
1.78
1.90
1.25
1.53
1.54
1.27
2.06
1.81
0.85
1.72
Current
Mkt Cap
(S$ MM)
7,305.2
5,918.0
5,241.8
4,749.8
3,947.2
3,208.3
2,668.3
1,949.5
1,887.3
1,772.9
1,502.4
1,420.2
41,570.9
Target
Price
2.15
2.55
1.75
2.10
1.25
1.40
1.55
1.40
1.85
1.70
0.80
1.80
Current
gearing
(%)
33.8%
33.6%
29.3%
34.7%
43.3%
37.9%
32.8%
38.5%
29.3%
31.7%
31.4%
28.7%
34.1%
Interest
coverage
(x)
4.5
6.1
7.2
4.3
5.0
5.5
8.1
4.3
6.3
8.6
NA
6.2
5.5
Avg. debt
duration
(year)
4.7
3.9
3.9
3.6
3.6
3.0
4.0
4.4
2.3
2.8
2.5
2.8
3.7
Interest
cost
(%)
3.5%
2.7%
2.3%
2.4%
2.2%
2.2%
2.2%
3.0%
2.7%
2.3%
2.2%
3.3%
2.6%
Fixed
borrowings
(%)
100%
66%
83%
60%
65%
74%
86%
80%
87%
41%
60%
73%
75.8%
BVPS/
NAV
(S$)
1.81
2.03
1.75
2.12
1.41
1.17
1.21
1.37
1.85
1.65
0.98
1.63
WALE
(years)
NA
3.9
8.1
3.0
6.1
2.0
2.6
NA
1.7
NA
NA
9.0
3.2
Occupancy
(%)
98.8%
86.8%
96.4%
100.0%
99.3%
99.2%
90.8%
NA
96.4%
90.0%
87.1%
95.9%
90.9%
Source: J.P. Morgan estimates, Bloomberg, Company data.
Table 36: S-REITs Debt expiry profile
Specified
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trust
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Covered Stocks
Share price
30-Jan-15
(S$)
2.46
1.27
1.78
2.11
1.72
1.81
0.85
2.06
1.25
1.53
1.54
1.90
Current
Mkt cap
(S$ MM)
5,918
1,949
5,242
7,305
1,420
1,773
1,502
1,887
3,947
3,208
2,668
4,750
41,571
Total debt
(S$ MM)
2,664
1,560
2,239
3,428
673
777
798
739
3,545
1,551
1,086
2,646
21,706
CY2015
(S$ MM)
215
249
270
577
123
318
316
95
300
0
0
0
2,463
CY2016
(S$ MM)
350
263
946
412
105
84
0
264
403
289
126
370
3,611
CY2017
(S$ MM)
675
141
175
250
131
0
250
190
733
354
139
200
3,237
CY2018
(S$ MM)
448
222
200
505
139
219
132
60
715
230
109
966
3,945
CY2019
(S$ MM)
457
128
248
158
75
156
100
60
1,045
0
185
800
3,412
CY2020
(S$ MM)
0
149
275
226
100
0
0
70
350
448
289
310
2,216
CY2021
(S$ MM)
62
268
125
412
0
0
0
0
0
160
93
0
1,120
> CY2021
(S$ MM)
457
141
0
888
0
0
0
0
0
70
145
0
1,701
Total debt
(S$ MM)
2,664
1,560
2,239
3,428
673
777
798
739
3,545
1,551
1,086
2,646
21,706
CY2015
(S$ MM)
8%
16%
12%
17%
18%
41%
40%
13%
8%
0%
0%
0%
11%
CY2016
(S$ MM)
13%
17%
42%
12%
16%
11%
0%
36%
11%
19%
12%
14%
17%
CY2017
(S$ MM)
25%
9%
8%
7%
19%
0%
31%
26%
21%
23%
13%
8%
15%
CY2018
(S$ MM)
17%
14%
9%
15%
21%
28%
17%
8%
20%
15%
10%
37%
18%
CY2019
(S$ MM)
17%
8%
11%
5%
11%
20%
13%
8%
29%
0%
17%
30%
16%
CY2020
(S$ MM)
0%
10%
12%
7%
15%
0%
0%
9%
10%
29%
27%
12%
10%
CY2021
(S$ MM)
2%
17%
6%
12%
0%
0%
0%
0%
0%
10%
9%
0%
5%
> CY2021
(S$ MM)
17%
9%
0%
26%
0%
0%
0%
0%
0%
5%
13%
0%
8%
Source: J.P. Morgan estimates, Bloomberg, Company data.
Table 37: S-REITs Debt expiry composition
Specified
A-REIT
Ascott Residence Trust
CapitaCommercial Trust
CapitaMall Trust
CapitaRetail China Trust
CDL Hospitality Trust
Far East Hospitality Trust
Frasers Centrepoint Trust
Keppel REIT
Mapletree Commercial Trust
Mapletree Industrial Trust
Suntec REIT
Covered Stocks
Share price
30-Jan-15
(S$)
2.46
1.27
1.78
2.11
1.72
1.81
0.85
2.06
1.25
1.53
1.54
1.90
Current
Mkt cap
(S$ MM)
5,918
1,949
5,242
7,305
1,420
1,773
1,502
1,887
3,947
3,208
2,668
4,750
41,571
Source: J.P. Morgan estimates, Bloomberg, Company data.
26
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
A-REIT
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
2,406
5,918
4,371
2.46
30 Jan 15
8.22
19.51
14.4
3419.05
1.35
31-Dec-15
Ascendas Real Estate Investment Trust (Reuters: AEMN.SI, Bloomberg: AREIT SP)
S$ in mn, year-end Mar
FY13A
FY14A
FY15E
FY16E
FY17E
Revenue (S$ mn)
576
614
655
681
695
Net property income (S$ mn)
409
436
463
481
491
Distributable Profit (S$ mn)
306
342
361
378
388
EPU (S$)
0.12
0.14
0.15
0.15
0.16
DPU (S$)
0.14
0.14
0.15
0.16
0.16
BVPU (S$)
1.94
2.02
2.01
2.01
2.01
Revenue growth (%)
14.4%
6.6%
6.7%
4.0%
2.0%
DPU growth (%)
1.3%
3.6%
5.4%
4.6%
2.4%
P/E (x)
20.7
17.6
16.8
16.1
15.7
P/BV (x)
1.3
1.2
1.2
1.2
1.2
Dividend Yield
5.6%
5.8%
6.1%
6.4%
6.5%
Gearing
28.4%
29.6%
32.9%
32.9%
32.9%
RNAV/Share
2.49
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
A-REIT (Overweight; Price Target: S$2.55)
Investment Thesis
A-REIT is one of the most defensive REITs, with a 34% gearing ratio as of Dec-14, a
stable lease expiry profile and reasonable in-place rents. The REIT’s focus on
internal portfolio growth will drive a three-year DPU CAGR of 4%, on our estimates.
Valuation
Our Dec-15 price target of S$2.55 is based on the average of our DDM and RNAV
estimates, with DDM using a 7.6% discount rate and long-term growth rate of 1.0%.
RNAV is estimated at S$299psf.
Risks to Rating and Price Target
Key upside risks include better-than-expected execution of its China expansion and
improved occupancy rates, especially for business parks.
Key downside risks include an inability to execute on ongoing development projects,
rent reduction by competing industrial landlords in order to fill up space, and SUAMTB conversions having trouble filling up space.
27
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
A-REIT: Summary of Financials
Income Statement
S$ in millions, year end Mar
FY14
FY15E
Revenues
614
655
% change Y/Y
6.6%
6.7%
EBIT
395
421
% change Y/Y
8.6%
6.5%
EBIT Margin (%)
64.4%
64.3%
Net Interest
(36)
(68)
Earnings before tax
505
353
% change Y/Y
49.8%
(30.1%)
Tax
(23)
(2)
as % of EBT
4.6%
0.5%
Net income (reported)
336
352
% change Y/Y
27.2%
4.6%
Core net profit
336
352
% change Y/Y
27.2%
4.6%
Shares outstanding
2,403
2,406
EPS (reported) (S$)
0.14
0.15
% change Y/Y
17.9%
4.5%
DPU (reported) (S$)
0.14
0.15
% change Y/Y
3.6%
5.4%
Balance sheet
S$ in millions, year end Mar
FY14
FY15E
Cash and cash equivalents
66
59
Accounts receivable
66
52
Inventories
Others
13
13
Current assets
144
124
LT investments
6,923
7,304
Net fixed assets
0
1
Total Assets
7,357
7,719
Liabilities
ST Loans
946
946
Payables
127
131
Others
33
33
Total current liabilities
1,107
1,110
Long-term debt
1,231
1,591
Other liabilities
171
171
Total Liabilities
2,509
2,872
Shareholders' equity
4,849
4,846
BVPS
2.02
2.01
Source: Company reports and J.P. Morgan estimates.
28
FY16E
681
4.0%
439
4.3%
64.5%
(68)
371
5.0%
(2)
0.6%
369
4.8%
369
4.8%
2,409
0.15
4.7%
0.16
4.6%
FY17E
695
2.0%
449
2.2%
64.6%
(68)
380
2.6%
(2)
0.6%
378
2.6%
378
2.6%
2,412
0.16
2.5%
0.16
2.4%
FY16E
56
54
13
124
7,307
1
7,722
FY17E
56
56
13
124
7,307
1
7,722
946
136
33
1,115
1,591
171
2,878
4,844
2.01
946
139
33
1,118
1,591
171
2,880
4,842
2.01
Cash flow statement
S$ in millions, year end Mar
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
395
1
5
66
407
FY15E
421
1
17
75
444
FY16E
439
1
3
75
448
FY17E
449
1
2
75
456
Capex
Disposal/(purchase)
Net Interest
Free cash flow
(0)
441
(1)
511
(1)
515
(1)
523
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
0
170
(70)
(326)
20
66
0.14
0
360
(71)
(361)
66
59
0.15
0
0
(71)
(378)
59
56
0.16
0
0
(71)
(388)
56
56
0.16
Ratio Analysis
S$ in millions, year end Mar
EBIT Margin
Net margin
FY14
64.4%
54.8%
FY15E
64.3%
53.7%
FY16E
64.5%
54.1%
FY17E
64.6%
54.5%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
6.6%
27.2%
17.9%
11.0
30.3%
43.5%
0.1
1.5
7.1%
5.5%
6.7%
4.6%
4.5%
6.2
33.8%
51.1%
0.1
1.6
7.3%
5.8%
4.0%
4.8%
4.7%
6.5
33.9%
51.2%
0.1
1.6
7.6%
5.9%
2.0%
2.6%
2.5%
6.6
33.9%
51.2%
0.1
1.6
7.8%
6.0%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Ascott Residence Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
1,535
1,942
1,434
1.27
30 Jan 15
1.09
1.38
1.0
3419.05
1.35
31-Dec-15
Ascott Residence Trust (Reuters: ASRT.SI, Bloomberg: ART SP)
S$ in mn, year-end Dec
FY12A
FY13A
FY14A
Revenue (S$ mn)
304
317
357
Net property income (S$ mn)
159
161
180
Distributable Profit (S$ mn)
100
115
126
EPU (S$)
0.06
0.05
0.05
DPU (S$)
0.09
0.08
0.08
BVPU (S$)
1.44
1.44
1.44
Revenue growth (%)
5.3%
4.2%
12.8%
DPU growth (%)
2.7%
(4.1%)
(2.4%)
P/E (x)
21.6
26.0
26.1
P/BV (x)
0.9
0.9
0.9
Dividend Yield
6.9%
6.6%
6.5%
Gearing
39.0%
33.4%
37.6%
RNAV/Share
-
FY15E
407
209
133
0.07
0.09
1.42
14.0%
4.6%
18.1
0.9
6.8%
37.7%
1.42
FY16E
413
213
135
0.07
0.09
1.41
1.5%
1.1%
17.9
0.9
6.9%
38.0%
-
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Ascott Residence Trust (Overweight; Price Target: S$1.40)
Investment Thesis
ART has a diversified serviced residence portfolio across Asia and Europe/UK, with
fixed lease structures in volatile Europe regions and variable lease structures in
improving Asia markets. Inorganic growth has primarily been through sponsorrelated acquisitions from Ascott Group. However, the trust's portfolio remains highly
sensitive toward global economic growth trends.
Valuation
Our Dec-15 price target of S$1.40 is based on the average of our DDM and RNAV
estimates, with DDM utilizing an 8.7% discount rate and long-term growth rate of
2.0%. Tenure adjusted RNAV is estimated @ S$408,081 per key.
Risks to Rating and Price Target
Key upside/downside risks stem from any volatility in global GDP growth, which
would magnify RevPAU forecast errors, given high operating leverage in the
business. Additional downside risk would be on further exchange rate fluctuations.
29
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Ascott Residence Trust: Summary of Financials
Income Statement
S$ in millions, year end Dec
FY14
Revenues
357
% change Y/Y
12.8%
EBIT
160
% change Y/Y
8.1%
EBIT Margin (%)
44.9%
Net Interest
(41)
Earnings before tax
167
% change Y/Y
(33.5%)
Tax
(37)
as % of EBT
22.1%
Net income (reported)
74
% change Y/Y
18.3%
Core net profit
74
% change Y/Y
18.3%
Shares outstanding
1,535
EPS (reported) (S$)
0.05
% change Y/Y
(0.1%)
DPU (reported) (S$)
0.08
% change Y/Y
(2.4%)
Balance sheet
S$ in millions, year end Dec
FY14
Cash and cash equivalents
193
Accounts receivable
36
Inventories
0
Others
88
Current assets
317
LT investments
3,724
Net fixed assets
54
Total Assets
4,122
Liabilities
ST Loans
249
Payables
119
Others
8
Total current liabilities
376
Long-term debt
1,302
Other liabilities
91
Total Liabilities
1,918
Shareholders' equity
2,106
BVPS
1.44
Source: Company reports and J.P. Morgan estimates.
30
FY15E
407
14.0%
184
14.6%
45.1%
(48)
135
(19.1%)
(20)
15.0%
108
45.3%
108
45.3%
1,548
0.07
44.0%
0.09
4.6%
FY16E
413
1.5%
187
1.6%
45.2%
(48)
138
2.2%
(21)
15.0%
110
2.2%
110
2.2%
1,561
0.07
1.3%
0.09
1.1%
FY17E
422
2.2%
191
2.4%
45.2%
(48)
143
3.2%
(21)
15.0%
114
3.3%
114
3.3%
1,575
0.07
2.4%
0.09
2.2%
FY15E
207
41
0
88
336
3,754
48
4,164
FY16E
203
41
0
88
332
3,784
41
4,184
FY17E
200
42
0
88
330
3,814
34
4,205
249
143
8
400
1,322
91
1,962
2,097
1.42
249
145
8
402
1,342
91
1,984
2,088
1.41
249
148
8
405
1,362
91
2,007
2,078
1.40
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
160
16
(26)
88
153
FY15E
184
16
20
71
215
FY16E
187
17
1
72
200
FY17E
191
17
2
72
205
Capex
Disposal/(purchase)
Net Interest
Free cash flow
(10)
0
(40)
175
(10)
0
(48)
246
(10)
0
(48)
231
(10)
0
(48)
236
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
148
315
(46)
(120)
205
193
0.08
0
20
(51)
(133)
193
207
0.09
0
20
(51)
(135)
207
203
0.09
0
20
(51)
(140)
203
200
0.09
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
FY14
44.9%
20.8%
FY15E
45.1%
26.5%
FY16E
45.2%
26.6%
FY17E
45.2%
26.9%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
12.8%
18.3%
(0.1%)
4.3
38.1%
61.6%
0.1
1.8
3.5%
3.6%
14.0%
45.3%
44.0%
4.1
38.3%
62.0%
0.1
2.0
5.1%
4.3%
1.5%
2.2%
1.3%
4.2
38.7%
63.1%
0.1
2.0
5.3%
4.3%
2.2%
3.3%
2.4%
4.3
39.1%
64.2%
0.1
2.0
5.5%
4.4%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
CapitaCommercial Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
2,945
5,212
3,850
1.77
30 Jan 15
7.62
13.30
9.8
3419.05
1.35
31-Dec-15
CapitaCommercial Trust (Reuters: CACT.SI, Bloomberg: CCT SP)
S$ in mn, year-end Dec
FY12A
FY13A
FY14A
Revenue (S$ mn)
376
251
263
Net property income (S$ mn)
296
197
205
Distributable Profit (S$ mn)
229
234
249
EPU (S$)
0.07
0.07
0.08
DPU (S$)
0.08
0.08
0.08
BVPU (S$)
1.66
1.71
1.75
Revenue growth (%)
4.0%
(33.1%)
4.4%
DPU growth (%)
7.0%
1.2%
4.0%
P/E (x)
25.0
23.8
22.6
P/BV (x)
1.1
1.0
1.0
Dividend Yield
4.5%
4.6%
4.8%
Gearing
29.6%
13.9%
16.4%
RNAV/Share
-
FY15E
257
207
253
0.08
0.09
1.74
(2.3%)
1.3%
22.7
1.0
4.8%
17.1%
1.81
FY16E
252
203
273
0.08
0.09
1.73
(1.8%)
7.8%
21.1
1.0
5.2%
17.8%
-
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
CapitaCommercial Trust (Neutral; Price Target: S$1.75)
Investment Thesis
CCT is a pure-play on the broader office market. Sector fundamentals are improving,
evidenced by rental growth trends and a lower-than-average supply pipeline in the
next two years. Earnings have also troughed, in our view, post One George Street's
income-support expiry, together with 9% of leases due for renewal/rent review this
year.
Valuation
Our Dec-15 price target of S$1.75 is based on the average of our DDM and RNAV
estimates, with DDM using a 7.6% discount rate and LT growth rate of 2.0%. Tenure
adjusted RNAV is estimated @ S$2,090 psf.
Risks to Rating and Price Target
Key downside risks include a worse-than-expected rental reversion and
management’s inability to back-fill space vacated by certain clients and remaining
vacant space in CapitaGreen.
Key upside risks include a rise in the pre-commitment rate of CapitaGreen from the
existing 69%, better-than-expected office rent reversions, and forward-leasing of
expiring office space in 2015-17.
31
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
CapitaCommercial Trust: Summary of Financials
Income Statement
S$ in millions, year end Dec
FY14
FY15E
Revenues
263
257
% change Y/Y
4.4%
(2.3%)
EBIT
194
195
% change Y/Y
4.8%
0.7%
EBIT Margin (%)
73.9%
76.2%
Net Interest
(33)
(28)
Earnings before tax
449
230
% change Y/Y
19.8%
(48.8%)
Tax
(0)
0
as % of EBT
0.0%
0.0%
Net income (reported)
229
230
% change Y/Y
7.5%
0.6%
Core net profit
229
230
% change Y/Y
7.5%
0.6%
Shares outstanding
2,945
2,952
EPS (reported) (S$)
0.08
0.08
% change Y/Y
5.7%
(0.6%)
DPU (reported) (S$)
0.08
0.09
% change Y/Y
4.0%
1.3%
Balance sheet
S$ in millions, year end Dec
FY14
FY15E
Cash and cash equivalents
101
165
Accounts receivable
38
13
Inventories
0
0
Others
0
0
Current assets
139
178
LT investments
4,882
4,892
Net fixed assets
1
1
Total Assets
6,521
6,549
Liabilities
ST Loans
270
270
Payables
47
51
Others
11
11
Total current liabilities
329
333
Long-term debt
801
851
Other liabilities
238
238
Total Liabilities
1,368
1,422
Shareholders' equity
5,153
5,128
BVPS
1.75
1.74
Source: Company reports and J.P. Morgan estimates.
32
FY16E
252
(1.8%)
196
0.1%
77.6%
(28)
247
7.6%
0
0.0%
247
7.6%
247
7.6%
2,959
0.08
7.4%
0.09
7.8%
FY17E
253
0.5%
197
0.5%
77.6%
(28)
250
0.9%
0
0.0%
250
0.9%
250
0.9%
2,965
0.08
0.6%
0.09
0.6%
FY16E
195
13
0
0
208
4,902
5
6,576
FY17E
226
13
0
0
239
4,912
9
6,603
270
50
11
332
901
238
1,471
5,105
1.73
270
51
11
332
951
238
1,521
5,082
1.71
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
194
4
(5)
(39)
189
FY15E
195
5
29
(44)
221
FY16E
196
1
(1)
(62)
186
FY17E
197
1
0
(64)
188
Capex
Disposal/(purchase)
Net Interest
Free cash flow
(0)
0
221
(5)
0
243
(5)
0
209
(5)
0
210
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
(170)
220
(31)
(243)
84
101
0.08
0
50
(33)
(253)
101
165
0.09
0
50
(33)
(273)
165
195
0.09
0
50
(33)
(276)
195
226
0.09
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
FY14
73.9%
87.1%
FY15E
76.2%
89.6%
FY16E
77.6%
98.2%
FY17E
77.6%
98.6%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
4.4%
7.5%
5.7%
6.1
15.8%
18.8%
0.0
1.3
4.5%
3.2%
(2.3%)
0.6%
(0.6%)
7.3
15.7%
18.6%
0.0
1.3
4.5%
3.1%
(1.8%)
7.6%
7.4%
7.1
16.0%
19.1%
0.0
1.3
4.8%
3.1%
0.5%
0.9%
0.6%
7.2
16.4%
19.6%
0.0
1.3
4.9%
3.1%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
CapitaMall Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
3,462
7,236
5,345
2.09
30 Jan 15
9.21
18.95
14.0
3419.05
1.35
31-Dec-15
CapitaMall Trust (Reuters: CMLT.SI, Bloomberg: CT SP)
S$ in mn, year-end Dec
FY12A
FY13A
FY14A
Revenue (S$ mn)
662
638
659
Net property income (S$ mn)
445
439
448
Distributable Profit (S$ mn)
317
356
375
EPU (S$)
0.09
0.10
0.11
DPU (S$)
0.09
0.10
0.11
BVPU (S$)
1.65
1.74
1.81
Revenue growth (%)
4.9%
(3.6%)
3.3%
DPU growth (%)
1.0%
8.6%
5.6%
P/E (x)
24.3
19.9
19.3
P/BV (x)
1.3
1.2
1.2
Dividend Yield
4.5%
4.9%
5.2%
Gearing
36.1%
30.4%
32.1%
RNAV/Share
-
FY15E
699
483
392
0.12
0.11
1.82
6.1%
4.3%
17.8
1.2
5.4%
32.6%
2.17
FY16E
724
501
406
0.12
0.12
1.82
3.6%
3.7%
17.0
1.1
5.6%
32.8%
-
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
CapitaMall Trust (Neutral; Price Target: S$2.15)
Investment Thesis
CT is a pure-play on domestic retail trends, with 41% of the REIT's portfolio being
suburban retail malls and another 41% allocated to downtown retail. We think the
outlook for the sector remains stable with five-year averaged rental reversions at
6+%.
Valuation
Our Dec-15 price target of S$2.15 is based on the average of our DDM and RNAV
estimates, with DDM @ 6.8% discount rate and projected LT growth rate of 1.0%.
Tenure adjusted RNAV is estimated @ S$1,778 psf (excl. hotels).
Risks to Rating and Price Target
Key risks include: 1) worse-than-expected rental reversions; 2) inability to make
further investments and deploy surplus capital; and 3) prolonged challenges in retail
sector, leading to tenant consolidation, declining sales turnover, rising business costs
and slowing shopper traffic.
33
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
CapitaMall Trust: Summary of Financials
Income Statement
S$ in millions, year end Dec
FY14
FY15E
Revenues
659
699
% change Y/Y
3.3%
6.1%
EBIT
402
442
% change Y/Y
1.5%
9.8%
EBIT Margin (%)
61.0%
63.2%
Net Interest
(99)
(107)
Earnings before tax
619
406
% change Y/Y
7.7%
(34.4%)
Tax
(0)
0
as % of EBT
0.0%
0.0%
Net income (reported)
375
406
% change Y/Y
3.5%
8.3%
Core net profit
375
406
% change Y/Y
3.5%
8.3%
Shares outstanding
3,462
3,465
EPS (reported) (S$)
0.11
0.12
% change Y/Y
3.4%
8.2%
DPU (reported) (S$)
0.11
0.11
% change Y/Y
5.6%
4.3%
Balance sheet
S$ in millions, year end Dec
FY14
FY15E
Cash and cash equivalents
1,130
1,160
Accounts receivable
25
14
Inventories
0
0
Others
0
0
Current assets
1,155
1,174
LT investments
7,510
7,510
Net fixed assets
2
6
Total Assets
9,858
9,880
Liabilities
ST Loans
762
762
Payables
217
175
Others
36
36
Total current liabilities
1,016
973
Long-term debt
2,407
2,457
Other liabilities
153
153
Total Liabilities
3,576
3,583
Shareholders' equity
6,282
6,297
BVPS
1.81
1.82
Source: Company reports and J.P. Morgan estimates.
34
FY16E
724
3.6%
458
3.8%
63.3%
(107)
426
4.8%
0
0.0%
426
4.8%
426
4.8%
3,468
0.12
4.7%
0.12
3.7%
FY17E
742
2.4%
470
2.5%
63.4%
(107)
438
3.0%
0
0.0%
438
3.0%
438
3.0%
3,471
0.13
2.9%
0.12
2.9%
FY16E
1,233
14
0
0
1,248
7,510
9
9,956
FY17E
1,311
15
0
2
1,328
7,510
13
10,037
762
181
36
979
2,507
153
3,639
6,316
1.82
762
185
36
984
2,557
154
3,695
6,343
1.83
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
402
1
6
27
409
FY15E
442
2
(32)
35
411
FY16E
458
2
6
33
466
FY17E
470
2
7
33
480
(1)
(65)
507
(5)
0
514
(5)
0
568
(5)
0
582
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
0
320
(110)
(370)
830
1,130
0.11
0
50
(111)
(392)
1,130
1,160
0.11
0
50
(111)
(406)
1,160
1,233
0.12
0
50
(110)
(419)
1,233
1,311
0.12
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
FY14
61.0%
56.9%
FY15E
63.2%
58.1%
FY16E
63.3%
58.8%
FY17E
63.4%
59.1%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
3.3%
3.5%
3.4%
4.1
24.5%
32.5%
0.1
1.6
6.1%
4.4%
6.1%
8.3%
8.2%
4.1
24.6%
32.7%
0.1
1.6
6.5%
4.7%
3.6%
4.8%
4.7%
4.3
24.4%
32.2%
0.1
1.6
6.7%
4.8%
2.4%
3.0%
2.9%
4.4
24.1%
31.7%
0.1
1.6
6.9%
4.9%
Capex
Net acquisitions
Net Interest
Free cash flow
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
CapitaRetail China Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
828
1,420
1,049
1.72
30 Jan 15
0.88
1.42
1.0
3419.05
1.35
31-Dec-15
CapitaRetail China Trust (Reuters: CRCT.SI, Bloomberg: CRCT SP)
S$ in mn, year-end Dec
FY11A
FY12A
FY13A
Revenue (S$ mn)
132
153
160
Net property income (S$ mn)
86
100
103
Distributable Profit (S$ mn)
57
67
70
EPU (S$)
0.08
0.08
0.08
DPU (S$)
0.09
0.10
0.09
BVPU (S$)
1.33
1.31
1.48
Revenue growth (%)
10.8%
15.7%
4.9%
DPU growth (%)
4.1%
9.7%
(5.5%)
P/E (x)
22.7
21.8
22.4
P/BV (x)
1.3
1.3
1.2
Dividend Yield
5.1%
5.6%
5.3%
Gearing
28.2%
28.2%
32.6%
RNAV/Share
-
FY14A
203
132
81
0.08
0.10
1.63
27.0%
8.9%
20.5
1.1
5.7%
28.5%
FY15E
214
146
88
0.10
0.11
1.62
5.2%
8.1%
17.3
1.1
6.2%
28.7%
1.72
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
CapitaRetail China Trust (Overweight; Price Target: S$1.80)
Investment Thesis
CRCT is a pure-play on the China retail market. The sector outlook remains stable
given the portfolio's focus on non-discretionary retail malls, with five-year averaged
rental reversions stable at 9%. Asset injections via the sponsor pipeline also remain
another key catalyst for the stock.
Valuation
Our Dec-15 price target of S$1.80 is based on the average of our DDM and RNAV
estimates, with DDM utilising a 9.8% discount rate and LT growth rate of 3.0%.
Tenure adjusted RNAV is estimated @ RMB16,794 psm.
Risks to Rating and Price Target
Key upside risks to our rating and price target include management's ability to grow
the portfolio and better-than-expected operating fundamentals.
Key downside risks mainly stem from continued growth in the e-commerce space,
leading to more consumers heading offline.Worse-than-expected tenant sales growth
and worse-than-expected retail rent reversions also add to downside risks.
35
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
CapitaRetail China Trust: Summary of Financials
Income Statement
S$ in millions, year end Dec
FY14
FY15E
Revenues
203
214
% change Y/Y
27.0%
5.2%
EBIT
118
133
% change Y/Y
27.0%
12.3%
EBIT Margin (%)
58.2%
62.2%
Net Interest
(21)
(21)
Earnings before tax
203
112
% change Y/Y
10.3%
(44.8%)
Tax
(57)
(28)
as % of EBT
28.1%
25.0%
Net income (reported)
68
83
% change Y/Y
17.3%
21.0%
Core net profit
68
83
% change Y/Y
17.3%
21.0%
Shares outstanding
829
833
EPS (reported) (S$)
0.08
0.10
% change Y/Y
8.9%
19.0%
DPU (reported) (S$)
0.10
0.11
% change Y/Y
8.9%
8.1%
Balance sheet
S$ in millions, year end Dec
FY14
FY15E
Cash and cash equivalents
87
97
Accounts receivable
11
11
Inventories
Others
0
0
Current assets
98
108
LT investments
2,251
2,256
Net fixed assets
8
7
Total Assets
2,358
2,372
Liabilities
ST Loans
123
123
Payables
51
53
Others
3
3
Total current liabilities
177
179
Long-term debt
549
559
Other liabilities
255
255
Total Liabilities
980
993
Shareholders' equity
1,350
1,350
BVPS
1.63
1.62
Source: Company reports and J.P. Morgan estimates.
36
FY16E
221
3.4%
138
4.0%
62.6%
(21)
118
4.8%
(29)
25.0%
87
4.9%
87
4.9%
836
0.10
4.4%
0.11
4.3%
FY17E
226
2.4%
142
2.8%
62.8%
(21)
122
3.3%
(30)
25.0%
89
3.3%
89
3.3%
840
0.11
2.9%
0.11
2.8%
FY16E
107
11
0
118
2,261
6
2,386
FY17E
115
11
0
127
2,266
5
2,399
123
55
3
181
569
255
1,004
1,350
1.61
123
57
3
182
579
255
1,016
1,350
1.61
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
118
3
2
38
111
FY15E
133
2
3
28
116
FY16E
138
2
1
28
118
FY17E
142
2
1
29
121
Capex
Disposal/(purchase)
Net Interest
Free cash flow
(3)
0
1
124
(1)
0
1
130
(1)
0
1
133
(1)
0
1
135
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
0
(44)
(24)
(49)
105
87
0.10
0
10
(22)
(88)
87
97
0.11
0
10
(22)
(93)
97
107
0.11
0
10
(22)
(96)
107
115
0.11
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
FY14
58.2%
33.6%
FY15E
62.2%
38.6%
FY16E
62.6%
39.1%
FY17E
62.8%
39.5%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
27.0%
17.3%
8.9%
5.8
29.8%
42.5%
0.1
1.8
5.4%
4.3%
5.2%
21.0%
19.0%
6.6
29.8%
42.4%
0.1
1.8
6.1%
4.9%
3.4%
4.9%
4.4%
6.8
29.8%
42.4%
0.1
1.8
6.4%
5.1%
2.4%
3.3%
2.9%
7.0
29.8%
42.4%
0.1
1.8
6.6%
5.2%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
CDL Hospitality Trusts
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
981
1,765
1,304
1.80
30 Jan 15
1.19
2.07
1.5
3419.05
1.35
31-Dec-15
CDL Hospitality Trusts (Reuters: CDLT.SI, Bloomberg: CDREIT SP)
S$ in mn, year-end Dec
FY12A
FY13A
FY14A
Revenue (S$ mn)
150
149
167
Net property income (S$ mn)
139
137
141
Distributable Profit (S$ mn)
109
107
108
EPU (S$)
0.11
0.11
0.11
DPU (S$)
0.11
0.11
0.11
BVPU (S$)
1.61
1.63
1.65
Revenue growth (%)
6.0%
(0.5%)
12.1%
DPU growth (%)
2.4%
(3.1%)
0.1%
P/E (x)
16.2
16.9
16.8
P/BV (x)
1.1
1.1
1.1
Dividend Yield
6.3%
6.1%
6.1%
Gearing
24.8%
29.6%
31.6%
RNAV/Share
-
FY15E
164
148
112
0.11
0.11
1.64
(1.6%)
3.4%
16.2
1.1
6.3%
32.3%
1.78
FY16E
166
149
114
0.11
0.11
1.64
1.0%
0.3%
16.2
1.1
6.3%
32.7%
-
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
CDL Hospitality Trusts (Underweight; Price Target: S$1.70)
Investment Thesis
CDREIT is a hospitality REIT with 74% of portfolio exposure in Singapore hotels.
Sector headwinds continue to persist arising from flat demand growth and continued
supply in the mid/mass segments. Sector-wide occupied room nights in 2013 were
also down 3% Y/Y. Having said that, we note that year-on-year RevPAR declines are
expected to stabilize due to low base effects.
Valuation
Our Dec-15 price target of S$1.70 is based on the average of our DDM and RNAV
estimates, with DDM using a 9.2% discount rate and LT growth rate of 1.5%. Tenure
adjusted RNAV is estimated @ S$504,856 per key.
Risks to Rating and Price Target
Key upside risks stem from better-than-expected visitor arrivals and therefore room
rate growth, improvement in global macroeconomic environment, which leads to
higher corporate budgets as well as an unexpected increase in the dividend payout
ratio. We also highlight the high sensitivity to any forecast errors in RevPAR and
business cyclicality given the high operating leverage. Currency fluctuation also adds
on to downside risk.
37
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
CDL Hospitality Trusts: Summary of Financials
Income Statement
S$ in millions, year end Dec
Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT Margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income (reported)
% change Y/Y
Distributable Income
% change Y/Y
Shares outstanding
EPS (reported) (S$)
% change Y/Y
DPU (reported) (S$)
% change Y/Y
Balance sheet
S$ in millions, year end Dec
Cash and cash equivalents
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
FY14
167
12.1%
123
(0.3%)
73.5%
(16)
124
(13.3%)
(1)
1.2%
105
1.1%
108
0.8%
982
0.11
0.4%
0.11
0.1%
FY15E
164
(1.6%)
133
8.6%
81.1%
(19)
114
(7.9%)
(5)
4.2%
109
4.3%
112
4.5%
990
0.11
3.5%
0.11
3.4%
FY16E
166
1.0%
135
1.0%
81.1%
(19)
115
1.1%
(5)
4.2%
110
1.0%
114
1.1%
997
0.11
0.3%
0.11
0.3%
FY17E
171
2.9%
139
3.0%
81.1%
(19)
119
3.5%
(5)
4.2%
114
3.5%
117
3.3%
1,005
0.11
2.7%
0.12
2.6%
FY14
76
20
1
98
FY15E
87
16
1
105
FY16E
110
17
1
128
FY17E
132
17
1
151
2,206
145
2,450
2,206
150
2,462
2,206
155
2,490
Liabilities
ST Loans
317
Payables
40
Others
1
Total current liabilities
358
Long-term debt
458
Other liabilities
19
Total Liabilities
834
Shareholders' equity
1,616
BVPS
1.65
Source: Company reports and J.P. Morgan estimates.
38
317
25
1
343
478
19
839
1,623
1.64
317
25
1
343
498
19
859
1,631
1.64
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
Capex
Net acquisitions
Net Interest
Free cash flow
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
Sales growth
Net profit growth
2,206 EBIT growth
160 EPS growth
2,518
Interest coverage (x)
Net debt to total capital
317 Net debt to equity
26 Sales/assets (x)
1 Assets/equity (x)
344 ROE
518 ROCE
19
880
1,638
1.63
FY14
123
0
4
31
139
FY15E
133
0
(11)
29
127
FY16E
135
0
0
30
140
FY17E
139
0
0
30
144
(66)
(27)
(16)
90
(5)
0
(19)
141
(5)
0
(19)
153
(5)
0
(19)
158
0
84
(18)
(106)
69
76
0.11
0
20
(20)
(112)
76
87
0.11
0
20
(20)
(114)
87
110
0.11
0
20
(20)
(117)
110
132
0.12
FY14
73.5%
62.8%
FY15E
81.1%
66.6%
FY16E
81.1%
66.6%
FY17E
81.1%
66.9%
12.1%
1.1%
(0.3%)
0.4%
(1.6%)
4.3%
8.6%
3.5%
1.0%
1.0%
1.0%
0.3%
2.9%
3.5%
3.0%
2.7%
7.6
30.2%
43.2%
0.1
1.5
6.5%
5.2%
7.0
30.4%
43.6%
0.1
1.5
6.8%
5.3%
7.0
30.2%
43.2%
0.1
1.5
6.8%
5.3%
7.2
30.0%
42.9%
0.1
1.5
7.0%
5.4%
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Far East Hospitality Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
Price Target (S$)
1,775
1,500
1,108
0.85
30 Jan 15
0.41
0.34
0.2
3419.05
1.35
31-Dec-15
0.80
Far East Hospitality Trust (Reuters: FAEH.SI, Bloomberg: FEHT SP)
S$ in mn, year-end Dec
FY12A
FY13A
FY14E
Revenue (S$ mn)
42
122
129
Distributable Profit (S$ mn)
34
95
97
EPU (S$)
0.01
0.05
0.05
DPU (S$)
0.02
0.06
0.05
BVPU (S$)
0.97
0.98
0.98
Revenue growth (%)
190.1%
5.2%
DPU growth (%)
169.9%
(3.6%)
P/E (x)
75.0
16.7
17.3
P/BV (x)
0.9
0.9
0.9
Dividend Yield
2.5%
6.7%
6.4%
Gearing
29.2%
30.8%
30.9%
RNAV/Share
Net property income (S$ mn)
39
112
117
FY15E
128
93
0.05
0.05
0.97
(0.7%)
(4.8%)
18.3
0.9
6.1%
31.0%
0.89
116
FY16E
132
96
0.05
0.05
0.96
3.0%
3.5%
17.6
0.9
6.3%
31.2%
120
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Far East Hospitality Trust (Underweight; Price Target: S$0.80)
Investment Thesis
FEHT is a pure-play domestic hospitality REIT with 73% of GAV exposure in
Singapore hotels and 16% in serviced residences. We believe sector fundamentals
remain challenging from flat demand growth and continued supply in the
midrange/mass hotel segments. Sectorwide occupied room nights in 2013 were down
3% Y/Y. Having said that, YoY RevPAR declines are expected to stabilize due to
low base effects.
Valuation
Our Dec-15 PT of S$0.80 is based on the average of our DDM and RNAV valuation
estimates, with DDM using a 9.8% discount rate and LTGR of 1.5%. Tenureadjusted RNAV is estimated at S$716,708 per key.
Risks to Rating and Price Target
Key upside risks to our rating and PT stem from better-than-expected visitor arrivals
and therefore better growth in room rates. FEHT has high sensitivity to forecast
errors in RevPAR, such that a 5% change in RevPAR would translate into a 7%
change in our DPU estimates.
39
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Far East Hospitality Trust: Summary of Financials
Income Statement
S$ in millions, year end Dec
FY13
FY14E
Revenues
122
129
% change Y/Y
190.1%
5.2%
EBIT
100
104
% change Y/Y
349.4%
4.1%
EBIT Margin (%)
81.3%
80.4%
Net Interest
(15)
(17)
Earnings before tax
138
86
% change Y/Y
98.7% (37.4%)
Tax
0
0
as % of EBT
0.0%
0.0%
Net income (reported)
84
86
% change Y/Y
366.8%
2.4%
Core net profit
84
86
% change Y/Y
366.8%
2.4%
Shares outstanding
1,765
1,777
EPS (reported) (S$)
0.05
0.05
% change Y/Y
348.0%
(3.3%)
DPU (reported) (S$)
0.06
0.05
% change Y/Y
169.9%
(3.6%)
Balance sheet
S$ in millions, year end Dec
FY13
FY14E
Cash and cash equivalents
29
37
Accounts receivable
22
19
Inventories
0
0
Others
6
6
Current assets
57
63
LT investments
2,475
2,475
Net fixed assets
0
1
Total Assets
2,532
2,538
Liabilities
ST Loans
0
0
Payables
4
6
Others
5
5
Total current liabilities
9
11
Long-term debt
779
784
Other liabilities
8
8
Total Liabilities
797
804
Shareholders' equity
1,735
1,735
BVPS
0.98
0.98
Source: Company reports and J.P. Morgan estimates.
40
FY15E
128
(0.7%)
103
(0.5%)
80.6%
(21)
82
(4.6%)
0
0.0%
82
(4.6%)
82
(4.6%)
1,789
0.05
(5.3%)
0.05
(4.8%)
FY16E
132
3.0%
107
3.7%
81.1%
(21)
86
4.6%
0
0.0%
86
4.6%
86
4.6%
1,801
0.05
3.9%
0.05
3.5%
FY15E
41
19
0
6
66
2,475
2
2,543
FY16E
44
20
0
6
70
2,475
3
2,548
0
6
5
11
789
8
809
1,734
0.97
0
7
5
11
794
8
814
1,734
0.96
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY13
100
0
2
24
111
FY14E
104
0
5
27
118
FY15E
103
0
0
30
113
FY16E
107
0
(0)
30
116
Capex
Disposal/(purchase)
Net Interest
Free cash flow
0
126
(1)
134
(1)
132
(1)
136
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
68
132
(14)
(103)
36
29
0.06
0
0
(12)
(97)
29
37
0.05
0
0
(16)
(93)
37
41
0.05
0
0
(16)
(96)
41
44
0.05
FY13
81.3%
68.9%
FY14E
80.4%
67.1%
FY15E
80.6%
64.4%
FY16E
81.1%
65.4%
190.1%
366.8%
348.0%
6.6
30.2%
43.2%
0.1
1.4
5.1%
4.2%
5.2%
2.4%
(3.3%)
6.0
30.1%
43.1%
0.1
1.5
5.0%
4.1%
(0.7%)
(4.6%)
(5.3%)
5.0
30.2%
43.2%
0.1
1.5
4.8%
4.1%
3.0%
4.6%
3.9%
5.2
30.2%
43.3%
0.1
1.5
5.0%
4.2%
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Frasers Centrepoint Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
Price Target (S$)
916
1,896
1,400
2.07
30 Jan 15
1.13
2.18
1.6
3419.05
1.35
31-Dec-15
1.85
Frasers Centrepoint Trust (Reuters: FCRT.SI, Bloomberg: FCT SP)
S$ in mn, year-end Sep
FY13A
FY14A
FY15E
Revenue (S$ mn)
158
169
188
Distributable Profit (S$ mn)
90
95
106
EPU (S$)
0.10
0.11
0.11
DPU (S$)
0.11
0.11
0.12
BVPU (S$)
1.77
1.85
1.85
Revenue growth (%)
7.3%
6.8%
11.6%
DPU growth (%)
9.3%
2.4%
3.7%
P/E (x)
19.9
19.6
18.3
P/BV (x)
1.2
1.1
1.1
Dividend Yield
5.3%
5.4%
5.6%
Gearing
27.6%
29.3%
29.2%
RNAV/Share
1.87
Net property income (S$ mn)
112
118
133
FY16E
190
108
0.11
0.12
1.85
1.0%
1.1%
18.1
1.1
5.7%
29.2%
134
FY17E
191
108
0.11
0.12
1.84
0.1%
0.3%
18.1
1.1
5.7%
29.2%
135
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Frasers Centrepoint Trust (Underweight; Price Target: S$1.85)
Investment Thesis
FCT is a pure-play on domestic non-discretionary retail trends, with the portfolio
comprising suburban retail malls. While rental reversions in FY13 were strong at 9%
post the completion of Causeway Point AEI, they are expected to moderate as the
asset stabilizes. One key catalyst could potentially be from the injection of Changi
City Point.
Valuation
Our Dec-15 price target of S$1.85 is based on the average of our DDM and RNAV
estimates, with DDM using an 8.0% discount rate and a LT growth rate of 1.5%.
Tenure-adjusted RNAV is estimated @ S$2,152 psf.
Risks to Rating and Price Target
Key upside risks to our rating and price target include better-than expected rental
reversions.
Key downside risks include prolonged challenges in the retail sector, leading to
tenant consolidation, declining sales turnover, rising business costs and slowing
shopper traffic.
41
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Frasers Centrepoint Trust: Summary of Financials
Income Statement
S$ in millions, year end Sep
Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT Margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income (reported)
% change Y/Y
Distributable Income
% change Y/Y
Shares outstanding
EPS (reported) (S$)
% change Y/Y
DPU (reported) (S$)
% change Y/Y
Balance sheet
S$ in millions, year end Sep
Cash and cash equivalents
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
FY14
169
6.8%
104
5.0%
61.4%
(18)
165
(42.6%)
0
0.0%
90
5.1%
95
5.9%
916
0.11
1.2%
0.11
2.4%
FY15E
188
11.6%
117
13.0%
62.1%
(18)
104
(37.2%)
0
0.0%
104
15.0%
106
11.6%
918
0.11
7.3%
0.12
3.7%
FY16E
190
1.0%
118
1.1%
62.2%
(18)
105
1.3%
0
0.0%
105
1.3%
108
1.3%
919
0.11
1.1%
0.12
1.1%
FY17E
191
0.1%
119
0.1%
62.2%
(18)
105
0.2%
0
0.0%
105
0.2%
108
0.5%
921
0.11
(0.0%)
0.12
0.3%
FY14
42
5
0
0
47
FY15E
43
4
0
0
47
FY16E
36
4
0
0
40
FY17E
29
4
0
0
33
2,400
0
2,522
2,405
2
2,529
2,410
4
2,529
Liabilities
ST Loans
95
Payables
40
Others
18
Total current liabilities
153
Long-term debt
644
Other liabilities
26
Total Liabilities
823
Shareholders' equity
1,699
BVPS
1.85
Source: Company reports and J.P. Morgan estimates.
42
95
47
18
160
644
26
830
1,699
1.85
95
48
18
161
644
26
831
1,699
1.85
Cash flow statement
S$ in millions, year end Sep
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
104
0
(6)
16
100
FY15E
117
0
9
16
129
FY16E
118
0
0
16
122
FY17E
119
0
0
16
121
Capex
Net acquisitions
Net Interest
Free cash flow
(0)
(300)
119
(2)
(5)
145
(2)
(5)
138
(2)
(5)
138
161
150
(20)
(94)
40
42
0.11
0
0
(18)
(106)
42
43
0.12
0
0
(18)
(108)
43
36
0.12
0
0
(18)
(108)
36
29
0.12
FY14
61.4%
53.4%
FY15E
62.1%
55.1%
FY16E
62.2%
55.2%
FY17E
62.2%
55.2%
6.8%
5.1%
5.0%
1.2%
11.6%
15.0%
13.0%
7.3%
1.0%
1.3%
1.1%
1.1%
0.1%
0.2%
0.1%
(0.0%)
5.6
29.1%
41.0%
0.1
1.5
5.7%
4.6%
6.4
29.1%
41.0%
0.1
1.5
6.1%
4.8%
6.5
29.3%
41.4%
0.1
1.5
6.2%
4.9%
6.5
29.5%
41.8%
0.1
1.5
6.2%
4.9%
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
Ratio Analysis
S$ in millions, year end Sep
EBIT Margin
Net margin
Sales growth
Net profit growth
2,415 EBIT growth
6 EPS growth
2,529
Interest coverage (x)
Net debt to total capital
95 Net debt to equity
48 Sales/assets (x)
18 Assets/equity (x)
161 ROE
644 ROCE
26
831
1,698
1.84
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Keppel REIT
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
Price Target (S$)
3,170
3,915
2,892
1.24
30 Jan 15
4.73
5.77
4.3
3419.05
1.35
31-Dec-15
1.25
Keppel REIT (Reuters: KASA.SI, Bloomberg: KREIT SP)
S$ in mn, year-end Dec
FY13A
FY14A
Revenue (S$ mn)
174
184
Distributable Profit (S$ mn)
214
206
EPU (S$)
0.05
0.05
DPU (S$)
0.08
0.07
BVPU (S$)
1.40
1.41
Revenue growth (%)
10.9%
5.8%
DPU growth (%)
1.4%
(8.2%)
P/E (x)
23.0
24.0
P/BV (x)
0.9
0.9
Dividend Yield
6.4%
5.9%
Gearing
39.6%
36.4%
RNAV/Share
Net property income (S$ mn)
138
151
FY15E
178
227
0.04
0.07
1.37
(3.3%)
(2.0%)
29.0
0.9
5.7%
36.8%
1.34
140
FY16E
184
227
0.04
0.07
1.34
3.2%
(0.5%)
27.7
0.9
5.7%
37.1%
144
FY17E
188
223
0.05
0.07
1.31
2.4%
(2.8%)
26.7
0.9
5.5%
37.4%
150
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Keppel REIT (Neutral; Price Target: S$1.25)
Investment Thesis
K-REIT is a Singapore-listed office REIT with one of the best office portfolios for
Singapore and some exposure to the Australia prime office sector. Sector
fundamentals for KREIT are improving, as evidenced by rental growth trends and a
lower-than average supply pipeline in the next two years. However, 28% of FY14
income contributions are from income support arrangements, which have factored in
rental growth expectations.
Valuation
Our Dec-15 PT of S$1.25 is based on the average of our DDM and RNAV valuation
estimates, with DDM using an 8.0% discount rate and a long-term growth rate of
2.0%. Tenure-adjusted RNAV is estimated at S$2,269 psf.
Risks to Rating and Price Target
Key upside risks to our rating and price target stem mainly from better-than-expected
office rent reversions, resulting in actual rent closing the gap between incomesupported rent; the forward-leasing of expiring office space in 2015-17; and AUD
appreciation.
Key downside risks include an unexpected worsening in office rent reversions and
AUD depreciation.
43
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Keppel REIT: Summary of Financials
Income Statement
S$ in millions, year end Dec
FY14
FY15E
Revenues
184
178
% change Y/Y
5.8%
(3.3%)
EBIT
111
92
% change Y/Y
(4.6%)
(17.6%)
EBIT Margin (%)
60.4%
51.4%
Net Interest
(23)
(30)
Earnings before tax
384
143
% change Y/Y
(30.5%)
(62.7%)
Tax
(12)
(7)
as % of EBT
3.0%
5.1%
Net income (reported)
147
136
% change Y/Y
1.2%
(7.9%)
Core net profit
147
136
% change Y/Y
1.2%
(7.9%)
Shares outstanding
3,170
3,199
EPS (reported) (S$)
0.05
0.04
% change Y/Y
(3.9%)
(17.3%)
DPU (reported) (S$)
0.07
0.07
% change Y/Y
(8.2%)
(2.0%)
Balance sheet
S$ in millions, year end Dec
FY14
FY15E
Cash and cash equivalents
200
182
Accounts receivable
25
27
Inventories
0
0
Others
1
1
Current assets
225
209
LT investments
3,614
3,604
Net fixed assets
0
0
Total Assets
7,329
7,252
Liabilities
ST Loans
275
275
Payables
84
82
Others
21
21
Total current liabilities
380
378
Long-term debt
2,390
2,390
Other liabilities
99
99
Total Liabilities
2,870
2,867
Shareholders' equity
4,459
4,385
BVPS
1.41
1.37
Source: Company reports and J.P. Morgan estimates.
44
FY16E
184
3.2%
95
3.8%
51.7%
(36)
148
3.7%
(5)
3.4%
143
5.6%
143
5.6%
3,228
0.04
4.7%
0.07
(0.5%)
FY17E
188
2.4%
100
5.5%
53.3%
(36)
155
4.4%
(5)
3.0%
150
4.9%
150
4.9%
3,258
0.05
3.9%
0.07
(2.8%)
FY16E
163
28
0
1
192
3,594
0
7,186
FY17E
154
28
0
1
183
3,584
0
7,131
275
85
21
380
2,390
99
2,870
4,316
1.34
275
87
21
382
2,390
99
2,872
4,259
1.31
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
111
0
(74)
(31)
43
FY15E
92
0
(4)
(17)
114
FY16E
95
0
2
(18)
127
FY17E
100
0
1
(19)
132
(0)
26
(23)
64
0
(10)
(30)
143
0
(10)
(36)
162
0
(10)
(36)
167
228
(20)
(61)
(215)
91
200
0.07
0
0
(58)
(227)
200
182
0.07
0
0
(58)
(227)
182
163
0.07
0
0
(58)
(223)
163
154
0.07
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
FY14
60.4%
80.0%
FY15E
51.4%
76.2%
FY16E
51.7%
78.0%
FY17E
53.3%
79.8%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
5.8%
1.2%
(3.9%)
4.9
35.6%
55.3%
0.0
1.7
3.5%
1.6%
(3.3%)
(7.9%)
(17.3%)
3.0
36.2%
56.6%
0.0
1.6
3.1%
1.2%
3.2%
5.6%
4.7%
2.7
36.7%
58.0%
0.0
1.7
3.3%
1.3%
2.4%
4.9%
3.9%
2.8
37.1%
59.0%
0.0
1.7
3.5%
1.4%
Capex
Net acquisitions
Net Interest
Free cash flow
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Mapletree Commercial Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
Price Target (S$)
2,104
3,187
2,354
1.52
30 Jan 15
2.05
2.97
2.2
3419.05
1.35
31-Dec-15
1.40
Mapletree Commercial Trust (Reuters: MACT.SI, Bloomberg: MCT SP)
S$ in mn, year-end Mar
FY13A
FY14A
FY15E
FY16E
Revenue (S$ mn)
219
267
284
295
Distributable Profit (S$ mn)
124
153
164
167
EPU (S$)
0.06
0.07
0.07
0.07
DPU (S$)
0.06
0.07
0.08
0.08
BVPU (S$)
1.06
1.16
1.16
1.16
Revenue growth (%)
23.8%
21.7%
6.3%
3.7%
DPU growth (%)
23.2%
13.7%
6.6%
1.1%
P/E (x)
25.3
22.2
20.5
20.3
P/BV (x)
1.4
1.3
1.3
1.3
Dividend Yield
4.3%
4.9%
5.2%
5.2%
Gearing
40.8%
38.6%
38.4%
38.4%
RNAV/Share
1.34
Net property income (S$ mn)
156
195
211
212
FY17E
304
173
0.08
0.08
1.15
3.2%
3.6%
19.5
1.3
5.4%
38.3%
219
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Mapletree Commercial Trust (Underweight; Price Target: S$1.40)
Investment Thesis
MCT is predominantly a retail play, with the VivoCity mall expected to drive 70% of
portfolio NPI growth in the next three years. We believe near-term DPU growth will
continue to be organically driven, with VivoCity's rental reversions expected to
remain stable.
Valuation
Our Dec-15 price target of S$1.40 is based on the average of our DDM and RNAV
estimates, with DDM using a 7.1% discount rate and a long-term growth rate of
1.5%. Tenure-adjusted RNAV is estimated at S$2,044 psf.
Risks to Rating and Price Target
Key downside risks include 1) prolonged challenges in retail sector, leading to tenant
consolidation, declining sales turnover, rising business costs and slowing shopper
traffic 2) worse-than-expected retail rent reversions.
45
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Mapletree Commercial Trust: Summary of Financials
Income Statement
S$ in millions, year end Mar
FY14
FY15E
Revenues
267
284
% change Y/Y
21.7%
6.3%
EBIT
176
190
% change Y/Y
25.7%
8.1%
EBIT Margin (%)
65.8%
66.9%
Net Interest
(35)
(36)
Earnings before tax
343
154
% change Y/Y
10.4%
(55.1%)
Tax
0
0
as % of EBT
0.0%
0.0%
Net income (reported)
141
154
% change Y/Y
24.0%
9.1%
Core net profit
141
154
% change Y/Y
24.0%
9.1%
Shares outstanding
2,083
2,090
EPS (reported) (S$)
0.07
0.07
% change Y/Y
13.7%
8.4%
DPU (reported) (S$)
0.07
0.08
% change Y/Y
13.7%
6.6%
Balance sheet
S$ in millions, year end Mar
FY14
FY15E
Cash and cash equivalents
70
86
Accounts receivable
4
9
Inventories
Others
1
1
Current assets
75
95
LT investments
4,034
4,039
Net fixed assets
0
0
Total Assets
4,110
4,135
Liabilities
ST Loans
339
339
Payables
54
71
Others
8
8
Total current liabilities
400
418
Long-term debt
1,249
1,249
Other liabilities
35
43
Total Liabilities
1,684
1,710
Shareholders' equity
2,426
2,425
BVPS
1.16
1.16
Source: Company reports and J.P. Morgan estimates.
46
FY16E
295
3.7%
192
0.8%
65.0%
(35)
156
1.5%
0
0.0%
156
1.5%
156
1.5%
2,097
0.07
1.1%
0.08
1.1%
FY17E
304
3.2%
198
3.4%
65.1%
(35)
163
4.1%
0
0.0%
163
4.1%
163
4.1%
2,104
0.08
3.8%
0.08
3.6%
FY16E
84
9
1
93
4,044
0
4,138
FY17E
82
9
1
91
4,049
0
4,141
339
74
8
420
1,249
45
1,714
2,424
1.16
339
76
8
423
1,249
46
1,718
2,423
1.15
Cash flow statement
S$ in millions, year end Mar
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
176
0
3
44
189
FY15E
190
0
21
45
221
FY16E
192
0
4
44
205
FY17E
198
0
3
45
211
(0)
(4)
0
223
0
(5)
0
257
0
(5)
1
240
0
(5)
1
246
0
0
(35)
(126)
47
70
0.07
0
0
(36)
(164)
70
86
0.08
0
0
(36)
(167)
86
84
0.08
0
0
(36)
(173)
84
82
0.08
Ratio Analysis
S$ in millions, year end Mar
EBIT Margin
Net margin
FY14
65.8%
52.9%
FY15E
66.9%
54.3%
FY16E
65.0%
53.1%
FY17E
65.1%
53.6%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
21.7%
24.0%
13.7%
5.1
38.5%
62.5%
0.1
1.7
6.1%
4.5%
6.3%
9.1%
8.4%
5.3
38.2%
61.9%
0.1
1.7
6.4%
4.7%
3.7%
1.5%
1.1%
5.4
38.3%
62.0%
0.1
1.7
6.5%
4.8%
3.2%
4.1%
3.8%
5.6
38.3%
62.1%
0.1
1.7
6.7%
4.9%
Capex
Net acquisitions
Net Interest
Free cash flow
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Mapletree Industrial Trust
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
Price Target (S$)
1,732
2,650
1,958
1.53
30 Jan 15
2.39
3.57
2.6
3419.05
1.35
31-Dec-15
1.55
Mapletree Industrial Trust (Reuters: MAPI.SI, Bloomberg: MINT SP)
S$ in mn, year-end Mar
FY13A
FY14A
FY15E
Revenue (S$ mn)
276
299
319
Distributable Profit (S$ mn)
151
166
174
EPU (S$)
0.09
0.10
0.10
DPU (S$)
0.09
0.10
0.10
BVPU (S$)
1.10
1.20
1.20
Revenue growth (%)
12.2%
8.3%
6.5%
DPU growth (%)
10.0%
7.9%
2.9%
P/E (x)
17.3
15.6
15.1
P/BV (x)
1.4
1.3
1.3
Dividend Yield
6.1%
6.5%
6.7%
Gearing
34.8%
34.4%
35.1%
RNAV/Share
1.47
Net property income (S$ mn)
195
215
227
FY16E
328
178
0.10
0.11
1.20
2.9%
2.2%
14.8
1.3
6.9%
37.0%
234
FY17E
334
180
0.10
0.11
1.20
2.0%
1.2%
14.6
1.3
6.9%
38.6%
239
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Mapletree Industrial Trust (Neutral; Price Target: S$1.55)
Investment Thesis
MINT is a pure-play on Singapore industrial real-estate, with primary exposure to
flatted factory assets (48% of portfolio). While sector fundamentals for MINT remain
stable, we note that portfolio occupancy/retention levels have seen fluctuations due to
tenant turnover in recent quarters. We also note that MINT's tenant base remains
more fragmented against some of its listed peers.
Valuation
Our Dec-15 price target of S$1.55 is based on the average of our DDM and RNAV
estimates, with DDM using a 8.5% discount rate and LT growth rate of 1.0%. RNAV
is estimated @ S$244 psf.
Risks to Rating and Price Target
Key upside risks to our rating and price target mainly stem from better-than-expected
rent reversions, a pick-up in occupancy of business parks and announcements of
more AEIs.
Key downside risks to our rating and price target include an unexpected deterioration
in operating fundamentals or rent reductions in order to fill up vacant space and
rising competition from strata-titled factories.
47
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Mapletree Industrial Trust: Summary of Financials
Income Statement
S$ in millions, year end Mar
FY14
FY15E
Revenues
299
319
% change Y/Y
8.3%
6.5%
EBIT
189
200
% change Y/Y
9.8%
5.7%
EBIT Margin (%)
63.2%
62.8%
Net Interest
(26)
(29)
Earnings before tax
314
171
% change Y/Y
12.1%
(45.5%)
Tax
(0)
0
as % of EBT
0.0%
0.0%
Net income (reported)
164
171
% change Y/Y
13.3%
4.7%
Core net profit
164
171
% change Y/Y
13.3%
4.7%
Shares outstanding
1,690
1,692
EPS (reported) (S$)
0.10
0.10
% change Y/Y
11.1%
2.9%
DPU (reported) (S$)
0.10
0.10
% change Y/Y
7.9%
2.9%
Balance sheet
S$ in millions, year end Mar
FY14
FY15E
Cash and cash equivalents
96
8
Accounts receivable
5
6
Inventories
0
0
Others
4
4
Current assets
105
19
LT investments
3,170
3,280
Net fixed assets
0
1
Total Assets
3,275
3,300
Liabilities
ST Loans
344
344
Payables
68
64
Others
1
1
Total current liabilities
413
408
Long-term debt
784
814
Other liabilities
50
50
Total Liabilities
1,246
1,272
Shareholders' equity
2,029
2,028
BVPS
1.20
1.20
Source: Company reports and J.P. Morgan estimates.
48
FY16E
328
2.9%
206
2.9%
62.8%
(31)
175
2.3%
0
0.0%
175
2.3%
175
2.3%
1,693
0.10
2.2%
0.11
2.2%
FY17E
334
2.0%
210
2.0%
62.8%
(33)
177
1.3%
0
0.0%
177
1.3%
177
1.3%
1,695
0.10
1.2%
0.11
1.2%
FY16E
9
7
0
4
19
3,380
2
3,401
FY17E
11
7
0
4
21
3,468
3
3,492
344
66
1
410
914
50
1,374
2,027
1.20
344
67
1
412
1,004
50
1,465
2,027
1.20
Cash flow statement
S$ in millions, year end Mar
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
FY14
189
0
3
23
190
FY15E
200
0
(5)
31
197
FY16E
206
0
2
33
210
FY17E
210
0
1
35
213
Capex
Net acquisitions
Net Interest
Free cash flow
0
(138)
0
215
(1)
(111)
0
225
(1)
(100)
0
240
(1)
(88)
0
245
0
94
(25)
(97)
72
96
0.10
0
30
(29)
(174)
96
8
0.10
0
100
(31)
(178)
8
9
0.11
0
90
(33)
(180)
9
11
0.11
Ratio Analysis
S$ in millions, year end Mar
EBIT Margin
Net margin
FY14
63.2%
54.6%
FY15E
62.8%
53.7%
FY16E
62.8%
53.4%
FY17E
62.8%
53.0%
Sales growth
Net profit growth
EPS growth
Interest coverage (x)
Net debt to total capital
Net debt to equity
Sales/assets (x)
Assets/equity (x)
ROE
ROCE
8.3%
13.3%
11.1%
7.4
33.7%
50.9%
0.1
1.6
8.5%
6.3%
6.5%
4.7%
2.9%
6.9
36.2%
56.7%
0.1
1.6
8.4%
6.3%
2.9%
2.3%
2.2%
6.7
38.1%
61.6%
0.1
1.7
8.6%
6.4%
2.0%
1.3%
1.2%
6.4
39.7%
66.0%
0.1
1.7
8.8%
6.3%
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Suntec REIT
Company Data
Shares O/S (mn)
Market Cap (S$ mn)
Market Cap ($ mn)
Price (S$)
Date Of Price
Free Float(%)
3M - Avg daily vol (mn)
3M - Avg daily val (S$ mn)
3M - Avg daily val ($ mn)
FTSTI
Exchange Rate
Price Target End Date
Price Target (S$)
2,502
4,704
3,475
1.88
30 Jan 15
12.13
23.27
17.2
3419.05
1.35
31-Dec-15
2.10
Suntec REIT (Reuters: SUNT.SI, Bloomberg: SUN SP)
S$ in mn, year-end Dec
FY12A
FY13A
Revenue (S$ mn)
262
234
Distributable Profit (S$ mn)
213
211
EPU (S$)
0.07
0.05
DPU (S$)
0.09
0.09
BVPU (S$)
2.12
2.20
Revenue growth (%)
(3.1%)
(10.6%)
DPU growth (%)
(4.5%)
(1.7%)
P/E (x)
28.8
41.3
P/BV (x)
0.9
0.9
Dividend Yield
5.0%
5.0%
Gearing
36.7%
38.0%
RNAV/Share
Net property income (S$ mn)
163
149
FY14A
282
230
0.09
0.09
2.16
20.6%
0.8%
20.6
0.9
5.0%
34.7%
192
FY15E
337
261
0.08
0.10
2.14
19.3%
10.1%
24.2
0.9
5.5%
37.1%
2.04
230
FY16E
355
267
0.08
0.10
2.11
5.4%
1.4%
22.3
0.9
5.6%
37.5%
268
Source: Company data, Bloomberg, J.P. Morgan estimates.
Investment Thesis, Valuation and Risks
Suntec REIT (Overweight; Price Target: S$2.10)
Investment Thesis
SUN is primarily exposed to the Singapore office and retail segments, with the
group’s recent expansion into the Australian office market. Key catalysts we expect
for the stock are progressive leasing of Suntec City Mall Phase 3 and strong office
rent growth in 2015.
Valuation
Our Dec-15 price target of S$2.10 is based on the average of our DDM and RNAV
estimates, with DDM using a 7.0% discount rate and LT growth rate of 2%. We
estimate tenure-adjusted RNAV at S$1,994 psf.
Risks to Rating and Price Target
Key downside risks include worse-than-expected rental reversions, an inability to
lease out remaining vacant space at Suntec City Mall Phase 3 AEI and acquisitions of
offshore assets.
Key upside risks include stronger-than-expected rental reversions and a rise in the
pre-commitment rate of Suntec City Mall's Phase 3 AEI from the existing 60%.
49
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Suntec REIT: Summary of Financials
Income Statement
S$ in millions, year end Dec
Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT Margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income (reported)
% change Y/Y
Distributable Income
% change Y/Y
Shares outstanding
EPS (reported) (S$)
% change Y/Y
DPU (reported) (S$)
% change Y/Y
Balance sheet
S$ in millions, year end Dec
Cash and cash equivalents
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
FY14
282
20.6%
134
20.5%
47.4%
(45)
323
(14.5%)
(7)
2.2%
223
116.9%
230
9.1%
2,506
0.09
100.4%
0.09
0.8%
FY15E
337
19.3%
184
37.7%
54.7%
(39)
203
(37.1%)
(3)
1.3%
196
(12.2%)
261
13.5%
2,526
0.08
(14.7%)
0.10
10.1%
FY16E
355
5.4%
220
19.3%
61.9%
(58)
221
8.7%
(2)
0.9%
214
9.3%
267
2.3%
2,547
0.08
8.4%
0.10
1.4%
FY17E
368
3.6%
235
6.9%
63.9%
(64)
230
4.5%
(2)
0.9%
223
4.5%
278
3.9%
2,568
0.09
3.7%
0.11
3.0%
FY14
150
17
0
0
166
FY15E
173
7
0
0
180
FY16E
200
7
0
0
207
FY17E
212
7
0
0
220
5,948
3
8,602
6,204
6
8,844
6,239
9
8,884
Liabilities
ST Loans
13
Payables
107
Others
10
Total current liabilities
130
Long-term debt
2,981
Other liabilities
73
Total Liabilities
3,184
Shareholders' equity
5,418
BVPS
2.16
Source: Company reports and J.P. Morgan estimates.
50
13
67
10
91
3,281
73
3,444
5,399
2.14
13
71
10
94
3,331
73
3,498
5,386
2.11
Cash flow statement
S$ in millions, year end Dec
EBIT
Depr. & amortization
Change in working capital
Others
Cash flow from operations
Capex
Net acquisitions
Net Interest
Free cash flow
Equity raised/(repaid)
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPU reported
Ratio Analysis
S$ in millions, year end Dec
EBIT Margin
Net margin
Sales growth
Net profit growth
6,239 EBIT growth
12 EPS growth
8,872
Interest coverage (x)
Net debt to total capital
13 Net debt to equity
74 Sales/assets (x)
10 Assets/equity (x)
97 ROE
3,331 ROCE
73
3,501
5,372
2.09
FY14
134
1
14
(43)
196
FY15E
184
2
(29)
33
202
FY16E
220
2
3
39
258
FY17E
235
2
2
45
273
(96)
5
31
143
(256)
(5)
44
(16)
(36)
(5)
26
280
0
(5)
20
337
350
(518)
232
(224)
181
150
0.09
0
300
(82)
(261)
150
173
0.10
0
50
(84)
(267)
173
200
0.10
0
0
(84)
(278)
200
212
0.11
FY14
47.4%
78.9%
FY15E
54.7%
58.0%
FY16E
61.9%
60.2%
FY17E
63.9%
60.7%
20.6%
116.9%
20.5%
100.4%
19.3%
(12.2%)
37.7%
(14.7%)
5.4%
9.3%
19.3%
8.4%
3.6%
4.5%
6.9%
3.7%
3.0
34.4%
52.5%
0.0
1.7
4.4%
1.6%
4.8
36.6%
57.8%
0.0
1.6
3.7%
2.2%
3.8
36.9%
58.4%
0.0
1.7
4.1%
2.5%
3.7
36.8%
58.3%
0.0
1.7
4.3%
2.7%
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per
KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or
intervention.
Important Disclosures

Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Ascott
Residence Trust within the past 12 months.

Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of
CapitaRetail China Trust: Brandon Lee. The following analysts (and/or their associates or household members) own a long position in the
shares of Frasers Centrepoint Trust: Brandon Lee. The following analysts (and/or their associates or household members) own a long
position in the shares of Mapletree Industrial Trust: Brandon Lee.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Ascott Residence Trust,
CapitaCommercial Trust, CapitaMall Trust, CapitaRetail China Trust, Keppel REIT, Suntec REIT.

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment
banking clients: Ascott Residence Trust.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
company(ies) as clients, and the services provided were non-investment-banking, securities-related: Ascott Residence Trust, Keppel
REIT.

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Ascott
Residence Trust.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from Ascott Residence Trust.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Ascott Residence Trust, Keppel REIT.

“J.P. Morgan (S.E.A.) Limited (“J.P. Morgan”) is acting as a Joint Lead Manager and Joint Bookrunners for DBS Trustee Limited in
its capacity as trustee of Ascott Residence Trust (“Ascott”) for its subordinated perpetual issuance as announced on 17 October 2014. J.P.
Morgan will be receiving fees for so acting. J.P. Morgan and/or its affiliates may perform, or may seek to perform, other financial or
advisory services for Ascott and/or its affiliates and may have other interests in or relationships with Ascott and/or its affiliates, and
receive fees, commissions or other compensation in such capacities. This research report and the information herein is not intended to
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51
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
A-REIT (AEMN.SI, AREIT SP) Price Chart
OW S$3.154
OW OW
S$2.928
S$2.593
OW S$2.5
OW S$1.65 N S$2.1
N S$2.18
5
OW S$3.001
OWOW
S$2.943
S$2.992
OW S$2.649
OW S$1.7
OW S$2
N S$2.05
N S$2.1N S$2.15
N S$2.2
N S$2.65
4
OW S$3.05
OW S$3.324
OWOW
S$2.876
S$2.953
OW S$2.572
OW S$2.3
OW S$1.85
OW N
S$2.05
S$2.05 N S$2.2
N S$2.25
N S$2.3 N S$2.7
OW S$2.4
3
Price(S$)
2
1
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
52
Oct
12
Apr
14
Date
Rating Share Price Price Target
(S$)
(S$)
19-Jan-07
OW
2.69
3.05
19-Jul-07
OW
2.97
3.32
23-Aug-07 OW
2.45
3.00
19-Oct-07
OW
2.40
3.15
21-Jan-08
OW
2.18
2.88
25-Jan-08
OW
2.28
2.94
19-Feb-08 OW
2.25
2.93
19-Apr-08
OW
2.36
2.95
11-May-08 OW
2.48
2.99
16-Jun-08
OW
2.20
2.59
OW S$2.55 23-Sep-08
OW
2.05
2.57
19-Oct-08
OW
1.50
2.65
NR
OW S$2.5 13-Nov-08
OW
1.49
2.50
15-Jan-09
OW
1.25
2.30
19-Apr-09
OW
1.47
1.70
05-May-09 OW
1.43
1.65
18-Jul-09
OW
1.65
1.85
17-Aug-09 OW
1.62
2.00
18-Jan-10
OW
2.04
2.05
20-Jan-10
N
2.03
2.05
16-Mar-10 N
1.94
2.10
20-Apr-10
N
1.99
2.05
18-Jul-10
N
2.01
2.10
18-Oct-10
N
2.11
2.18
11-Jan-11
N
2.16
2.20
21-Mar-11 N
1.89
2.15
08-Jul-11
N
2.14
2.25
28-Aug-11 N
2.09
2.20
31-Jul-12
N
2.24
2.30
02-Oct-12
N
2.40
2.65
28-Apr-13
N
2.71
2.70
31-Aug-13 OW
2.18
2.40
25-Aug-14 NR
2.35
--
09-Dec-14 OW
2.29
2.50
22-Jan-15
2.52
2.55
OW
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Ascott Residence Trust (ASRT.SI, ART SP) Price Chart
2
N S$1.45
N S$1.35
NROW S$1.4
1.5
Date
Rating Share Price Price Target
(S$)
(S$)
28-Apr-13
1
Price(S$)
0.5
N
1.45
1.45
31-Aug-13 N
1.20
1.35
25-Aug-14 NR
1.23
--
09-Dec-14 OW
1.26
1.40
0
Mar
10
Dec
10
Sep
11
Jun
12
Mar
13
Dec
13
Sep
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
CapitaCommercial Trust (CACT.SI, CCT SP) Price Chart
4
UW S$2.204
UW S$2.602
OW S$2.268
N S$2.105 N S$0.81
N S$1
UW S$1.484
UW S$2.446
N S$1.924
OW S$2.299
N S$1.14
N S$0.9
3
N S$1.4
OW S$1.75
N S$1.35
UW S$1.4
N S$1.5 OW OW
S$1.4
S$1.6
N S$1.75
UW S$1.481
UW S$2.402
UW S$2.359
UW OW
S$2.214
S$2.227
N S$1.2
N S$0.85
N S$1.1
N S$1.15
N S$1.3
UW S$1.35
N S$1.45
N S$1.3
OW S$1.3
OW S$1.5
OW S$1.85
OW S$1.6
OW S$1.7
NR
N S$1.7
Price(S$) 2
1
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
Oct
12
Apr
14
Date
Rating Share Price Price Target
(S$)
(S$)
18-Oct-06
UW
1.59
1.48
08-Nov-06 UW
1.61
1.48
18-Jan-07
UW
1.93
2.20
05-Apr-07
UW
1.97
2.40
25-Apr-07
UW
1.96
2.45
20-Jul-07
UW
2.11
2.60
23-Aug-07 UW
1.86
2.36
03-Jan-08
UW
1.67
2.21
21-Jan-08
N
1.46
1.92
19-Mar-08 OW
1.45
2.27
28-Apr-08
OW
1.60
2.23
09-Jun-08
OW
1.63
2.30
16-Jun-08
N
1.47
2.10
18-Nov-08 N
0.63
1.20
20-Jan-09
N
0.64
1.14
30-Apr-09
N
0.62
0.81
22-May-09 N
0.77
0.85
22-Jul-09
N
0.88
0.90
17-Aug-09 N
0.86
1.00
23-Sep-09 N
1.04
1.10
18-Mar-10 N
1.13
1.15
18-Jul-10
N
1.35
1.30
25-Jul-10
N
1.40
1.35
11-Jan-11
UW
1.51
1.35
19-Jan-11
UW
1.51
1.40
25-Jun-11
N
1.42
1.45
14-Jul-11
N
1.45
1.50
28-Aug-11 N
1.17
1.40
14-Sep-11 N
1.13
1.30
04-Feb-12 OW
1.09
1.30
11-Apr-12
OW
1.22
1.40
20-Jul-12
OW
1.34
1.50
31-Jul-12
OW
1.34
1.60
02-Oct-12
OW
1.50
1.75
53
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
28-Apr-13
CapitaMall Trust (CMLT.SI, CT SP) Price Chart
6
OW S$3.735
OW S$4.3
OW S$3.672
OW S$3.253
OW S$2.05
OW S$1.8
OW S$2.1
OWOW
S$3.494
S$4.281
OW S$4.003
OW S$3.327
OW OW
S$2.2
S$1.45
OW S$2
N S$2
OW S$2.2
OW S$2.15
OW S$2.35
OW S$2.2
4
OW S$2.761
OW S$4.206
OW S$3.9
OW S$3.928
OW S$2.78
OW S$1.5
OW S$1.9 OW S$2.15
N S$2.05
OW S$2.2
OWOW
S$2.1
S$2.15
OW S$2.15
Price(S$)
2
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
54
Oct
12
Apr
14
OW
1.71
1.85
31-Aug-13 OW
1.36
1.60
21-Apr-14
OW
1.64
1.70
25-Aug-14 NR
1.68
--
09-Dec-14 N
1.68
1.70
21-Jan-15
N
1.90
1.75
Date
Rating Share Price Price Target
(S$)
(S$)
20-Oct-06
OW
2.14
2.76
17-Jan-07
OW
2.32
3.49
19-Jan-07
OW
2.46
3.73
05-Apr-07
OW
3.02
4.21
20-Apr-07
OW
3.02
4.28
25-Apr-07
OW
3.21
4.30
23-Aug-07 OW
2.85
3.90
29-Nov-07 OW
2.59
4.00
21-Jan-08
OW
2.32
3.67
22-May-08 OW
2.86
3.93
16-Jun-08
OW
2.47
3.33
N S$2.15 23-Sep-08
OW
2.04
3.25
22-Oct-08
OW
1.72
2.78
OW
NR S$2.15 25-Nov-08
OW
1.29
2.20
22-Jan-09
OW
1.22
2.05
10-Feb-09 OW
1.11
1.50
17-Apr-09
OW
1.30
1.45
26-Jul-09
OW
1.58
1.80
17-Aug-09 OW
1.46
1.90
23-Oct-09
OW
1.73
2.00
24-Jan-10
OW
1.75
2.10
22-Jul-10
OW
1.98
2.15
22-Oct-10
OW
2.02
2.20
11-Jan-11
N
1.96
2.00
01-Mar-11 N
1.81
2.05
21-Mar-11 OW
1.71
2.15
20-Jul-11
OW
1.92
2.20
18-Jan-12
OW
1.75
2.10
04-May-12 OW
1.80
2.15
31-Jul-12
OW
1.94
2.20
02-Oct-12
OW
2.02
2.35
31-Aug-13 OW
1.86
2.15
25-Aug-14 NR
2.00
--
09-Dec-14 OW
1.98
2.15
23-Jan-15
2.25
2.15
N
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
2.11
2.60
2.67
3.42
26-Jul-07
OW
2.47
3.46
23-Aug-07 OW
2.21
2.78
18-Oct-07
OW
2.49
3.00
24-Oct-07
OW
2.42
3.06
14-Apr-08
OW
1.18
1.64
OW S$1.8 16-Jun-08
OW
1.30
1.55
23-Sep-08 OW
0.66
1.52
OW S$1.52
OW S$1.45
N S$1.25
N S$1.2
N S$1.65
OW S$2.6
OWOW
S$3.46
S$3.06
OW S$1.64
OW S$1.549
OW S$1.05
OW S$1.3
N S$1.3 N S$1.3
N S$1.25
N S$1.3
N S$1.25
N S$1.45 N S$1.8
N S$1.55
3
OW
NR S$1.75 29-Sep-08
OW
0.67
1.55
20-Jan-09
OW
0.59
1.05
23-Jul-09
OW
1.21
1.30
17-Aug-09 OW
1.20
1.45
20-Jan-10
N
1.28
1.30
31-Jan-10
N
1.25
1.25
20-Oct-10
N
1.25
1.30
21-Mar-11 N
1.22
1.25
15-Jul-11
N
1.23
1.30
16-Oct-11
N
1.19
1.20
28-Jan-12
N
1.14
1.25
31-Jul-12
N
1.44
1.45
02-Oct-12
N
1.48
1.65
28-Apr-13
N
1.70
1.80
31-Aug-13 N
1.34
1.55
25-Aug-14 NR
1.65
--
09-Dec-14 OW
1.59
1.75
29-Jan-15
OW
1.72
1.80
Date
Rating Share Price Price Target
(S$)
(S$)
19-Jan-07
Price(S$)
2
1
0
Dec
06
Jun
08
Dec
09
Jun
11
Dec
12
Jun
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
OW
1.63
2.00
17-May-07 OW
2.01
2.27
22-Jun-07
N
2.43
2.51
31-Jul-07
N
2.25
2.52
23-Aug-07 N
2.25
2.28
01-Nov-07 OW
2.39
2.80
21-Jan-08
OW
2.20
2.55
UW
NR S$1.65 19-Mar-08
UW
1.90
1.51
16-Jun-08
UW
1.80
1.61
16-Jul-08
UW
1.52
1.32
03-May-09 UW
0.61
0.55
02-Aug-09 OW
1.21
1.80
01-Nov-09 OW
1.59
1.85
20-Jan-10
OW
1.75
2.00
02-May-10 OW
1.98
2.10
31-Oct-10
OW
2.17
2.30
11-Jan-11
OW
2.05
2.35
21-Mar-11 OW
1.89
2.10
28-Aug-11 N
1.78
1.80
19-Oct-11
N
1.46
1.50
31-Jan-12
N
1.78
1.55
31-Jul-12
N
2.07
1.90
02-Oct-12
N
2.03
2.10
20-Oct-12
UW
2.05
2.00
06-Jan-13
UW
1.94
1.90
CDL Hospitality Trusts (CDLT.SI, CDREIT SP) Price Chart
4
N S$2.51
OW S$2.8
UW S$1.608
OW S$1.8
OW S$2.35N S$1.5
N S$2.1
UW S$1.7
3
OW OW
S$1.999
S$2.275
N S$2.282
UW S$1.507 UW S$0.545
OWOW
S$2
S$2.1
OW S$2.3 N S$1.8
N S$1.55
N S$1.9
UW S$1.9N S$1.6
Price(S$) 2
1
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
Oct
12
Apr
14
17-Jan-07
OW
5
4
OW S$3.416
OW S$2.78OW S$1.55
Rating Share Price Price Target
(S$)
(S$)
22-Mar-07 OW
CapitaRetail China Trust (CRCT.SI, CRCT SP) Price Chart
OW S$3
Date
55
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
31-Aug-13 N
1.56
1.60
25-Aug-14 NR
1.66
--
09-Dec-14 UW
1.72
1.65
28-Jan-15
UW
1.80
1.70
Date
Rating Share Price Price Target
(S$)
(S$)
28-Apr-13
Far East Hospitality Trust (FAEH.SI, FEHT SP) Price Chart
2
1.5
UW S$1.05
UW S$0.8
NR
UW S$0.8
1
Price(S$)
0.5
UW
1.16
1.05
31-Aug-13 UW
0.84
0.80
25-Aug-14 NR
0.82
--
09-Dec-14 UW
0.82
0.80
0
Aug
12
Nov
12
Feb
13
May
13
Aug
13
Nov
13
Feb
14
May
14
Aug
14
Nov
14
Feb
15
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
Frasers Centrepoint Trust (FCRT.SI, FCT SP) Price Chart
4
N S$2.1
3
N S$1.845
OW S$1.683
N S$2.05
N S$1.708
OW S$1.862
OW S$1.537
OW S$1.359
OW S$1.151
OW S$0.997
OW S$1.3
OW S$1.65OW OW
S$1.8
S$1.65
N S$1.65
UW S$1.85
N S$1.85N S$2.15
N S$1.85
NR
Price(S$) 2
1
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Sep 08, 2014 - Dec 09, 2014.
56
Oct
12
Apr
14
Date
Rating Share Price Price Target
(S$)
(S$)
19-Jan-07
N
1.53
1.71
24-Apr-07
N
1.71
1.85
13-Aug-07 OW
1.38
1.86
23-Aug-07 OW
1.51
1.68
21-Jan-08
OW
1.23
1.54
16-Jun-08
OW
1.22
1.36
23-Oct-08
OW
0.64
1.15
24-Apr-09
OW
0.70
1.00
17-Aug-09 OW
0.98
1.30
10-Jan-10
OW
1.40
1.65
26-Oct-10
OW
1.50
1.80
21-Mar-11 OW
1.42
1.65
20-Jul-11
N
1.57
1.65
31-Jul-12
N
1.80
1.85
02-Oct-12
N
1.82
2.05
23-Oct-12
N
1.91
2.10
28-Apr-13
N
2.30
2.15
31-Aug-13 N
1.79
1.85
08-Sep-14 NR
1.98
--
09-Dec-14 UW
1.91
1.85
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Keppel REIT (KASA.SI, KREIT SP) Price Chart
2
Date
UW S$1.198
UW S$0.66
N S$1.4
UW S$0.8
N S$0.85N S$1.1
N S$1.35
N S$1.25
NR
N S$1.25 16-Jun-08
UW
1.25
1.20
19-Jan-09
UW
0.59
0.66
25-Jun-11
N
1.32
1.40
28-Aug-11 N
1.14
1.30
14-Sep-11 N
1.10
1.10
18-Oct-11
1.03
0.80
04-Feb-12 N
0.88
0.85
11-Apr-12
N
0.93
0.95
17-Jul-12
N
1.10
1.05
31-Jul-12
N
1.12
1.10
02-Oct-12
N
1.18
1.30
28-Apr-13
N
1.53
1.35
31-Aug-13 N
1.20
1.25
25-Aug-14 NR
1.25
--
09-Dec-14 N
1.21
1.25
1.5
Price(S$)
1
0.5
0
Jun
08
Mar
09
Dec
09
Sep
10
Jun
11
Mar
12
Dec
12
Sep
13
Rating Share Price Price Target
(S$)
(S$)
Jun
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
UW
Mapletree Commercial Trust (MACT.SI, MCT SP) Price Chart
2
OW S$0.92
OW S$1.25
N S$0.92
OW S$1.15
N S$1.4 N S$1.25
OW S$1.4 NR UW S$1.4
Date
Rating Share Price Price Target
(S$)
(S$)
08-Jun-11
N
1.5
Price(S$)
1
0.5
0
Apr
11
Jan
12
Oct
12
Jul
13
Apr
14
0.88
0.92
28-Aug-11 OW
0.84
0.92
31-Jul-12
OW
1.09
1.15
02-Oct-12
OW
1.17
1.25
20-Oct-12
N
1.26
1.25
28-Apr-13
N
1.45
1.40
31-Aug-13 N
1.12
1.25
24-Apr-14
OW
1.26
1.40
25-Aug-14 NR
1.44
--
09-Dec-14 UW
1.44
1.40
Jan
15
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
57
Asia Pacific Equity Research
31 January 2015
Brandon Lee
(65) 6882-7073
[email protected]
Mapletree Industrial Trust (MAPI.SI, MINT SP) Price Chart
2
OW S$1.3
OW S$1.3 OW S$1.4
N S$1.45
N S$1.35
N S$1.45 NR N S$1.55
Date
Rating Share Price Price Target
(S$)
(S$)
08-Jun-11
1.5
1
Price(S$)
0.5
0
Oct
10
Jul
11
Apr
12
Jan
13
Oct
13
OW
1.16
1.30
28-Aug-11 OW
1.16
1.25
27-Jan-12
OW
1.08
1.30
31-Jul-12
OW
1.31
1.40
02-Oct-12
OW
1.42
1.55
28-Apr-13
N
1.58
1.45
31-Aug-13 N
1.28
1.35
23-Apr-14
1.43
1.45
25-Aug-14 NR
1.43
--
09-Dec-14 N
1.49
1.55
N
Jul
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
Date
Suntec REIT (SUNT.SI, SUN SP) Price Chart
3
OW S$2.128
UW S$1.496
UW S$0.64
UW S$0.85
UW S$1.2
UW S$1.35
OW S$1.65
N S$1.75
OW S$2
OW S$1.834
UW S$1.629
UW S$1.344
UW S$1.337
UW S$1.342
UW S$0.8
UW S$1.15
N S$1.4N S$1.55
N S$1.4
N S$1.45
N S$1.6
OW S$1.8
OW S$1.75
2
Price(S$)
1
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Aug 25, 2014 - Dec 09, 2014.
58
Oct
12
Apr
14
Rating Share Price Price Target
(S$)
(S$)
28-Nov-06 OW
1.63
1.83
19-Jan-07
OW
1.82
2.13
14-Aug-07 UW
1.90
1.63
23-Aug-07 UW
1.83
1.50
30-Oct-07
UW
1.82
1.50
21-Jan-08
UW
1.49
1.34
16-Jun-08
UW
1.53
1.34
25-Nov-08 UW
0.62
1.34
29-Jan-09
UW
0.68
0.64
29-Apr-09
UW
0.72
0.60
NR
OW S$2.1 31-Jul-09
UW
1.06
0.80
17-Aug-09 UW
0.97
0.85
23-Sep-09 UW
1.12
1.00
20-Jan-10
UW
1.35
1.15
26-Jan-10
UW
1.30
1.20
27-Apr-10
UW
1.38
1.25
25-Jul-10
N
1.43
1.40
27-Oct-10
UW
1.54
1.35
11-Jan-11
N
1.55
1.60
21-Mar-11 N
1.47
1.55
25-Jun-11
1.48
1.65
28-Aug-11 N
1.32
1.50
14-Sep-11 N
1.27
1.40
11-Apr-12
N
1.25
1.45
31-Jul-12
N
1.42
1.60
02-Oct-12
N
1.49
1.75
20-Oct-12
OW
1.57
1.75
23-Jan-13
OW
1.74
1.80
28-Apr-13
OW
1.96
2.00
31-Aug-13 OW
1.52
1.75
25-Aug-14 NR
1.80
--
09-Dec-14 OW
1.90
2.10
OW
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is
compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear
in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research
website, www.jpmorganmarkets.com.
Coverage Universe: Lee, Brandon: A-REIT (AEMN.SI), Ascott Residence Trust (ASRT.SI), CDL Hospitality Trusts (CDLT.SI),
CapitaCommercial Trust (CACT.SI), CapitaLand (CATL.SI), CapitaMall Trust (CMLT.SI), CapitaRetail China Trust (CRCT.SI), City
Developments (CTDM.SI), Far East Hospitality Trust (FAEH.SI), Frasers Centrepoint Trust (FCRT.SI), Global Logistic Properties Ltd
(GLPL.SI), Keppel Land (KLAN.SI), Keppel REIT (KASA.SI), Mapletree Commercial Trust (MACT.SI), Mapletree Industrial Trust
(MAPI.SI), Overseas Union Enterprise Ltd (OVES.SI), Suntec REIT (SUNT.SI)
J.P. Morgan Equity Research Ratings Distribution, as of January 1, 2015
J.P. Morgan Global Equity Research Coverage
IB clients*
JPMS Equity Research Coverage
IB clients*
Overweight
(buy)
45%
56%
45%
75%
Neutral
(hold)
43%
49%
48%
67%
Underweight
(sell)
12%
33%
7%
52%
*Percentage of investment banking clients in each rating category.
For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table
above.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered
companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst
or your J.P. Morgan representative, or email [email protected].
Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based
upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US
affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS,
and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public
appearances, and trading securities held by a research analyst account.
Other Disclosures
J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketing
name for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.
All research reports made available to clients are simultaneously available on our client website, J.P. Morgan Markets. Not all research content is
redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your sales
representative.
Options related research: If the information contained herein regards options related research, such information is available only to persons who have
received the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,
please contact your J.P. Morgan Representative or visit the OCC's website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf
Legal Entities Disclosures
U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC. U.K.: JPMorgan Chase N.A., London
Branch, is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and to limited regulation by
59
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
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60
Brandon Lee
(65) 6882-7073
[email protected]
Asia Pacific Equity Research
31 January 2015
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