Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Equity Bottom-Up

<div><div><div><div><ul><li>Solid set of results-  3Q22 revenue grew by 14.5% YoY to S$36.8m and 3Q22 NPI jumped 14.8% YoY to S$27.1m.</li></ul><div><div><div><ul><li>Rising occupancy rate and +ve rent reversions-  6.1% of portfolio NLA had secured new leases and renewal leases with overall rent reversion at +0.2% in 3Q22 (+2.1% in 2Q22) and higher occupancy rate at 97.6% in 3Q22 (2Q22: 97.3%).</li></ul><div><div><div><div><ul><li>Lower share of fixed-rate debts- The share of fixed-rate debts has declined to 57% and ~90% of total debts will mature during FY24-27E.</li></ul></div></div></div></div></div></div></div></div></div></div></div>

Solid set of results-  3Q22 revenue grew by 14.5% YoY to S$36.8m and 3Q22 NPI jumped 14.8% YoY to S$27.1m.Rising occupancy rate and +ve rent reversions-  6.1% of portfolio NLA had secured new leases and renewal leases with overall rent reversion at +0.2% in 3Q22 (+2.1% in 2Q22) and higher occupancy rate at 97.6% in 3Q22 (2Q22: 97.3%).Lower share of fixed-rate debts- The share of fixed-rate debts has declined to 57% and ~90% of total debts will mature during FY24-27E.

AIMS APAC REIT (AAREIT SP) - On a Solid Organic Growth Path

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<p>We raised our TP to S$1.63/unit to account for the recent Woolworths HQ acquisition, higher rental growth (driven by Logistics sector) and robust occupancies from existing portfolio, as well as a potential S$100m EFR in FY23E. We estimate DPU growth to stay flattish in FY22E and increase by +5.6% in FY23E (post-dilution effect). AAREIT currently trades at an attractive FY22E P/B of 1.07x (vs Industrial peers of 1.39x) and offers a total return of 20% (13.4% upside potential and 6.6% FY23E yield). Reiterate BUY.</p>
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We raised our TP to S$1.63/unit to account for the recent Woolworths HQ acquisition, higher rental growth (driven by Logistics sector) and robust occupancies from existing portfolio, as well as a potential S$100m EFR in FY23E. We estimate DPU growth to stay flattish in FY22E and increase by +5.6% in FY23E (post-dilution effect). AAREIT currently trades at an attractive FY22E P/B of 1.07x (vs Industrial peers of 1.39x) and offers a total return of 20% (13.4% upside potential and 6.6% FY23E yield). Reiterate BUY.





AIMS APAC REIT: Mixture of Inorganic and Organic Growth Warrant an Upgrade

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<p>AAREIT reported a solid 2Q22 set of results. On a QoQ basis, Revenue, NPI and DPU were up by 5.1%, 6.7%, and 11.1%, respectively, with the half-yearly figures making up 48-49% of our FY forecast. Portfolio occupancy rose by 1.6ppt QoQ to 97.3%, while rent reversion was +2.1% (reversing -0.4% in 1Q22). ~50% of lease expiring for the remainder of FY22E is in the resilient Logistics and Warehouse sector. We upgrade to BUY and note additional upside to our TP from Woolworths HQ and Alexandra Rd acquisition.</p>
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AAREIT reported a solid 2Q22 set of results. On a QoQ basis, Revenue, NPI and DPU were up by 5.1%, 6.7%, and 11.1%, respectively, with the half-yearly figures making up 48-49% of our FY forecast. Portfolio occupancy rose by 1.6ppt QoQ to 97.3%, while rent reversion was +2.1% (reversing -0.4% in 1Q22). ~50% of lease expiring for the remainder of FY22E is in the resilient Logistics and Warehouse sector. We upgrade to BUY and note additional upside to our TP from Woolworths HQ and Alexandra Rd acquisition.





AIMS APAC REIT: Strong Quarter; Upgrade to BUY

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<p>AAREIT has acquired Woolworths HQ in Sydney for ~S$454m, which increases its asset size by ~27% to S$2.18bn. The asset sits on a 9ha freehold land with a development potential of up to 4x of its current NLA of ~45,000sqm. On a FY21A pro-forma basis, this transaction is DPU accretive by 4.7%. Given resilient Logistics segment (38% of portfolio) and new mgmt’s continued focus on executing inorganic growth strategy (Alexandra Rd in pipeline), we are positive on the direction of AAREIT.</p>
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AAREIT has acquired Woolworths HQ in Sydney for ~S$454m, which increases its asset size by ~27% to S$2.18bn. The asset sits on a 9ha freehold land with a development potential of up to 4x of its current NLA of ~45,000sqm. On a FY21A pro-forma basis, this transaction is DPU accretive by 4.7%. Given resilient Logistics segment (38% of portfolio) and new mgmt’s continued focus on executing inorganic growth strategy (Alexandra Rd in pipeline), we are positive on the direction of AAREIT.




AIMS APAC REIT: Transformative Acquisition; Significant Development Potential

Singapore

AIMS APAC REIT is a real estate investment trust that invests in and manages a diversified portfolio of income-producing industrial, logistics, and business park properties across the Asia-Pacific region. It provides leasing and rental services for assets used in warehousing, distribution, business park, light industrial, high-tech, and manufacturing activities. The company is headquartered in Singapore and was incorporated in 2006.

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AIMS APAC REIT (AAREIT SP)