SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

Capitaland India Trust / Equity Bottom-Up

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Prudence is very much a watchword for chartered accountant by training Sanjeev Dasgupta.

The CEO of the trustee-manager of SGX-listed Ascendas India Trust, whose early career spans corporate finance, investment banking, as well as private equity real estate, is big on risk management.

“I learned many lessons from the Global Financial Crisis that hit India’s real estate sector between 2009 and 2012,” he recalled. “For one, managing risk has to be a critical part of a sustainable and responsible growth strategy for any organisation.”

“During boom times, there’s a tendency to be over-aggressive on investing, with less focus on risk mitigation, which means there’s quite a bit of pain once a crisis hits.”

The second lesson came from an ex-colleague’s pithy remark: Nobody makes money when they invest – only when they divest. “During good times, everyone is focused on investing – they, at times, miss the crux of the issue, which is being able to make a meaningful profit when you exit the investment,” he added.

Dasgupta, a Bachelor of Commerce graduate from Mumbai University who also holds a Master in Business Administration from London Business School, joined a-iTrust in January 2014. Prior to this role, he held the position of President, Real Estate, at ICICI Venture Funds Management between 2009 and 2013, and was the Managing Director of Future Capital Real Estate from 2005 to 2009.

For Dasgupta, the differences between the worlds of private equity and listed REITs are stark.

“The key differentiator for REITs is their corporate governance framework, which investors draw a lot of comfort from. DPUs also keep REIT management teams disciplined, as they need to prioritise risk management to ensure distributions to unitholders are not compromised,” he noted, referring to distributions per unit, a closely watched industry metric.

“In comparison, private equity structures, arguably, have much more freedom and flexibility, but much greater risk.”

Ascendas India Trust (a-iTrust) was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

a-iTrust’s portfolio – which has a healthy committed occupancy rate of 98% – comprises seven world-class IT business parks and one logistics park in India. Assets under management (AUM) stood at S$2.1 billion as at 30 June 2020.

a-iTrust, structured as a business trust, offers stable income distributions similar to a real estate investment trust. It is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly owned subsidiary of SGX-listed CapitaLand Ltd.

CapitaLand became the Sponsor of the trust in June 2019 after its acquisition of Ascendas Pte Ltd and Singbridge Pte Ltd. CapitaLand is one of Asia’s largest diversified real estate groups, with AUM of more than S$130 billion. The Group has a significant global footprint in the real estate investment management business, managing seven listed REITs and business trusts as well as over 20 private funds.

DPU-Accretive

For a-iTrust, one primary growth driver has been its ability to execute value-add growth strategies. One example is its use of forward purchase deals to acquire assets in India at lower prices, instead of buying overpriced income-producing assets.

“The Ascendas Group has a 25-year operating history on the ground in India, with strong leasing, project execution and property management expertise. This gives us the confidence to deal with potential risks if the environment becomes challenging,” Dasgupta added.

More acquisitions are also on the cards for a-iTrust. “The assets must, first and foremost, be DPU-accretive,” he noted. “We’ve set a certain hurdle rate for our investments in India, and they have to be at or above that rate.”

The geographic focus remains on the country’s six metro cities, which are relatively large in size and have a lot of untapped potential. Staying within the IT corridors in those six cities is also a must, he added.

The logistics sector remains a key focus area for a-iTrust, which acquired its first logistics asset two years ago. “India doesn’t have a large base of Grade A warehouse assets, so there’s a need to create that pipeline for ourselves,” Dasgupta pointed out. “At the Sponsor level, we have created a platform with a local partner, which gives us the requisite expertise to grow faster in this asset class.”

“Following COVID-19, logistics has also become the one of the most coveted asset classes among investors globally, due to the acceleration of e-commerce growth.”

Another sector that a-iTrust is evaluating is data centres. “We’re looking at how we can participate in the growth of this asset class, which will, in part, be driven by the government’s data localisation regulations that require financial services and healthcare data to be kept onshore,” Dasgupta said.

According to the Ericsson Mobility Report 2020, Indians used about 12GB of data per month on average in 2019, the highest consumption globally, and this figure is expected to double to over the next five years. “So this is one sector that merits close attention, and we’re optimistic about its outlook,” he added.

Currently, IT business parks comprise 93% of a-iTrust’s portfolio, with logistics accounting for the remaining 7%. “IT business parks are still growing, and the IT services sector is expanding at a reasonable pace, even during COVID, due to the acceleration of digital transformation,” Dasgupta said.

“Over time, we expect logistics and data centres – which are at a nascent growth stage – to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.”

Mitigating Risks

Notwithstanding the robust outlook, a-iTrust continues to grapple with foreign currency risks, although these are mitigated by its hedging strategy, said Dasgupta.

“The fact that the rupee is a long-term depreciating currency – relative to the US dollar and Singapore dollar – is a big challenge.”

“We try to achieve a growth that is meaningfully higher than the annual currency depreciation rate of 2.5%-3.0%,” he added. “Over the last six years, we’ve been able to deliver 9%-10% dividend growth in Sing dollar terms to investors, which translates to 12%-13% rupee growth. This has helped us to mitigate the FX risks.”

a-iTrust’s financial position remains robust – it has a low gearing ratio of 29%, with cash and undrawn committed facilities totalling S$198 million. Of its total borrowings, 82% are effectively on a fixed-interest rate basis and 65% are hedged into rupees.

Meanwhile, the next biggest – and most obvious – challenge for the trust remains COVID-19, with India’s infection rate still climbing.

Following the economic consequences of the outbreak, the country’s gross domestic product is forecast to contract 5.9% in 2020 and recover to 3.9% next year, according to a UN Conference on Trade and Development (UNCTAD) report published in last month.

“We continue to monitor our physical occupancy levels closely,” Dasgupta said. “We also see this as an opportunity to differentiate our properties by bringing in know-how and infrastructure from Singapore, like thermal scanners and air purification technology, to keep our park population safe. The fact that we’re doing more than other landlords is very much appreciated by our tenants.”

Nonetheless, Dasgupta remains optimistic about a-iTrust’s portfolio occupancy rates. “The cost of real estate for IT parks in India is not high, whereas companies have to reimburse staff for bandwidth and utility costs for work-from-home protocols, so actually, the cost-benefit analysis in terms of rental savings doesn’t really work for India, unlike in other developed markets,” he added.

Looking ahead, Dasgupta has made it his personal target to develop a-iTrust into a much larger platform, delivering both profitable as well as sustainable growth.

“Given the size and scale of the Indian market, and despite healthy expansion rates over the last six years, there’s still a lot of room to grow,” he added.

Apart from managing the trust’s operations, Dasgupta, 53, also prioritises family time with his college-going son, and daughter, a recent university graduate. His wife, a social entrepreneur, has been actively involved in supporting Singapore’s COVID-19 containment efforts amongst migrant workers.

Belonging to a family of foodies, he bonds with his wife and children over kitchen activities. This usually involves him playing role of food critic, while they whip up delectable South Indian, Thai and Italian dishes.

“You can be the most successful CEO in any organisation, but the toughest job in the world is still being a parent,” he said with a chuckle. “As parents, we want to provide love and support for our kids, and ensure they grow up with the right values.”

“That’s always a work in progress.”

 

Ascendas India Trust

Ascendas India Trust (a-iTrust) listed on SGX in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or  uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. As at 30 June 2020, a-iTrust’s assets under management stand at S$2.1billion.

a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India – International Tech Park Bangalore, International Tech Park Chennai and CyberValein Chennai, International Tech Park Hyderabad, CyberPearl, and aVancein Hyderabad, aVancein Pune and Arshiya warehouses near Mumbai.

a-iTrust is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly  owned  subsidiary of SGX-listed CapitaLand Ltd, one of Asia’s largest diversified real estate groups, which owns and manages a global portfolio worth S$131.9 billion as at 31 December 2019.

The company website is: <a href="http://www.a-itrust.com">www.a-itrust.com</a>. 
Click <a href="https://www.sgx.com/securities/equities/CY6U">here </a>for the company's StockFacts page. 
For the six months ended 30 June 2020 financial results, click <a href="https://ir.a-itrust.com/newsroom/1._1H_FY2020_Press_Release_final.pdf">here</a>.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="///C:/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    a-iTrust-CEO


Prudence is very much a watchword for chartered accountant by training Sanjeev Dasgupta.

The CEO of the trustee-manager of SGX-listed Ascendas India Trust, whose early career spans corporate finance, investment banking, as well as private equity real estate, is big on risk management.

“I learned many lessons from the Global Financial Crisis that hit India’s real estate sector between 2009 and 2012,” he recalled. “For one, managing risk has to be a critical part of a sustainable and responsible growth strategy for any organisation.”

“During boom times, there’s a tendency to be over-aggressive on investing, with less focus on risk mitigation, which means there’s quite a bit of pain once a crisis hits.”

The second lesson came from an ex-colleague’s pithy remark: Nobody makes money when they invest – only when they divest. “During good times, everyone is focused on investing – they, at times, miss the crux of the issue, which is being able to make a meaningful profit when you exit the investment,” he added.

Dasgupta, a Bachelor of Commerce graduate from Mumbai University who also holds a Master in Business Administration from London Business School, joined a-iTrust in January 2014. Prior to this role, he held the position of President, Real Estate, at ICICI Venture Funds Management between 2009 and 2013, and was the Managing Director of Future Capital Real Estate from 2005 to 2009.

For Dasgupta, the differences between the worlds of private equity and listed REITs are stark.

“The key differentiator for REITs is their corporate governance framework, which investors draw a lot of comfort from. DPUs also keep REIT management teams disciplined, as they need to prioritise risk management to ensure distributions to unitholders are not compromised,” he noted, referring to distributions per unit, a closely watched industry metric.

“In comparison, private equity structures, arguably, have much more freedom and flexibility, but much greater risk.”

Ascendas India Trust (a-iTrust) was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

a-iTrust’s portfolio – which has a healthy committed occupancy rate of 98% – comprises seven world-class IT business parks and one logistics park in India. Assets under management (AUM) stood at S$2.1 billion as at 30 June 2020.

a-iTrust, structured as a business trust, offers stable income distributions similar to a real estate investment trust. It is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly owned subsidiary of SGX-listed CapitaLand Ltd.

CapitaLand became the Sponsor of the trust in June 2019 after its acquisition of Ascendas Pte Ltd and Singbridge Pte Ltd. CapitaLand is one of Asia’s largest diversified real estate groups, with AUM of more than S$130 billion. The Group has a significant global footprint in the real estate investment management business, managing seven listed REITs and business trusts as well as over 20 private funds.

DPU-Accretive

For a-iTrust, one primary growth driver has been its ability to execute value-add growth strategies. One example is its use of forward purchase deals to acquire assets in India at lower prices, instead of buying overpriced income-producing assets.

“The Ascendas Group has a 25-year operating history on the ground in India, with strong leasing, project execution and property management expertise. This gives us the confidence to deal with potential risks if the environment becomes challenging,” Dasgupta added.

More acquisitions are also on the cards for a-iTrust. “The assets must, first and foremost, be DPU-accretive,” he noted. “We’ve set a certain hurdle rate for our investments in India, and they have to be at or above that rate.”

The geographic focus remains on the country’s six metro cities, which are relatively large in size and have a lot of untapped potential. Staying within the IT corridors in those six cities is also a must, he added.

The logistics sector remains a key focus area for a-iTrust, which acquired its first logistics asset two years ago. “India doesn’t have a large base of Grade A warehouse assets, so there’s a need to create that pipeline for ourselves,” Dasgupta pointed out. “At the Sponsor level, we have created a platform with a local partner, which gives us the requisite expertise to grow faster in this asset class.”

“Following COVID-19, logistics has also become the one of the most coveted asset classes among investors globally, due to the acceleration of e-commerce growth.”

Another sector that a-iTrust is evaluating is data centres. “We’re looking at how we can participate in the growth of this asset class, which will, in part, be driven by the government’s data localisation regulations that require financial services and healthcare data to be kept onshore,” Dasgupta said.

According to the Ericsson Mobility Report 2020, Indians used about 12GB of data per month on average in 2019, the highest consumption globally, and this figure is expected to double to over the next five years. “So this is one sector that merits close attention, and we’re optimistic about its outlook,” he added.

Currently, IT business parks comprise 93% of a-iTrust’s portfolio, with logistics accounting for the remaining 7%. “IT business parks are still growing, and the IT services sector is expanding at a reasonable pace, even during COVID, due to the acceleration of digital transformation,” Dasgupta said.

“Over time, we expect logistics and data centres – which are at a nascent growth stage – to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.”

Mitigating Risks

Notwithstanding the robust outlook, a-iTrust continues to grapple with foreign currency risks, although these are mitigated by its hedging strategy, said Dasgupta.

“The fact that the rupee is a long-term depreciating currency – relative to the US dollar and Singapore dollar – is a big challenge.”

“We try to achieve a growth that is meaningfully higher than the annual currency depreciation rate of 2.5%-3.0%,” he added. “Over the last six years, we’ve been able to deliver 9%-10% dividend growth in Sing dollar terms to investors, which translates to 12%-13% rupee growth. This has helped us to mitigate the FX risks.”

a-iTrust’s financial position remains robust – it has a low gearing ratio of 29%, with cash and undrawn committed facilities totalling S$198 million. Of its total borrowings, 82% are effectively on a fixed-interest rate basis and 65% are hedged into rupees.

Meanwhile, the next biggest – and most obvious – challenge for the trust remains COVID-19, with India’s infection rate still climbing.

Following the economic consequences of the outbreak, the country’s gross domestic product is forecast to contract 5.9% in 2020 and recover to 3.9% next year, according to a UN Conference on Trade and Development (UNCTAD) report published in last month.

“We continue to monitor our physical occupancy levels closely,” Dasgupta said. “We also see this as an opportunity to differentiate our properties by bringing in know-how and infrastructure from Singapore, like thermal scanners and air purification technology, to keep our park population safe. The fact that we’re doing more than other landlords is very much appreciated by our tenants.”

Nonetheless, Dasgupta remains optimistic about a-iTrust’s portfolio occupancy rates. “The cost of real estate for IT parks in India is not high, whereas companies have to reimburse staff for bandwidth and utility costs for work-from-home protocols, so actually, the cost-benefit analysis in terms of rental savings doesn’t really work for India, unlike in other developed markets,” he added.

Looking ahead, Dasgupta has made it his personal target to develop a-iTrust into a much larger platform, delivering both profitable as well as sustainable growth.

“Given the size and scale of the Indian market, and despite healthy expansion rates over the last six years, there’s still a lot of room to grow,” he added.

Apart from managing the trust’s operations, Dasgupta, 53, also prioritises family time with his college-going son, and daughter, a recent university graduate. His wife, a social entrepreneur, has been actively involved in supporting Singapore’s COVID-19 containment efforts amongst migrant workers.

Belonging to a family of foodies, he bonds with his wife and children over kitchen activities. This usually involves him playing role of food critic, while they whip up delectable South Indian, Thai and Italian dishes.

“You can be the most successful CEO in any organisation, but the toughest job in the world is still being a parent,” he said with a chuckle. “As parents, we want to provide love and support for our kids, and ensure they grow up with the right values.”

“That’s always a work in progress.”

 

Ascendas India Trust

Ascendas India Trust (a-iTrust) listed on SGX in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or  uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. As at 30 June 2020, a-iTrust’s assets under management stand at S$2.1billion.

a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India – International Tech Park Bangalore, International Tech Park Chennai and CyberValein Chennai, International Tech Park Hyderabad, CyberPearl, and aVancein Hyderabad, aVancein Pune and Arshiya warehouses near Mumbai.

a-iTrust is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly  owned  subsidiary of SGX-listed CapitaLand Ltd, one of Asia’s largest diversified real estate groups, which owns and manages a global portfolio worth S$131.9 billion as at 31 December 2019.

The company website is: www.a-itrust.com.  
Click here for the company's StockFacts page.  
For the six months ended 30 June 2020 financial results, click here.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Ascendas India Trust Targets Logistics, Data Centre Growth

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Thematic (Sector/Industry)

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.
Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.
The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. 
The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.
We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.
We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.
Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.
Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.
The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. 
The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.
We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.
We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.
Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.

Asian Governance: Diversity & Incentives Through the Cultural Lens

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

After nearly 10 months of work across many jurisdictions (and probably a dozen insights by yours truly in that period), Temasek has decided to walk away from the deal.
Today - a national holiday in Singapore - saw the <a href="https://links.sgx.com/FileOpen/200810%20KIH%20SGX%20Announcement%20MAC%20invoked.ashx?App=Announcement&amp;FileID=626918" target="_blank" rel="noopener">announcement</a> (SGX link) that Temasek would not proceed with the Partial Offer as the MAC Pre-Condition of no material adverse change (MAC) in the Group's financial performance occur over the 12 months to the latest financial statements as of the time when the deal might go forward (and because the long stop appears to be before the next quarter's earnings will be released, that means the Q2 earnings to 30 June 2020 were going to be the defining data set. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/151/693/original/Screenshot%202020-08-10%20at%205.00.02%20PM.png?1597050277" class="editor-image img-responsive" data-smartkarma-image-id="151693"></figure>
<hr>
After a week of no news on this, I had expected that the national holiday long weekend would have either seen such an announcement before the weekend, or it might wait on the <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> shareholder vote, if there was a non-explicit condition to their eventual decision to do the deal. 
Over the weekend in <a href="https://www.smartkarma.com/insights/what-triggers-a-temasek-decision-on-keppel" target="_blank" data-smartkarma-citation="insights:41976" rel="noopener">What Triggers a Temasek Decision on Keppel?</a> I argued that on balance, when people came in to trade on Tuesday, I'd be a better buyer than seller - for the first time in months - because the upside to downside ratio was pretty good.
If I'd only waited a day I would have less egg on my face but for the moment, I have been "lucky" that markets haven't opened and people have not been able to trade on that change in recommendation. 
The question now is where should Keppel shares trade when uncontaminated by the possibility of being able to sell a portion at a higher price?
The obvious answer is "Probably lower." But there is nuance in there. And a bunch of that nuance has to do with the fact that Sembcorp Marine has fallen more than 50% in just over 2 months because of the announcement of its intention to do a Rights Offering recapitalisation and spinout (see <a href="https://www.smartkarma.com/insights/sembcorp-restructuring-details-timing-announced-the-arithmetic-is-compelling" target="_blank" rel="noopener">here</a> for more on that story) which would deliver a bunch of SMM shares to people who might not necessarily want them. 
As always, more below the fold.
<hr>
<h3>Side Notes:</h3>
Some of the insights which accompany this situation are noted below. 
<div>
After a disastrous Q1, Sembcorp Industries (SCI) and Sembcorp Marine (SMM) proposed a recapitalization/de-merger, as discussed in the insights listed below: 1. <a href="https://www.smartkarma.com/insights/sembcorp-marine-and-sci-a-gloriously-messy-recap-and-de-merger-big-win-for-sci" target="_blank" data-smartkarma-citation="insights:40153" rel="noopener">SembCorp Marine and SCI - A Gloriously Messy Recap and De-Merger - Big Win for SCI</a>  2. <a href="https://www.smartkarma.com/insights/sembcorp-marine-rights-offer-cast-away" target="_blank" data-smartkarma-citation="insights:40164" rel="noopener">Sembcorp Marine Rights Offer - Cast Away</a>  3. <a href="https://www.smartkarma.com/insights/thinking-about-sembcorp-industries-future-be-bigly-bullish" target="_blank" data-smartkarma-citation="insights:40809" rel="noopener">Thinking About Sembcorp Industries' Future - Be Bigly Bullish</a> 4. <a href="https://www.smartkarma.com/insights/sembcorp-restructuring-details-timing-announced-the-arithmetic-is-compelling" target="_blank" data-smartkarma-citation="insights:41504" rel="noopener">Sembcorp Restructuring Details &amp; Timing Announced - The Arithmetic Is Compelling</a> 
</div>
<div>
The EGMs for both SCI and SMM are scheduled for 11 August. That's "today" if you are reading this on Tuesday when you get back (or Monday in Europe or the US).
<table class="table table-striped">
<tbody>
<tr>
<td colspan="3" style="width: 724px;">
<h3>Past Insights on the Temasek Deal for Keppel</h3>
</td>
</tr>
<tr>
<td style="width: 100.8px;">Date</td>
<td style="width: 102.4px;">Insight Type</td>
<td style="width: 479.2px;">Title</td>
</tr>
<tr>
<td style="width: 100.8px;">2019</td>
<td style="width: 102.4px;">General</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/quiddity-singapore-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:28849" rel="noopener">Quiddity Singapore M&amp;A Guide 2019</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">21 Oct 2019</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/big-temasek-partial-offer-for-keppel" target="_blank" data-smartkarma-citation="insights:33305" rel="noopener">BIG Temasek Partial Offer for Keppel</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">29 Oct 2019</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/gauging-foreign-investment-review-risk-for-temasek-takeover-of-keppel" target="_blank" data-smartkarma-citation="insights:33908" rel="noopener">Gauging Foreign Investment Review Risk for Temasek Takeover of Keppel</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">27 Nov 2019</td>
<td style="width: 102.4px;">General</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/the-dummies-guide-to-partial-offers-tenders" target="_blank" data-smartkarma-citation="insights:34719" rel="noopener">The Dummies' Guide to Partial Offers/Tenders</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">15 Dec 2019</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-trading-cheap-to-its-comp-basket" target="_blank" data-smartkarma-citation="insights:35267" rel="noopener">Keppel Corp - Trading Cheap To Its Comp Basket</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">2 Feb  2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-partial-offer-countdown-still-cheap" target="_blank" data-smartkarma-citation="insights:36272" rel="noopener">Keppel Corp Partial Offer Countdown - Still Cheap</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">28 Feb 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-update-still-trading-cheap" target="_blank" data-smartkarma-citation="insights:36946" rel="noopener">Keppel Corp Update - STILL Trading Cheap</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">16 Mar 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-implied-likelihood-of-temasek-walking-away-or-dealbreak" target="_blank" data-smartkarma-citation="insights:37493" rel="noopener">Keppel - Implied Likelihood of Temasek Walking Away or Dealbreak</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">20 Mar 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-update-implied-likelihood-up-as-market-falls-meaning" target="_blank" data-smartkarma-citation="insights:37630" rel="noopener">Keppel Corp Update - Implied Likelihood Up As Market Falls, Meaning...</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">20 Mar 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-arb-grids-updated-20-march" target="_blank" data-smartkarma-citation="insights:37654" rel="noopener">Keppel Corp Arb Grids - Updated 20 March</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">30 April 2020 </td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-partial-tender-update-odds-less-in-your-favor-now-than-before" target="_blank" data-smartkarma-citation="insights:38878" rel="noopener">Keppel Corp Partial Tender Update - Odds Less In Your Favor Now Than Before</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">4 May 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-two-ways-to-tender" target="_blank" data-smartkarma-citation="insights:39010" rel="noopener">Keppel Corp - Two Ways To Tender</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">15 June 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-corp-stretched-vs-proxy-baskets-and-now-with-new-risk" target="_blank" data-smartkarma-citation="insights:40339" rel="noopener">Keppel Corp - Stretched Vs Proxy Baskets And Now With New Risk</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">26 July 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/keppel-material-impairments-may-mean-a-mac-mess" target="_blank" data-smartkarma-citation="insights:41533" rel="noopener">Keppel "Material Impairments" May Mean A MAC Mess</a> </td>
</tr>
<tr>
<td style="width: 100.8px;">2 Aug 2020</td>
<td style="width: 102.4px;">Deal-Specific</td>
<td style="width: 479.2px;"><a href="https://www.smartkarma.com/insights/it-s-a-macastrophe-keppel-surprises-bigly-and-badly-in-o-m" target="_blank" data-smartkarma-citation="insights:41726" rel="noopener">It's a MACastrophe!!! Keppel Surprises Bigly and Badly in O&amp;M</a> </td>
</tr>
</tbody>
</table>
</div>

After nearly 10 months of work across many jurisdictions (and probably a dozen insights by yours truly in that period), Temasek has decided to walk away from the deal.
Today - a national holiday in Singapore - saw the announcement (SGX link) that Temasek would not proceed with the Partial Offer as the MAC Pre-Condition of no material adverse change (MAC) in the Group's financial performance occur over the 12 months to the latest financial statements as of the time when the deal might go forward (and because the long stop appears to be before the next quarter's earnings will be released, that means the Q2 earnings to 30 June 2020 were going to be the defining data set. 


After a week of no news on this, I had expected that the national holiday long weekend would have either seen such an announcement before the weekend, or it might wait on the Sembcorp Marine (SMM SP) shareholder vote, if there was a non-explicit condition to their eventual decision to do the deal. 
Over the weekend in What Triggers a Temasek Decision on Keppel? I argued that on balance, when people came in to trade on Tuesday, I'd be a better buyer than seller - for the first time in months - because the upside to downside ratio was pretty good.
If I'd only waited a day I would have less egg on my face but for the moment, I have been "lucky" that markets haven't opened and people have not been able to trade on that change in recommendation. 
The question now is where should Keppel shares trade when uncontaminated by the possibility of being able to sell a portion at a higher price?
The obvious answer is "Probably lower." But there is nuance in there. And a bunch of that nuance has to do with the fact that Sembcorp Marine has fallen more than 50% in just over 2 months because of the announcement of its intention to do a Rights Offering recapitalisation and spinout (see here for more on that story) which would deliver a bunch of SMM shares to people who might not necessarily want them. 
As always, more below the fold.

Side Notes:
Some of the insights which accompany this situation are noted below. 

After a disastrous Q1, Sembcorp Industries (SCI) and Sembcorp Marine (SMM) proposed a recapitalization/de-merger, as discussed in the insights listed below: 1. SembCorp Marine and SCI - A Gloriously Messy Recap and De-Merger - Big Win for SCI  2. Sembcorp Marine Rights Offer - Cast Away  3. Thinking About Sembcorp Industries' Future - Be Bigly Bullish 4. Sembcorp Restructuring Details &amp; Timing Announced - The Arithmetic Is Compelling 


The EGMs for both SCI and SMM are scheduled for 11 August. That's "today" if you are reading this on Tuesday when you get back (or Monday in Europe or the US).




Past Insights on the Temasek Deal for Keppel



Date
Insight Type
Title


2019
General
Quiddity Singapore M&amp;A Guide 2019 


21 Oct 2019
Deal-Specific
BIG Temasek Partial Offer for Keppel 


29 Oct 2019
Deal-Specific
Gauging Foreign Investment Review Risk for Temasek Takeover of Keppel 


27 Nov 2019
General
The Dummies' Guide to Partial Offers/Tenders 


15 Dec 2019
Deal-Specific
Keppel Corp - Trading Cheap To Its Comp Basket 


2 Feb  2020
Deal-Specific
Keppel Corp Partial Offer Countdown - Still Cheap 


28 Feb 2020
Deal-Specific
Keppel Corp Update - STILL Trading Cheap 


16 Mar 2020
Deal-Specific
Keppel - Implied Likelihood of Temasek Walking Away or Dealbreak 


20 Mar 2020
Deal-Specific
Keppel Corp Update - Implied Likelihood Up As Market Falls, Meaning... 


20 Mar 2020
Deal-Specific
Keppel Corp Arb Grids - Updated 20 March 


30 April 2020 
Deal-Specific
Keppel Corp Partial Tender Update - Odds Less In Your Favor Now Than Before 


4 May 2020
Deal-Specific
Keppel Corp - Two Ways To Tender 


15 June 2020
Deal-Specific
Keppel Corp - Stretched Vs Proxy Baskets And Now With New Risk 


26 July 2020
Deal-Specific
Keppel "Material Impairments" May Mean A MAC Mess 


2 Aug 2020
Deal-Specific
It's a MACastrophe!!! Keppel Surprises Bigly and Badly in O&amp;M 





Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Capitaland Integrated Commercial Trust / Event-Driven

<div><a href="https://www.smartkarma.com/entities/capitaland-mall-trust" target="_blank" data-smartkarma-citation="entities:105:1" rel="noopener">Capitaland Mall Trust (CT SP)</a> and <a href="https://www.smartkarma.com/entities/capitaland-commercial-trust" target="_blank" data-smartkarma-citation="entities:1077:1" rel="noopener">Capitaland Commercial Trust (CCT SP)</a> announced on 22nd Jan 2020 that the two would merge by way of a trust scheme of arrangement to form CapitaLand Integrated Commercial Trust. </div><div>I've spoke about the deal in my earlier insights:</div><div><ul>
<li>
<a href="https://www.smartkarma.com/insights/cct-cmt-is-it-really-a-merger-of-equals-solving-cmt-s-problem" target="_blank" rel="noopener">CCT+CMT: Is It Really a Merger of Equals? Solving CMT’s Problem</a> I spoke about how CCT's shareholders aren't exactly getting a splendid deal and they would have been better off going it alone.</li>
<li>
<a href="https://www.smartkarma.com/insights/cct-cmt-and-then-came-covid" target="_blank" rel="noopener">CCT+CMT: And Then Came COVID</a> I spoke about the impact of COVID-19 and the recent measures put in by the government on the performance of the two REITs.</li>
<li>
<a href="https://www.smartkarma.com/insights/cct-cmt-cct-results-update" target="_blank" rel="noopener">CCT+CMT: CCT Results Update</a> I looked at CCT's 1Q20 results.</li>
<li>
<a href="https://www.smartkarma.com/insights/cct-cmt-cmt-results-update-doing-the-right-thing-but-feeling-the-pain" target="_blank" rel="noopener">CCT+CMT: CMT Results Update, Doing the Right Thing but Feeling the Pain</a> I looked at CMT's 1Q20 results.</li>
</ul></div><div>In this insight, I'll take a quick look at CMT's results which were announced today.</div>

Capitaland Mall Trust (CT SP) and Capitaland Commercial Trust (CCT SP) announced on 22nd Jan 2020 that the two would merge by way of a trust scheme of arrangement to form CapitaLand Integrated Commercial Trust. I've spoke about the deal in my earlier insights:

CCT+CMT: Is It Really a Merger of Equals? Solving CMT’s Problem I spoke about how CCT's shareholders aren't exactly getting a splendid deal and they would have been better off going it alone.

CCT+CMT: And Then Came COVID I spoke about the impact of COVID-19 and the recent measures put in by the government on the performance of the two REITs.

CCT+CMT: CCT Results Update I looked at CCT's 1Q20 results.

CCT+CMT: CMT Results Update, Doing the Right Thing but Feeling the Pain I looked at CMT's 1Q20 results.
In this insight, I'll take a quick look at CMT's results which were announced today.

Mapletree Industrial Trust / Equity Bottom-Up

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body><ul>
<li>
Effective the June 22 open, Mapletree Industrial Trust will join the STI with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting near 12.5%. 
	 </li>
	<li>
Since listing in October 2010, Mapletree Industrial Trust has generated average annualised total returns of 19% and grown its portfolio from 70 properties valued at S$2.1 billion, to 114 properties valued at S$5.9 billion (including joint ventures). 
	 </li>
	<li>
The STI Reserve List, which has averaged 3% total returns in the 2020 year to 5 June on S$122 million on net institutional inflow, will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. 
	 
	Last week, the Straits Times Index (“STI”) was the strongest benchmark across Asia Pacific, generating a total return of 9.6%, bringing its 2020 year-to-date decline in total return to 13.2%. After the Thursday close, FTSE Russell announced that as part of the quarterly rebalancing, Mapletree Industrial Trust was added to the STI, with Singapore Press Holdings (“SPH”) omitted. Quarterly STI reviews are a highly competitive process with the Index maintaining a fixed number of 30 constituents. The process involves ranking stocks of the broader FTSE ST All-Share Index by market capitalisation and a stock will be inserted into the STI at the quarterly review if it rises to 20th position or above when the eligible securities are ranked by full market capitalisation or will be deleted at the quarterly review if it falls to 41st position or below.   Mapletree Industrial Trust’s 19.4% Annualised Total Returns since IPO 
	This year, Mapletree Industrial Trust has generated a total return of 8.2% through to 5 June, on S$33.5 million of net institutional inflow. This has brought Mapletree Industrial Trust’s annualised total returns since listing in October 2010 to 19.4% and has seen its market capitalisation rise from approximately S$1.7 billion on its debut, to S$6.0 billion at present. 
	Since the end of 2010, the S-REIT Sector total market capitalisation has grown from S$35 billion to approximately S$100 billion as of 5 June 2020. The same period of time has seen the number of REITs in the STI rise from one to six effective 22 June. SPH has also been a part of the significant expansion of the S-REIT Sector over the past 10 years, with the spin-off of Paragon and The Clementi Mall into SPH REIT in July 2013. From 23 July 2013, through to 5 June 2020, SPH REIT has since delivered investors 5.1% average annualised total returns. SPH REIT currently maintains a market capitalisation of S$2.5 billion, in comparison to SPH’s S$2.2 billion. As noted in its FY19 Annual Report (click <a href="http://sphreit.listedcompany.com/ar.html">here</a>) as of 10 October 2019, SPH maintained a 70% deemed interest (approximately S$1.75 billion on the 5 June close) in SPH REIT. As detailed in the table below Mapletree Industrial Trust will join the STI on the 22 June open with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting close to 12.5%.
	 

	<table class="table table-striped"><tbody>
<tr>
<td>
				STI Stocks
				</td>
				<td>
				STI Code
				</td>
				<td>
				31 March 2020 Index Weight
				</td>
				<td>
				New Indicative Weight for 22 June, based on 31 March 2020 data
				</td>
				<td>
				Sector/Industry
				</td>
			</tr>
<tr>
<td>
				Ascendas REIT
				</td>
				<td>
				A17U
				</td>
				<td>
				3.61%
				</td>
				<td>
				3.60%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				CapitaCom Trust
				</td>
				<td>
				C61U
				</td>
				<td>
				1.81%
				</td>
				<td>
				1.80%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				CapitaLand
				</td>
				<td>
				C31
				</td>
				<td>
				3.09%
				</td>
				<td>
				3.08%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				CapitaMall Trust
				</td>
				<td>
				C38U
				</td>
				<td>
				1.87%
				</td>
				<td>
				1.86%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				CityDev
				</td>
				<td>
				C09
				</td>
				<td>
				1.47%
				</td>
				<td>
				1.46%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				ComfortDelGro
				</td>
				<td>
				C52
				</td>
				<td>
				1.36%
				</td>
				<td>
				1.35%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				DairyFarm USD
				</td>
				<td>
				D01
				</td>
				<td>
				0.86%
				</td>
				<td>
				0.86%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				DBS
				</td>
				<td>
				D05
				</td>
				<td>
				14.52%
				</td>
				<td>
				14.47%
				</td>
				<td>
				Banks
				</td>
			</tr>
<tr>
<td>
				Genting Sing
				</td>
				<td>
				G13
				</td>
				<td>
				1.74%
				</td>
				<td>
				1.73%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				HongkongLand USD
				</td>
				<td>
				H78
				</td>
				<td>
				2.69%
				</td>
				<td>
				2.68%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				Jardine C&amp;C
				</td>
				<td>
				C07
				</td>
				<td>
				0.85%
				</td>
				<td>
				0.85%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				JMH USD
				</td>
				<td>
				J36
				</td>
				<td>
				6.49%
				</td>
				<td>
				6.47%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				JSH USD
				</td>
				<td>
				J37
				</td>
				<td>
				2.50%
				</td>
				<td>
				2.49%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				Keppel Corp
				</td>
				<td>
				BN4
				</td>
				<td>
				3.29%
				</td>
				<td>
				3.28%
				</td>
				<td>
				Oil &amp; Gas
				</td>
			</tr>
<tr>
<td>
				Mapletree Com Trust
				</td>
				<td>
				N2IU
				</td>
				<td>
				1.74%
				</td>
				<td>
				1.73%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				Mapletree Log Trust
				</td>
				<td>
				M44U
				</td>
				<td>
				1.75%
				</td>
				<td>
				1.74%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				OCBC Bank
				</td>
				<td>
				O39
				</td>
				<td>
				12.93%
				</td>
				<td>
				12.88%
				</td>
				<td>
				Banks
				</td>
			</tr>
<tr>
<td>
				SATS
				</td>
				<td>
				S58
				</td>
				<td>
				0.87%
				</td>
				<td>
				0.87%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				Sembcorp Ind
				</td>
				<td>
				U96
				</td>
				<td>
				0.61%
				</td>
				<td>
				0.61%
				</td>
				<td>
				Utilities
				</td>
			</tr>
<tr>
<td>
				SGX
				</td>
				<td>
				S68
				</td>
				<td>
				3.28%
				</td>
				<td>
				3.27%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				SIA
				</td>
				<td>
				C6L
				</td>
				<td>
				1.27%
				</td>
				<td>
				1.27%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				Singtel
				</td>
				<td>
				Z74
				</td>
				<td>
				8.21%
				</td>
				<td>
				8.18%
				</td>
				<td>
				Telecommunications
				</td>
			</tr>
<tr>
<td>
				ST Engineering
				</td>
				<td>
				S63
				</td>
				<td>
				2.07%
				</td>
				<td>
				2.06%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				ThaiBev
				</td>
				<td>
				Y92
				</td>
				<td>
				2.58%
				</td>
				<td>
				2.57%
				</td>
				<td>
				Consumer Goods
				</td>
			</tr>
<tr>
<td>
				UOB
				</td>
				<td>
				U11
				</td>
				<td>
				10.86%
				</td>
				<td>
				10.82%
				</td>
				<td>
				Banks
				</td>
			</tr>
<tr>
<td>
				UOL
				</td>
				<td>
				U14
				</td>
				<td>
				1.41%
				</td>
				<td>
				1.40%
				</td>
				<td>
				Real Estate
				</td>
			</tr>
<tr>
<td>
				Venture
				</td>
				<td>
				V03
				</td>
				<td>
				1.53%
				</td>
				<td>
				1.52%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				Wilmar Intl
				</td>
				<td>
				F34
				</td>
				<td>
				2.73%
				</td>
				<td>
				2.72%
				</td>
				<td>
				Consumer Goods
				</td>
			</tr>
<tr>
<td>
				YZJ Shipbldg SGD
				</td>
				<td>
				BS6
				</td>
				<td>
				0.76%
				</td>
				<td>
				0.76%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				SPH
				</td>
				<td>
				T39
				</td>
				<td>
				1.27%
				</td>
				<td>
				-
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				Mapletree Ind Trust
				</td>
				<td>
				ME8U
				</td>
				<td>
				-
				</td>
				<td>
				1.61%
				</td>
				<td>
				REITs
				</td>
			</tr>
</tbody></table>
	Source: FTSE Russell (<a href="http://www.ftse.com/products/indices/SGX-ST">www.ftse.com/products/indices/SGX-ST</a>), SGX My Gateway, SGX StockFacts. Note weights above are only indicative and based on relative weightings on 31 March 2020 with Mapletree Industrial Trust free float on 31 March provided in the relevant FTSE ST Singapore Shariah Index. 
	 
	STI Reserve List 
	Effective 22 June, the STI Reserve List will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. Four of the five STI Reserve List stocks have been recipient of net institutional inflows in the 2020 year to June 5 as illustrated below. The five stocks have also averaged 3% total returns in the 2020 year to 5 June.
	</li>
</ul></body></html>

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-06/Capture_5.PNG' alt='capture' />
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<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>The STI Reserve List is used in the event that one or more of the STI constituents are deleted during the period up to the next quarterly review. As detailed in the STI Ground Rules, when a company is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion.</body></html>




Effective the June 22 open, Mapletree Industrial Trust will join the STI with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting near 12.5%.  
	 
	
Since listing in October 2010, Mapletree Industrial Trust has generated average annualised total returns of 19% and grown its portfolio from 70 properties valued at S$2.1 billion, to 114 properties valued at S$5.9 billion (including joint ventures). 
	 
	
The STI Reserve List, which has averaged 3% total returns in the 2020 year to 5 June on S$122 million on net institutional inflow, will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. 
	 
	Last week, the Straits Times Index (“STI”) was the strongest benchmark across Asia Pacific, generating a total return of 9.6%, bringing its 2020 year-to-date decline in total return to 13.2%. After the Thursday close, FTSE Russell announced that as part of the quarterly rebalancing, Mapletree Industrial Trust was added to the STI, with Singapore Press Holdings (“SPH”) omitted.  Quarterly STI reviews are a highly competitive process with the Index maintaining a fixed number of 30 constituents. The process involves ranking stocks of the broader FTSE ST All-Share Index by market capitalisation and a stock will be inserted into the STI at the quarterly review if it rises to 20th position or above when the eligible securities are ranked by full market capitalisation or will be deleted at the quarterly review if it falls to 41st position or below.    Mapletree Industrial Trust’s 19.4% Annualised Total Returns since IPO  
	This year, Mapletree Industrial Trust has generated a total return of 8.2% through to 5 June, on S$33.5 million of net institutional inflow. This has brought Mapletree Industrial Trust’s annualised total returns since listing in October 2010 to 19.4% and has seen its market capitalisation rise from approximately S$1.7 billion on its debut, to S$6.0 billion at present.  
	Since the end of 2010, the S-REIT Sector total market capitalisation has grown from S$35 billion to approximately S$100 billion as of 5 June 2020. The same period of time has seen the number of REITs in the STI rise from one to six effective 22 June.  SPH has also been a part of the significant expansion of the S-REIT Sector over the past 10 years, with the spin-off of Paragon and The Clementi Mall into SPH REIT in July 2013. From 23 July 2013, through to 5 June 2020, SPH REIT has since delivered investors 5.1% average annualised total returns. SPH REIT currently maintains a market capitalisation of S$2.5 billion, in comparison to SPH’s S$2.2 billion. As noted in its FY19 Annual Report (click here) as of 10 October 2019, SPH maintained a 70% deemed interest (approximately S$1.75 billion on the 5 June close) in SPH REIT.  As detailed in the table below Mapletree Industrial Trust will join the STI on the 22 June open with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting close to 12.5%.
	 

	


				STI Stocks
				
				
				STI Code
				
				
				31 March 2020 Index Weight
				
				
				New Indicative Weight for 22 June, based on 31 March 2020 data
				
				
				Sector/Industry
				
			


				Ascendas REIT
				
				
				A17U
				
				
				3.61%
				
				
				3.60%
				
				
				REITs
				
			


				CapitaCom Trust
				
				
				C61U
				
				
				1.81%
				
				
				1.80%
				
				
				REITs
				
			


				CapitaLand
				
				
				C31
				
				
				3.09%
				
				
				3.08%
				
				
				Financials
				
			


				CapitaMall Trust
				
				
				C38U
				
				
				1.87%
				
				
				1.86%
				
				
				REITs
				
			


				CityDev
				
				
				C09
				
				
				1.47%
				
				
				1.46%
				
				
				Financials
				
			


				ComfortDelGro
				
				
				C52
				
				
				1.36%
				
				
				1.35%
				
				
				Consumer Services
				
			


				DairyFarm USD
				
				
				D01
				
				
				0.86%
				
				
				0.86%
				
				
				Consumer Services
				
			


				DBS
				
				
				D05
				
				
				14.52%
				
				
				14.47%
				
				
				Banks
				
			


				Genting Sing
				
				
				G13
				
				
				1.74%
				
				
				1.73%
				
				
				Consumer Services
				
			


				HongkongLand USD
				
				
				H78
				
				
				2.69%
				
				
				2.68%
				
				
				Financials
				
			


				Jardine C&amp;C
				
				
				C07
				
				
				0.85%
				
				
				0.85%
				
				
				Consumer Services
				
			


				JMH USD
				
				
				J36
				
				
				6.49%
				
				
				6.47%
				
				
				Industrials
				
			


				JSH USD
				
				
				J37
				
				
				2.50%
				
				
				2.49%
				
				
				Industrials
				
			


				Keppel Corp
				
				
				BN4
				
				
				3.29%
				
				
				3.28%
				
				
				Oil &amp; Gas
				
			


				Mapletree Com Trust
				
				
				N2IU
				
				
				1.74%
				
				
				1.73%
				
				
				REITs
				
			


				Mapletree Log Trust
				
				
				M44U
				
				
				1.75%
				
				
				1.74%
				
				
				REITs
				
			


				OCBC Bank
				
				
				O39
				
				
				12.93%
				
				
				12.88%
				
				
				Banks
				
			


				SATS
				
				
				S58
				
				
				0.87%
				
				
				0.87%
				
				
				Industrials
				
			


				Sembcorp Ind
				
				
				U96
				
				
				0.61%
				
				
				0.61%
				
				
				Utilities
				
			


				SGX
				
				
				S68
				
				
				3.28%
				
				
				3.27%
				
				
				Financials
				
			


				SIA
				
				
				C6L
				
				
				1.27%
				
				
				1.27%
				
				
				Consumer Services
				
			


				Singtel
				
				
				Z74
				
				
				8.21%
				
				
				8.18%
				
				
				Telecommunications
				
			


				ST Engineering
				
				
				S63
				
				
				2.07%
				
				
				2.06%
				
				
				Industrials
				
			


				ThaiBev
				
				
				Y92
				
				
				2.58%
				
				
				2.57%
				
				
				Consumer Goods
				
			


				UOB
				
				
				U11
				
				
				10.86%
				
				
				10.82%
				
				
				Banks
				
			


				UOL
				
				
				U14
				
				
				1.41%
				
				
				1.40%
				
				
				Real Estate
				
			


				Venture
				
				
				V03
				
				
				1.53%
				
				
				1.52%
				
				
				Industrials
				
			


				Wilmar Intl
				
				
				F34
				
				
				2.73%
				
				
				2.72%
				
				
				Consumer Goods
				
			


				YZJ Shipbldg SGD
				
				
				BS6
				
				
				0.76%
				
				
				0.76%
				
				
				Industrials
				
			


				SPH
				
				
				T39
				
				
				1.27%
				
				
				-
				
				
				Consumer Services
				
			


				Mapletree Ind Trust
				
				
				ME8U
				
				
				-
				
				
				1.61%
				
				
				REITs
				
			

	Source: FTSE Russell (www.ftse.com/products/indices/SGX-ST), SGX My Gateway, SGX StockFacts. Note weights above are only indicative and based on relative weightings on 31 March 2020 with Mapletree Industrial Trust free float on 31 March provided in the relevant FTSE ST Singapore Shariah Index. 
	 
	STI Reserve List  
	Effective 22 June, the STI Reserve List will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. Four of the five STI Reserve List stocks have been recipient of net institutional inflows in the 2020 year to June 5 as illustrated below. The five stocks have also averaged 3% total returns in the 2020 year to 5 June.
	



      
    
    capture

The STI Reserve List is used in the event that one or more of the STI constituents are deleted during the period up to the next quarterly review. As detailed in the STI Ground Rules, when a company is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion.


Sixth REIT, Mapletree Industrial Trust, to Join STI on 22 June

Singapore

CapitaLand Limited is a real estate company focused on investment holding. The Company and its subsidiaries are principally engaged in investment holding, real estate development, investment in real estate financial products and real estate assets, investment advisory and management services, as well as the management of serviced residences.

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