Singapore Reits
Back to basics

        Sreit yield projected at 7.4%; expect to perform in line with the
        market in 2010

        Gearing and refinancing risks have abated, look to growth
        fundamentals

        Bottom-up stock picking; prefer ART, Suntec, AIT, MLT and FCT

        Upgraded SGREIT and CDL HT on valuation grounds


Normalised valuations.  Sreit yields have normalized back to a market cap
weighted 7.4% FY10 DPU or 480bps over the 10-year bond yield, in tune with
long term historical levels. Hence, the Sreit sector is expected to trade
in line with the broader market in 2010 with a projected total return of
15.6%.

Back to fundamentals.  Balance sheets are now healthier with gearing at 31%
and refinancing risks have abated with only 16% of the Sreit indebtedness
due for review next year. At this point, with little prospect of
significant asset reflation, we believe that Sreits are unlikely to favour
gearing up much from here. Hence, any capital management exercises to fund
new purchases are likely to be smaller and opportunistic in nature.
Investors are likely to refocus back on earnings growth potential, driven
by both organic and acquisition means as a catalyst for stock performance.

Selective stock picking for outperformance. Sector and stock selection will
be key to outperformance within the sector. We continue to favour the
hospitality, retail and industrial sectors for healthy organic and
acquisition growth potential. Our top picks are ART and Suntec for their
leverage to the anticipated rebound in tourism and retail sales on the back
of the opening of the 2 IRs. Valuation is inexpensive as ART and Suntec are
trading on the higher end of the yield range within their respective
sub-segments. Amongst the industrial and retail reits, we continue to like
MapletreeLog, Ascendas India and FCT for their visible acquisition pipeline
that will underpin forward earnings growth. In addition, we have also
upgraded our call on CDL HT and Starhill Global REIT to BUYs on valuation
grounds. The key risk to our view is an earlier than expected interest rate
hike.

FIRST NATIONAL GEOGRAPHIC STORE TO OPEN IN Q1 2010

More details about the acquisitions/fundings can be obtain from SGX - listed company announcements. Read it if you are interested. Anyway, I think this one is undervalue like Suntec Reit as compared to other similar sector's reits. Mean fair value is ~ $0.63 as recommended by various brokers, latest NAV is ~$0.80.

Actually the info is as per that disclosed in SGX, just that they are rounded up. Believe that the Feb payment is for the 4QFY08, hence, not taken into account. Also, if I am not wrong, REITs have averaged around 5 - 6% yield before the current crisis. The 10+% yield from last Oct til around mid this year was due to the plunge of REIT prices while DPU remained stable. In fact, we are now seeing a tightening of the yield spread (over risk-free investments) as the economy turns around, through rights dilution, price recovery, declines in DPU, etc. In my view, they will stabalise to 5 - 6% over the not too long term. Although, DPU is no doubt a big factor in the price of the REITs, I do believe the underlying assets (class and quality), number of outstanding shares, presence of strong sponsors, macro-economical reasons such as government policies, perceived quality of management, debts, growth through acquisition, etc. are some of the other factors that also influence the trend. Sharing a thought too.

Question:

Where did you derive the distribution of 4.7cts?  

Apology for the huge mistake!  You are right, I forgot about the effect of the recent rights issue!  That is why I never bother apply for an analyst's position.

Your reason on Starhill share price's non-performance sounds convincing to me now.

If this is the situation, will this counter fall below 50cts assuming no further fund is needed (just disappointment)?

Although it appears that the falling pricing has stopped with low volume being traded in today's negative STI..... a good sign but from the TA chart it is still not out of the water yet with (Will% at -83, Stoc at only 13.9 and Parabolic suggest downward trend). 

Just got to trade with care....hopefully not another trap...