Wednesday, September 25, 2013

REITS : Hold Out For a Better Timing (RHB)

Although the US Fed’s decision to retain QE3 may give REITs some short-term relief as bond yields are expected to drop in the near-term, medium-term caution lingers over the actual date of tapering. On a relative basis, we see better value in SREITs owing to the larger spread and Singapore’s stronger economic fundamentals.

 OVERWEIGHTSREITs and UNDERWEIGHT MREITs.
• Short-term relief. As the US Federal Reserve (US Fed) maintains its QE or bond buying programme, the REITs sector will experience shortterm relief, as bond yields are expected to ease over the near-term.
After the US Fed first indicated its intention to stop its stimulus programme in May, both the Singapore REIT (SREIT) and Malaysia REIT (MREIT) markets saw some 15-20% correction in prices. This was due to the market’s anticipation that QE tapering would begin soon after, sparking off a capital outflow from emerging markets. As a result, SREITs’ yield spreads widened to 249 bps while that for MREITs rose to 109-175 bps, close to pre-QE levels. The current average dividend yields for both SREITs/MREITs (large caps excluding KLCC Property, or KLCCSS MK)- at 6.4%/4.3% (net) vs 4.2%/3.9% at peak valuations - are looking increasingly attractive. P/NAV is now 1.0x/1.2x for SREITs/MREITs vsthe previous high at 1.2x/1.5x.

• Still cautious over the medium term. Re-rating catalysts for the sector will come when bond yields start stabilising or stop rising and hinges on the timing of the US Fed official announcement on QE tapering. Note that, since May, the 10-year Malaysia and Singapore Government bond yields have increased by about 50 bps and 130 bps respectively. We expect this upward trend to continue after the short-term easing and, to be prudent, some 20-50 bps yield expansion is still likely, reverting to the long-term historical average level. During this period, with higher bond yields and subpar earnings growth, REITs will unlikely outperform the market significantly.

• Prefer SREITs over MREITs. On a relative basis, we prefer SREITs over MREITs due to the weaker economic fundamentals in the emerging markets. In July, rating agency Fitch downgraded Malaysia’s sovereign credit rating outlook to negative (from stable) due to deteriorating public finances. As the Malaysian Government has indicated plans to cut down some high import content infrastructure projects, this could potentially pose some downside risk to GDP growth. Furthermore, the recent fuel price hike and the likely announcement on GST implementation could dampen consumer sentiment in the near-term. Singapore, on the other
hand, appears to have more solid economic fundamentals. The Singapore Government has revised upwards its 2013 GDP growth forecast to 2.5-3.5% (from 1-3%), due to the stronger-than-expected 2Q13 GDP growth of 3.8% y-o-y (1Q13: 0.2%).

• Overweight SREITs, underweight MREITs. To be prudent, we like REITs with strong capital management, ie low gearing, good asset enhancement initiatives (AEI) and inorganic growth prospects, as well as capable managements. Despite the challenges, we still prefer Malaysia’s retail segment and Singapore’s office segment. Our Top Picks are: i)  Keppel REIT, ii) Cambridge REIT, and iii) AIMS AMP Capital. These  REITs offer better yields than the MREITs.



Source/Extract/Excerpts/来源/转贴/摘录: RHB-Research,
Publish date: 23/09/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
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做自己熟悉的事,等到发现大好机会才投钱下去

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“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
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每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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