Thursday, November 21, 2013

Suntec REIT - Maiden voyage (CIMB)

Suntec REIT -
Current S$1.57
Target S$1.91
Maiden voyage

We see no reason to continue being negative on Parkson following the recovery in Malaysia's profitability, although it is still not fully back to normal. Management is positive on 2H and the trends this quarter suggest that the optimism is justified. 1QFY6/14 core net profit was in line at 24% of our and consensus FY14 estimates. We trim our estimates by 1% on housekeeping matters. We upgrade to an Outperform from an Underperform on the back of Malaysia's recovering profitability and depressed share price. Our target price is raised as we roll over to 20x CY15 P/E (prev. 22x CY14), in line with regional peers. Catalysts are improving sales figures.


This acquisition could boost SUN's DPU by 4.7% with stable long-term income. However, 1) the resulting higher net gearing level, 2) foreign currency exposure and 3) forecasted yield from this property based on a higher-than-current market rental rate, could potentially offset the positive DPU uplift. Maintain Outperform with unchanged DDM-based (discount rate of 7.9%) TP of S$1.91 as we await for more information from the upcoming analysts briefing on Monday.

What Happened
Suntec REIT announced recently, that it will acquire a 31-storey, A-grade commercial tower, located in the North Sydney's CBD area, for a total price of A$413.19m (S$481.3m). The property, targeted for completion in early 2016, is expected to have a NLA of 423,915 sqft, 100% pre-commitment, with Leighton Group - one of Australia's largest property development group, taking a head lease of 76% of property's NLA with a weighted average lease to expiry of c.10 years. Concurrently, Leighton Holdings will also provide a four-year rental guarantee for any vacant space upon completion of the property. During the construction phase, the property will be underpinned by a coupon payment of 6.32% yield p.a and an initial yield of 6.89% upon completion. With the acquisition being funded via a S$500m facility management guided this transaction to be yield accretive, and will increase DPU by c.4.7%.

What We Think
Although we like this acquisition for its high yield, with SUN's net gearing currently at 37.2%, we believe it could potentially rise to c.41.0% post acquisition (42.5% post-Phase 3 AEI at Suntec City). A higher net gearing and foreign exchange fluctuation exposure could potentially mitigate the uplift in DPU. In addition, based on our estimates, an initial yield of 6.89% translates to an expected rental rate of A$7psf/mth - higher than the average A$5-6psf/mth in downtown Sydney. Having said that, the true impact on risks and DPU will be clearer after the upcoming briefing.

What You Should Do
Maintain Outperform as we awaits for more information from the analysts briefing on Monday.


Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 17/11/13

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Warren E. Buffett(沃伦•巴菲特)
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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。

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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,
冷眼(冯时能)投资概念
“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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