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

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<div>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</div>
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INITIATION
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<h2>AIMS APAC REIT (AAREIT SP)</h2>
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<h3>Achieving their AIM</h3>
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<ul>
<li>With a portfolio occupancy rate of 94.5%, almost 5% higher than Singapore’s industrial average occupancy level of 89.6% (based on JTC’s 3Q 2020 statistics), we like AIMS APAC REIT (AAREIT) for its diversified and resilient portfolio.</li>
<li>AAREIT’s management also has an excellent track record with yield-accretive acquisitions, value-adding to its current portfolio through property redevelopments or asset enhancement initiatives (AEIs) by building out its properties with under-utilised plot ratios, and refurbishing older assets.</li>
<li>We initiate coverage on AAREIT withan OUTPERFORM recommendation. Our target price of S$1.35 represents a total upside of 21.1%, inclusive of FY21F dividend yield of 7.4%.</li>
</ul>
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Investment Thesis
Diversified and resilient with income visibility. AAREIT’s assets are well-diversified from all fronts – property types, lease structures and tenants. It has properties ranging from Logistics &amp; Warehouse, Light Industrial, General Industrial, Business Parks as well as Hi-Tech. c.71% of its gross rental income (GRI, 2Q FY21) is earned from multi-tenanted assets, while the remaining GRI comes from master-leased assets with longer lease terms, providing a comfortable amount of income visibility and certainty. AAREIT’s properties are also tenanted by close to 200 tenants operating across a broad range of industries, including Telecommunication, Biotech/Life Sciences, Fashion and Apparels, and Furniture.
Strong performance track record. Over the years, AAREIT has successfully built out several properties with under- utilised plot ratios, and refurbished its older assets where possible. All six of its redeveloped assets have attracted premium tenants since 2011, unlocking long-term value for unitholders. Its most recent design-and-build redevelopment of 3 Tuas Avenue 2 transformed the asset into a versatile ramp-up industrial facility suitable for production and storage, in line with the Singapore Government’s master plan to develop and upgrade the Tuas region into a high performing industrial district, thereby enabling AAREIT to capture growth in demand for industrial space. With almost 7% of NLA still untapped, we like this as a key long term strategy that will help boost the REIT’s performance, as prospective tenants will naturally be drawn to premium quality properties.
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

INITIATION



AIMS APAC REIT (AAREIT SP)

Achieving their AIM


With a portfolio occupancy rate of 94.5%, almost 5% higher than Singapore’s industrial average occupancy level of 89.6% (based on JTC’s 3Q 2020 statistics), we like AIMS APAC REIT (AAREIT) for its diversified and resilient portfolio.
AAREIT’s management also has an excellent track record with yield-accretive acquisitions, value-adding to its current portfolio through property redevelopments or asset enhancement initiatives (AEIs) by building out its properties with under-utilised plot ratios, and refurbishing older assets.
We initiate coverage on AAREIT withan OUTPERFORM recommendation. Our target price of S$1.35 represents a total upside of 21.1%, inclusive of FY21F dividend yield of 7.4%.


Investment Thesis
Diversified and resilient with income visibility. AAREIT’s assets are well-diversified from all fronts – property types, lease structures and tenants. It has properties ranging from Logistics &amp; Warehouse, Light Industrial, General Industrial, Business Parks as well as Hi-Tech. c.71% of its gross rental income (GRI, 2Q FY21) is earned from multi-tenanted assets, while the remaining GRI comes from master-leased assets with longer lease terms, providing a comfortable amount of income visibility and certainty. AAREIT’s properties are also tenanted by close to 200 tenants operating across a broad range of industries, including Telecommunication, Biotech/Life Sciences, Fashion and Apparels, and Furniture.
Strong performance track record. Over the years, AAREIT has successfully built out several properties with under- utilised plot ratios, and refurbished its older assets where possible. All six of its redeveloped assets have attracted premium tenants since 2011, unlocking long-term value for unitholders. Its most recent design-and-build redevelopment of 3 Tuas Avenue 2 transformed the asset into a versatile ramp-up industrial facility suitable for production and storage, in line with the Singapore Government’s master plan to develop and upgrade the Tuas region into a high performing industrial district, thereby enabling AAREIT to capture growth in demand for industrial space. With almost 7% of NLA still untapped, we like this as a key long term strategy that will help boost the REIT’s performance, as prospective tenants will naturally be drawn to premium quality properties.





(Non-SGX Report) Aims Apac Reit: Achieving Their AIM

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 <div class='content-caption'>AA REIT-CEO</div>
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Engineer by training Koh Wee Lih has always been fascinated by the constantly shifting dynamics of the real estate industry.

“The changing nature of property use and property development is something that appeals to me,” the CEO of the manager of SGX-listed AIMS APAC REIT (AA REIT) said with a smile.

“As an engineer, I enjoy creating and assembling things – these same traits can be found in real estate, where you build structures from the ground up, and witness the gradual transformation of human lives that use these properties.”

Koh holds a Master of Business Administration, a Master of Science in Industrial and Operations Engineering, and a Bachelor of Science (Summa Cum Laude) in Aerospace Engineering from the University of Michigan.

He has nearly a quarter of a century of experience in investment, corporate finance and asset management, of which more than 16 years were in direct real estate, covering investments, developments, asset management and real estate private equity in the Asia Pacific region.

“Over the course of my career, which spanned several crises, including the bursting of the dot-com bubble and the Asian Financial Crisis, I have learned many lessons, such as saving for rainy days, maintaining robust cashflows, and prudent risk management,” Koh recalled.

“Learning is a lifelong process, and these lessons – big or small – help to shape who we are, and who we will be in the future. At the end of the day, change is the only constant, and it’s up to us to stay relevant.”

Koh was appointed Chief Executive of AIMS APAC REIT Management Ltd, the manager of AA REIT in January 2014. Prior to this appointment, he was the Head of Real Estate for the manager since October 2011, and its Senior Investment Manager since December 2008.

“During my career, I’ve been involved in office, residential and mixed-use developments, but my focus now is on industrial and light industrial properties, ranging from logistics facilities to warehouses and data centres,” he noted.

“These may not be your shiny, beautiful CBD Grade A office assets, but they are still the rear engine that keeps the economy humming, and are among some of the most resilient asset classes out there.”

AA REIT, previously known as MacarthurCook Industrial REIT (MI-REIT), listed on SGX in April 2007. During the 2009 Global Financial Crisis, MI-REIT was in dire financial straits when AIMS Financial Group acquired the distressed ASX-listed fund manager Macarthur Cook Ltd, which was owner of the manager of MI-REIT.

AIMS Financial Group is a diversified financial services and investment group, active in areas of mortgage lending, securitisation, investment banking, fund management, property investment, stockbroking and high-tech investment. AIMS Financial Group is also a strategic investor in the Sydney Stock Exchange.

Under AIMS Financial Group’s guidance as a Sponsor, and AIMS APAC REIT Management Ltd as its new manager, AA REIT was recapitalised, renamed, and turned around.

Raising Plot Ratios

Since then, AA REIT has grown significantly, with a market capitalisation of S$848.0 million and S$1.8 billion in total assets as at 30 September 2020.

It was established with the principal investment objective of owning and investing in a diversified portfolio of income-producing industrial, logistics, and business park real estate assets in the Asia-Pacific region.

The REIT’s existing portfolio comprises 28 properties, of which 26 are located throughout Singapore, with two in Australia – the first situated in Gold Coast, Queensland, and the other, its 49%-owned business park property Optus Centre, located in New South Wales.

To strengthen its portfolio for the long term, AA REIT will focus on asset enhancement initiatives, building out its properties with under-utilised plot ratios, and refurbishing older assets to ensure they remain contemporary and relevant.

It will also target the delivery of build-to-suit facilities for its tenants to help them grow and transform their businesses.

“Such organic growth strategies will help boost our rentals and total AUM value,” Koh said.

“Prospective tenants will naturally migrate to properties with better quality specs and facilities – that will help us lock-in longer dated leases, boost our portfolio occupancy rates, as well as improve our WALE,” he added, referring to weighted average lease expiry, a key industry yardstick.

The second prong of its growth strategy involves acquisitions. “A series of metrics will be used to analyse each opportunity, to see how they fit into the overall portfolio, including location, tenant profiles, and whether it is DPU-accretive – not just in the short term, but also over the long term,” Koh said, referring to distributions per unit, another closely watched sector benchmark.

AA REIT’s S$129.6 million acquisition of a logistics warehouse – 7 Bulim Street that was completed last month – is a case in point. “This deal will help us in the next stage of our growth,” he added.

With this purchase, AA REIT becomes the first industrial REIT with a presence in Singapore’s Jurong Innovation District, an advanced manufacturing campus with good connectivity to major expressways, as well as proximity to the future Tuas Mega Port and Tuas Checkpoint.

The inclusion of this modern, high-quality warehouse, 100% leased to a master tenant with a strong lease covenant, boosts AA REIT’s overall portfolio occupancy rate to 95.0%.

Shifting Demand Trends

Nevertheless, the REIT will continue to exercise prudence and caution in evaluating opportunities in the current environment. “We need to ensure that our capital management strategies are sound, as a robust balance sheet is required to support our growth efforts.”

Meanwhile, demand for industrial space, particularly for logistics and warehouse assets in Australia and Singapore, have proved resilient in the current environment, Koh said.

“More and more businesses have realised it’s critical to have a strong supply chain, and they cannot rely on a just-in-time inventory system – they need to stockpile or keep buffers for unexpected situations,” he added. “All these have driven overall demand for warehousing space from existing as well as new tenants.”

Demand patterns also continue to evolve, with information technology, biomedical and life sciences tenants seeking more business park space. “That’s where the new trends are,” Koh said.

“We’re keeping a close eye on JTC policies, which will provide clues on new segments that the government is focusing on,” he added, referring to Jurong Town Corporation, Singapore’s largest industrial landlord.

Nonetheless, navigating the REIT through a fluid environment brought about by the coronavirus pandemic is not without its challenges, Koh admitted.

“We’re adapting to the new normal, and steering in the direction that is relevant for all stakeholders,” he noted. “At the same time, we are trying to find meaningful and sustainable growth opportunities in this market.”

Another key focus for the REIT is managing relationships with its tenants and meeting their growth needs.

“Many of our tenants have been with us since our IPO, which was more than 12 years ago,” he added.

“We always tell them, ‘Focus on your core business, and let us take care of the real estate and real estate-related issues, so that you can achieve your best performance’. And when they perform well, we perform well too.”

When Koh is not managing the day-to-day operations of the REIT, he is spending time with his son and daughter, both in their pre-teens.

Apart from the principle of hard work, he wants his children to develop their moral compass early on. “This will equip them to make the right decisions in life,” he said.

“I also want them to understand the meaning of perseverance – because it’s always darkest before dawn – and to strive for excellence,” he added.

“The world is constantly evolving – they need to be able to keep ahead of the challenges and changes so as to deliver the best outcomes – for themselves as well as others around them.” 
 

AIMS APAC REIT

Managed by the Manager, AA REIT was established with the principal investment objective of owning and investing in a diversified portfolio of income-producing industrial, logistics and business park real estate, located throughout the Asia Pacific region. The real estate assets are utilised for a variety of purposes, including but not limited to warehousing and distribution activities, business park activities and manufacturing activities. AA REIT’s existing portfolio consists of 28 properties, of which 26 properties are located throughout Singapore, a property located in Gold Coast, Queensland, Australia and a 49.0% interest in one business park property, Optus Centre, which is located in Macquarie Park, New South Wales, Australia. 
AIMS Financial Group is the sole sponsor of AA REIT. Established in 1991, AIMS is a diversified financial services and investment group, active in the areas of mortgage lending, securitisation, investment banking, funds management, property investment, stock broking and high-tech investment. AIMS is also a strategic investor in the Sydney Stock Exchange.

The company website is: <a href="http://www.aimsapacreit.com/">www.aimsapacreit.com</a> 
Click <a href="https://www.sgx.com/securities/equities/O5RU">here </a>for the company's StockFacts page. 
For the three months ended 30 September 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/UG0QV4ZHZF6OA8FS/636490_AA_REIT_2Q_FY2021_Media_Release.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="https://www.sgx.com/research-education/market-dialogues">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/Downloads/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.

 
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    AA REIT-CEO


Engineer by training Koh Wee Lih has always been fascinated by the constantly shifting dynamics of the real estate industry.

“The changing nature of property use and property development is something that appeals to me,” the CEO of the manager of SGX-listed AIMS APAC REIT (AA REIT) said with a smile.

“As an engineer, I enjoy creating and assembling things – these same traits can be found in real estate, where you build structures from the ground up, and witness the gradual transformation of human lives that use these properties.”

Koh holds a Master of Business Administration, a Master of Science in Industrial and Operations Engineering, and a Bachelor of Science (Summa Cum Laude) in Aerospace Engineering from the University of Michigan.

He has nearly a quarter of a century of experience in investment, corporate finance and asset management, of which more than 16 years were in direct real estate, covering investments, developments, asset management and real estate private equity in the Asia Pacific region.

“Over the course of my career, which spanned several crises, including the bursting of the dot-com bubble and the Asian Financial Crisis, I have learned many lessons, such as saving for rainy days, maintaining robust cashflows, and prudent risk management,” Koh recalled.

“Learning is a lifelong process, and these lessons – big or small – help to shape who we are, and who we will be in the future. At the end of the day, change is the only constant, and it’s up to us to stay relevant.”

Koh was appointed Chief Executive of AIMS APAC REIT Management Ltd, the manager of AA REIT in January 2014. Prior to this appointment, he was the Head of Real Estate for the manager since October 2011, and its Senior Investment Manager since December 2008.

“During my career, I’ve been involved in office, residential and mixed-use developments, but my focus now is on industrial and light industrial properties, ranging from logistics facilities to warehouses and data centres,” he noted.

“These may not be your shiny, beautiful CBD Grade A office assets, but they are still the rear engine that keeps the economy humming, and are among some of the most resilient asset classes out there.”

AA REIT, previously known as MacarthurCook Industrial REIT (MI-REIT), listed on SGX in April 2007. During the 2009 Global Financial Crisis, MI-REIT was in dire financial straits when AIMS Financial Group acquired the distressed ASX-listed fund manager Macarthur Cook Ltd, which was owner of the manager of MI-REIT.

AIMS Financial Group is a diversified financial services and investment group, active in areas of mortgage lending, securitisation, investment banking, fund management, property investment, stockbroking and high-tech investment. AIMS Financial Group is also a strategic investor in the Sydney Stock Exchange.

Under AIMS Financial Group’s guidance as a Sponsor, and AIMS APAC REIT Management Ltd as its new manager, AA REIT was recapitalised, renamed, and turned around.

Raising Plot Ratios

Since then, AA REIT has grown significantly, with a market capitalisation of S$848.0 million and S$1.8 billion in total assets as at 30 September 2020.

It was established with the principal investment objective of owning and investing in a diversified portfolio of income-producing industrial, logistics, and business park real estate assets in the Asia-Pacific region.

The REIT’s existing portfolio comprises 28 properties, of which 26 are located throughout Singapore, with two in Australia – the first situated in Gold Coast, Queensland, and the other, its 49%-owned business park property Optus Centre, located in New South Wales.

To strengthen its portfolio for the long term, AA REIT will focus on asset enhancement initiatives, building out its properties with under-utilised plot ratios, and refurbishing older assets to ensure they remain contemporary and relevant.

It will also target the delivery of build-to-suit facilities for its tenants to help them grow and transform their businesses.

“Such organic growth strategies will help boost our rentals and total AUM value,” Koh said.

“Prospective tenants will naturally migrate to properties with better quality specs and facilities – that will help us lock-in longer dated leases, boost our portfolio occupancy rates, as well as improve our WALE,” he added, referring to weighted average lease expiry, a key industry yardstick.

The second prong of its growth strategy involves acquisitions. “A series of metrics will be used to analyse each opportunity, to see how they fit into the overall portfolio, including location, tenant profiles, and whether it is DPU-accretive – not just in the short term, but also over the long term,” Koh said, referring to distributions per unit, another closely watched sector benchmark.

AA REIT’s S$129.6 million acquisition of a logistics warehouse – 7 Bulim Street that was completed last month – is a case in point. “This deal will help us in the next stage of our growth,” he added.

With this purchase, AA REIT becomes the first industrial REIT with a presence in Singapore’s Jurong Innovation District, an advanced manufacturing campus with good connectivity to major expressways, as well as proximity to the future Tuas Mega Port and Tuas Checkpoint.

The inclusion of this modern, high-quality warehouse, 100% leased to a master tenant with a strong lease covenant, boosts AA REIT’s overall portfolio occupancy rate to 95.0%.

Shifting Demand Trends

Nevertheless, the REIT will continue to exercise prudence and caution in evaluating opportunities in the current environment. “We need to ensure that our capital management strategies are sound, as a robust balance sheet is required to support our growth efforts.”

Meanwhile, demand for industrial space, particularly for logistics and warehouse assets in Australia and Singapore, have proved resilient in the current environment, Koh said.

“More and more businesses have realised it’s critical to have a strong supply chain, and they cannot rely on a just-in-time inventory system – they need to stockpile or keep buffers for unexpected situations,” he added. “All these have driven overall demand for warehousing space from existing as well as new tenants.”

Demand patterns also continue to evolve, with information technology, biomedical and life sciences tenants seeking more business park space. “That’s where the new trends are,” Koh said.

“We’re keeping a close eye on JTC policies, which will provide clues on new segments that the government is focusing on,” he added, referring to Jurong Town Corporation, Singapore’s largest industrial landlord.

Nonetheless, navigating the REIT through a fluid environment brought about by the coronavirus pandemic is not without its challenges, Koh admitted.

“We’re adapting to the new normal, and steering in the direction that is relevant for all stakeholders,” he noted. “At the same time, we are trying to find meaningful and sustainable growth opportunities in this market.”

Another key focus for the REIT is managing relationships with its tenants and meeting their growth needs.

“Many of our tenants have been with us since our IPO, which was more than 12 years ago,” he added.

“We always tell them, ‘Focus on your core business, and let us take care of the real estate and real estate-related issues, so that you can achieve your best performance’. And when they perform well, we perform well too.”

When Koh is not managing the day-to-day operations of the REIT, he is spending time with his son and daughter, both in their pre-teens.

Apart from the principle of hard work, he wants his children to develop their moral compass early on. “This will equip them to make the right decisions in life,” he said.

“I also want them to understand the meaning of perseverance – because it’s always darkest before dawn – and to strive for excellence,” he added.

“The world is constantly evolving – they need to be able to keep ahead of the challenges and changes so as to deliver the best outcomes – for themselves as well as others around them.”  
 

AIMS APAC REIT

Managed by the Manager, AA REIT was established with the principal investment objective of owning and investing in a diversified portfolio of income-producing industrial, logistics and business park real estate, located throughout the Asia Pacific region. The real estate assets are utilised for a variety of purposes, including but not limited to warehousing and distribution activities, business park activities and manufacturing activities. AA REIT’s existing portfolio consists of 28 properties, of which 26 properties are located throughout Singapore, a property located in Gold Coast, Queensland, Australia and a 49.0% interest in one business park property, Optus Centre, which is located in Macquarie Park, New South Wales, Australia. 
AIMS Financial Group is the sole sponsor of AA REIT. Established in 1991, AIMS is a diversified financial services and investment group, active in the areas of mortgage lending, securitisation, investment banking, funds management, property investment, stock broking and high-tech investment. AIMS is also a strategic investor in the Sydney Stock Exchange.

The company website is: www.aimsapacreit.com  
Click here for the company's StockFacts page.  
For the three months ended 30 September 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.

 



AIMS APAC REIT Builds on Expanding Industrial Demand

Lakshmi Iyer, CFA

Debt Capital Markets

The new <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> perpetual is the second S$ perp issue in the post-Covid world. It is interesting because it is being issued to refinance the S$150mn perp that is callable in November (in other words, the bond will be called). This deal again raises the issue of whether outstanding perps should be priced to the call or not. Given the level at which these bonds have been issued, we think the bond with the next call date in the S$ perp market <a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39:1" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a>  4.75% perps) will be called in October.<div class="content-highlight">Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.</div>

The new Keppel REIT (KREIT SP) perpetual is the second S$ perp issue in the post-Covid world. It is interesting because it is being issued to refinance the S$150mn perp that is callable in November (in other words, the bond will be called). This deal again raises the issue of whether outstanding perps should be priced to the call or not. Given the level at which these bonds have been issued, we think the bond with the next call date in the S$ perp market Ascendas Real Estate Investment Trust (AREIT SP)  4.75% perps) will be called in October.Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

Keppel REIT New Perp - Implications for Ascendas REIT Bondholders

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

<div class="content-highlight">
This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a>
</div><h3>Macro Insights</h3>In <a href="https://www.smartkarma.com/insights/what-drives-rising-gold-prices" target="_blank" data-smartkarma-citation="insights:42091" rel="noopener">What Drives Rising Gold Prices?,</a> Strategist <a href="https://www.smartkarma.com/profiles/michael-j-howell" target="_blank" data-smartkarma-citation="accounts:2312" rel="noopener">Michael J. Howell</a> analyses driver drivers behind the rising gold price. In <a href="https://www.smartkarma.com/insights/political-pit-stop-aug-20-regime-jitters" target="_blank" data-smartkarma-citation="insights:41483" rel="noopener">Political Pit Stop (Aug'20): Regime Jitters,</a> out Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> revisits the political situation in Thailand and identifies potential pitfalls ahead. <h3>Equity Bottom-Up Insights</h3>In <a href="https://www.smartkarma.com/insights/bank-central-asia-bbca-ij-liability-protection" target="_blank" data-smartkarma-citation="insights:41598" rel="noopener">Bank Central Asia (BBCA IJ) - Liability Protection,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits Indonesia's biggest private bank following a conversation with management. In <a href="https://www.smartkarma.com/insights/kino-indonesia-kino-ij-sanitised-recovery" target="_blank" data-smartkarma-citation="insights:42045" rel="noopener">Kino Indonesia (KINO IJ) - Sanitised Recovery,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits one of Indonesia's less well-covered consumer players after a conversation with management and finds a promising outlook.<a href="https://www.smartkarma.com/entities/kino-indonesia" target="_blank" data-smartkarma-citation="entities:1083:1" rel="noopener"></a>In <a href="https://www.smartkarma.com/insights/procurri-us-ppp-saves-1h20-remains-cheap-at-0-4x-ev-sales-but-no-catalyst" target="_blank" data-smartkarma-citation="insights:42110" rel="noopener">Procurri: US PPP Saves 1H20; Remains Cheap at 0.4x EV/Sales but No Catalyst,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> revisits this IT Hardware player and continues to see the value.<a href="https://www.smartkarma.com/entities/procurri-corporation-limited" target="_blank" data-smartkarma-citation="entities:24110:1" rel="noopener"></a>In <a href="https://www.smartkarma.com/insights/airport-of-thailand-aot-travel-bubble-mof-and-certify-hub" target="_blank" data-smartkarma-citation="insights:42048" rel="noopener">Airport of Thailand (AoT): Travel Bubble, MoF, and Certify Hub,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" data-smartkarma-citation="accounts:1006" rel="noopener">Henry Soediarko</a> revisits Thailand's airport operator in light of the country's ever-changing tourism strategy.In <a href="https://www.smartkarma.com/insights/bts-and-bangkok-airways-utapao-brother-in-arms" target="_blank" data-smartkarma-citation="insights:40027" rel="noopener">BTS and Bangkok Airways, UTaPao Brother-In-Arms,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> comments on <a href="https://www.smartkarma.com/entities/bts-group-holdings-pcl" target="_blank" data-smartkarma-citation="entities:15943:1" rel="noopener">BTS Group Holdings (BTS TB)</a> and <a href="https://www.smartkarma.com/entities/bangkok-airways-co-ltd" target="_blank" data-smartkarma-citation="entities:457:1" rel="noopener">Bangkok Airways (BA TB)</a> after meetings with management. In <a href="https://www.smartkarma.com/insights/siam-commercial-bank-surprising-on-the-upside" target="_blank" data-smartkarma-citation="insights:42161" rel="noopener">Siam Commercial Bank: Surprising on the Upside,</a> banking specialist <a href="https://www.smartkarma.com/profiles/paul-hollingworth" target="_blank" data-smartkarma-citation="accounts:2554" rel="noopener">Paul Hollingworth</a> zeros in on this leading Thai bank.In <a href="https://www.smartkarma.com/insights/temasek-walks-away-from-keppel-deal" target="_blank" data-smartkarma-citation="insights:42047" rel="noopener">Temasek Walks Away from Keppel Deal,</a> events specialist <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> comments on the untimely end to this takeover by Temasek. In <a href="https://www.smartkarma.com/insights/keppel-temasek-pulls-the-partial-offer" target="_blank" data-smartkarma-citation="insights:42059" rel="noopener">Keppel: Temasek Pulls the Partial Offer,</a><a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" data-smartkarma-citation="accounts:1680" rel="noopener">Arun George</a> also comments on Temasek's decision to pull out of this long-standing deal. In <a href="https://www.smartkarma.com/insights/sembcorp-industries-a-simple-story-which-looks-complicated" target="_blank" data-smartkarma-citation="insights:42134" rel="noopener">Sembcorp Industries - A Simple Story Which Looks Complicated,</a><a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> comments on this complicated capital raise. In <a href="https://www.smartkarma.com/insights/sembcorp-marine-rights-decided-and-virtual-ipo-set-still-avoid" target="_blank" data-smartkarma-citation="insights:42076" rel="noopener">Sembcorp Marine Rights Decided And "Virtual IPO" Set (Still Avoid),</a> events specialist attempts to decipher this extremely complicated restructuring. In <a href="https://www.smartkarma.com/insights/b-work-offers-price-upside-and-a-good-dividend-yield" target="_blank" data-smartkarma-citation="insights:42157" rel="noopener">B-WORK: Offers Price Upside and a Good Dividend Yield,</a><a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr Andrew Stotz, CFA</a> initiates coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80.In <a href="https://www.smartkarma.com/insights/advanc-2q20-performance-hindered-by-a-drop-in-arpu" target="_blank" data-smartkarma-citation="insights:42036" rel="noopener">ADVANC:  2Q20 Performance Hindered by a Drop in ARPU,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> report back on <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> after recent results. In <a href="https://www.smartkarma.com/insights/cbg-trading-on-high-valuation-zone" target="_blank" data-smartkarma-citation="insights:42040" rel="noopener">CBG: Trading on High Valuation Zone,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> maintain their BUY rating and rollover their target price to THB141 based on 35x FY21E PER (Previous TP is THB110), the average of the Thailand energy drink group. In <a href="https://www.smartkarma.com/insights/asian-2q20-earnings-reached-its-peak" target="_blank" data-smartkarma-citation="insights:42086" rel="noopener">ASIAN: 2Q20 Earnings Reached Its Peak</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> revisit <a href="https://www.smartkarma.com/entities/asian-sea-corp-pcl" target="_blank" data-smartkarma-citation="entities:19827:1" rel="noopener">Asian Seafoods Coldstorage (ASIAN TB)</a> and maintain their ‘SELL’ rating with a new target price at Bt10.3 (from Bt7.2).In <a href="https://www.smartkarma.com/insights/planb-expect-net-loss-in-2q20-to-be-bottom-of-this-year" target="_blank" data-smartkarma-citation="insights:42156" rel="noopener">PLANB: Expect Net Loss in 2Q20 to Be Bottom of This Year,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> report back on <a href="https://www.smartkarma.com/entities/plan-b-media-pcl" target="_blank" data-smartkarma-citation="entities:24702:1" rel="noopener">Plan B Media (PLANB TB)</a> after a telephone call with management. <h3>Credit Insights</h3>In <a href="https://www.smartkarma.com/insights/aa-reit-s-bond-first-reit-perpetual-in-the-new-normal" target="_blank" data-smartkarma-citation="insights:42049" rel="noopener">AA REIT S$ Bond - First REIT Perpetual in the New Normal</a>, <a href="https://www.smartkarma.com/profiles/lakshmi-iyer-cfa" target="_blank" data-smartkarma-citation="accounts:9363" rel="noopener">Lakshmi Iyer, CFA</a> reports back after a new bond issue from <a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933:1" rel="noopener">AIMS APAC REIT (AAREIT SP).</a><a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933:1" rel="noopener">AIMS APAC REIT (AAREIT SP)</a> issued a perpetual security on August 6th (5.65% SGD125mn deal).  She thinks the deal is interesting for several reasons (timing of the issue, spread on coupon reset, etc.). She does not expect the bond to tighten significantly as it is correctly priced with respect to the senior debt.


This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in ASEAN@Smartkarma
Macro InsightsIn What Drives Rising Gold Prices?, Strategist Michael J. Howell analyses driver drivers behind the rising gold price. In Political Pit Stop (Aug'20): Regime Jitters, out Thai guru Athaporn Arayasantiparb, CFA revisits the political situation in Thailand and identifies potential pitfalls ahead. Equity Bottom-Up InsightsIn Bank Central Asia (BBCA IJ) - Liability Protection, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia's biggest private bank following a conversation with management. In Kino Indonesia (KINO IJ) - Sanitised Recovery, CrossASEAN Insight Provider Angus Mackintosh revisits one of Indonesia's less well-covered consumer players after a conversation with management and finds a promising outlook.In Procurri: US PPP Saves 1H20; Remains Cheap at 0.4x EV/Sales but No Catalyst, CrossASEAN Insight Provider Nicolas Van Broekhoven revisits this IT Hardware player and continues to see the value.In Airport of Thailand (AoT): Travel Bubble, MoF, and Certify Hub, CrossASEAN Insight Provider Henry Soediarko revisits Thailand's airport operator in light of the country's ever-changing tourism strategy.In BTS and Bangkok Airways, UTaPao Brother-In-Arms, our Thai guru Athaporn Arayasantiparb, CFA comments on BTS Group Holdings (BTS TB) and Bangkok Airways (BA TB) after meetings with management. In Siam Commercial Bank: Surprising on the Upside, banking specialist Paul Hollingworth zeros in on this leading Thai bank.In Temasek Walks Away from Keppel Deal, events specialist Travis Lundy comments on the untimely end to this takeover by Temasek. In Keppel: Temasek Pulls the Partial Offer,Arun George also comments on Temasek's decision to pull out of this long-standing deal. In Sembcorp Industries - A Simple Story Which Looks Complicated,Travis Lundy comments on this complicated capital raise. In Sembcorp Marine Rights Decided And "Virtual IPO" Set (Still Avoid), events specialist attempts to decipher this extremely complicated restructuring. In B-WORK: Offers Price Upside and a Good Dividend Yield,Dr Andrew Stotz, CFA initiates coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80.In ADVANC:  2Q20 Performance Hindered by a Drop in ARPU, our friends at Country Group report back on Advanced Info Service (ADVANC TB) after recent results. In CBG: Trading on High Valuation Zone,Country Group maintain their BUY rating and rollover their target price to THB141 based on 35x FY21E PER (Previous TP is THB110), the average of the Thailand energy drink group. In ASIAN: 2Q20 Earnings Reached Its PeakCountry Group revisit Asian Seafoods Coldstorage (ASIAN TB) and maintain their ‘SELL’ rating with a new target price at Bt10.3 (from Bt7.2).In PLANB: Expect Net Loss in 2Q20 to Be Bottom of This Year,Country Group report back on Plan B Media (PLANB TB) after a telephone call with management. Credit InsightsIn AA REIT S$ Bond - First REIT Perpetual in the New Normal, Lakshmi Iyer, CFA reports back after a new bond issue from AIMS APAC REIT (AAREIT SP).AIMS APAC REIT (AAREIT SP) issued a perpetual security on August 6th (5.65% SGD125mn deal).  She thinks the deal is interesting for several reasons (timing of the issue, spread on coupon reset, etc.). She does not expect the bond to tighten significantly as it is correctly priced with respect to the senior debt.

The Week that Was in ASEAN@Smartkarma - Thai Politics, BCA's +ve Liabilities, and Singapore O&M

<a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933:1" rel="noopener">AIMS APAC REIT (AAREIT SP)</a>   issued a perpetual security on August 6 (5.65% SGD125mn deal).  We think the deal is interesting for several reasons (timing of issue, spread on coupon reset, etc.). We do not expect the bond to tighten significantly as it is correctly priced with respect to the senior debt. <div class="content-highlight">Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.</div>

AIMS APAC REIT (AAREIT SP)   issued a perpetual security on August 6 (5.65% SGD125mn deal).  We think the deal is interesting for several reasons (timing of issue, spread on coupon reset, etc.). We do not expect the bond to tighten significantly as it is correctly priced with respect to the senior debt. Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

AA REIT S$ Bond - First REIT Perpetual in the New Normal

Singapore

AIMS APAC REIT is a real estate investment trust. The Trust's principal investment objective is owning and investing in a diversified portfolio of income-producing industrial real estate assets throughout Asia Pacific, including warehousing and logistics, manufacturing, business parks and hi-tech spaces.

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AIMS APAC REIT (AAREIT SP)

(Non-SGX Report) Aims Apac Reit: Achieving Their AIM

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

AIMS APAC REIT Builds on Expanding Industrial Demand

Engineer by training Koh Wee Lih has always been fascinated by the constantly shifting dynamics of the real estate...

Singapore Exchange Ltd (SGX)

Keppel REIT New Perp - Implications for Ascendas REIT Bondholders

Keppel Reit priced a new S$150 mn perpetual bond at 3.15%. The final pricing was inside of the initial price talk of 3.5%. The issue was to...

Lakshmi Iyer, CFA

The Week that Was in ASEAN@Smartkarma - Thai Politics, BCA's +ve Liabilities, and Singapore O&M

This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable...

Angus Mackintosh

AA REIT S$ Bond - First REIT Perpetual in the New Normal

AIMS APAC REIT (AAREIT SP) issued a perpetual security on August 6 (5.65% SGD125mn deal). We think the deal is interesting for several reasons...

Lakshmi Iyer, CFA

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