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

<ul><li>REIT Watch - S-Reits rebound amid less hawkish rates expectations The FTSE EPRA Nareit Developed Index gained close to 4 per cent last week while Singapore’s iEdge S-Reit Index booked its strongest week this year with 6 per cent returns.</li><li>Outperforming S-Reits for the week include Manulife US Reit, Keppel DC Reit, Aims Apac Reit, Keppel Pacific Oak US Reit, and CDL Hospitality Trusts.</li></ul>

REIT Watch - S-Reits rebound amid less hawkish rates expectations The FTSE EPRA Nareit Developed Index gained close to 4 per cent last week while Singapore’s iEdge S-Reit Index booked its strongest week this year with 6 per cent returns.Outperforming S-Reits for the week include Manulife US Reit, Keppel DC Reit, Aims Apac Reit, Keppel Pacific Oak US Reit, and CDL Hospitality Trusts.

REIT Watch - S-REITs rebound amidst less hawkish rates expectations

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)

<div><div><div><div><ul><li>Results ahead of our estimates: 2H22 revenue grew by 18.9% YoY to S$77.1m and 2H22 NPI jumped 16.6% YoY to S$55.5m.</li></ul><div><div><div><ul><li>Robust rent reversions and occupancy: ~5.9% of portfolio NLA secured new and renewal leases with overall rent reversions at +14.9% (+0.2% in 3Q22) and stable occupancy rate of 97.6% in 4Q22 (3Q22: 97.6%).</li></ul><div><div><div><div><ul><li>Utility cost manageable; Debt sufficiently hedged: Portfolio leases have been structured in a way that utility costs are passed through to tenants, and hence mgmt.</li></ul></div></div></div></div></div></div></div></div></div></div></div>

Results ahead of our estimates: 2H22 revenue grew by 18.9% YoY to S$77.1m and 2H22 NPI jumped 16.6% YoY to S$55.5m.Robust rent reversions and occupancy: ~5.9% of portfolio NLA secured new and renewal leases with overall rent reversions at +14.9% (+0.2% in 3Q22) and stable occupancy rate of 97.6% in 4Q22 (3Q22: 97.6%).Utility cost manageable; Debt sufficiently hedged: Portfolio leases have been structured in a way that utility costs are passed through to tenants, and hence mgmt.

<figure class="editor-figure mceNonEditable"><img src="https://api2.sgx.com/sites/default/files/2022-03/Capture_16.PNG" class="editor-image img-responsive"></figure>
<div class="content-caption">Insti investors continue to net buy sreits</div>
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<p>The iEdge S-Reit Index recovered 2.5 per cent in total returns over the past 5 sessions (Feb 25, 2022 through to Mar 3, 2022), after a 2 per cent decline seen last Thursday (Feb 24) as global markets saw major moves amid the market volatility.</p>
<p>Despite the dip, the iEdge S-Reit Index has returned 0.6 per cent in total returns for the whole period from Feb 24, 2022 through to Mar 3, 2022.</p>
<p>This means it outperformed the FTSE EPRA Nareit Asia ex-Japan Index which declined 0.7 per cent during the same period.<br><br>Within the S-Reit sub-sectors, gainers were led by the specialised, healthcare and office Reits while decliners were led by hospitality, retail and diversified Reits.</p>
<p>During the period, institutional investors have been a key driver in S-Reits' fund flow activities, accumulating net institutional inflows of S$30.4 million.</p>
<p>Retail investors on the other hand, net sold S$42.6 million for the sector.<br><br>In terms of sub-sectors, institutional flows were driven by inflows seen in diversified S-Reits (+S$16.7 million), specialised/data centre S-Reits (+S$6.9 million), and office S-Reits (+S$6.7 million).</p>
<p>The largest retail outflows were seen in diversified S-Reits (-S$22.8 million), office S-Reits (-S$6.6 million), and industrial S-Reits (-S$5.5 million).</p>
<p>On a year-to-date basis, S-Reits have seen a 2 per cent decline, against the Straits Times Index's 4.4 per cent total returns, while the FTSE EPRA Nareit Asia ex-Japan Index has seen a decline of 2.3 per cent.</p>
<p>Interest rates continue to be a key focus for the sector, as expectations of a rate hike grow.</p>
<p>As the earnings season concludes for the sector, broad based distribution per unit growth and healthy occupancy rates remain a common theme.<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/green-shoots-for-retail-and-hospitality-s-reits-amid-new-pandemic-phase" target="_blank" rel="noopener">&nbsp;</a><a href="https://www.businesstimes.com.sg/companies-markets/institutional-investors-continue-to-net-buy-s-reits" target="_blank" rel="noopener">read&nbsp;</a>the original version.</em></strong></p>


Insti investors continue to net buy sreits

The iEdge S-Reit Index recovered 2.5 per cent in total returns over the past 5 sessions (Feb 25, 2022 through to Mar 3, 2022), after a 2 per cent decline seen last Thursday (Feb 24) as global markets saw major moves amid the market volatility.
Despite the dip, the iEdge S-Reit Index has returned 0.6 per cent in total returns for the whole period from Feb 24, 2022 through to Mar 3, 2022.
This means it outperformed the FTSE EPRA Nareit Asia ex-Japan Index which declined 0.7 per cent during the same period.  Within the S-Reit sub-sectors, gainers were led by the specialised, healthcare and office Reits while decliners were led by hospitality, retail and diversified Reits.
During the period, institutional investors have been a key driver in S-Reits' fund flow activities, accumulating net institutional inflows of S$30.4 million.
Retail investors on the other hand, net sold S$42.6 million for the sector.  In terms of sub-sectors, institutional flows were driven by inflows seen in diversified S-Reits (+S$16.7 million), specialised/data centre S-Reits (+S$6.9 million), and office S-Reits (+S$6.7 million).
The largest retail outflows were seen in diversified S-Reits (-S$22.8 million), office S-Reits (-S$6.6 million), and industrial S-Reits (-S$5.5 million).
On a year-to-date basis, S-Reits have seen a 2 per cent decline, against the Straits Times Index's 4.4 per cent total returns, while the FTSE EPRA Nareit Asia ex-Japan Index has seen a decline of 2.3 per cent.
Interest rates continue to be a key focus for the sector, as expectations of a rate hike grow.
As the earnings season concludes for the sector, broad based distribution per unit growth and healthy occupancy rates remain a common theme.  REIT Watch is a weekly column on The Business Times,&nbsp;read&nbsp;the original version.

REIT Watch - Institutional Investors Continue to Net Buy S-Reits

<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

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)

REIT Watch - S-REITs rebound amidst less hawkish rates expectations

REIT Watch - S-Reits rebound amid less hawkish rates expectations The FTSE EPRA Nareit Developed Index gained close to 4 per cent last week while...

Singapore Exchange Ltd (SGX)

Aims Apac Reit - Steady Growth Ahead

FY22 DPU was +5.7 YoY, making up ~106% of our FY forecast. Portfolio occupancy remained high at 97.6%, while rent reversions came in robustly at...

SCCM Asia Research

REIT Watch - Institutional Investors Continue to Net Buy S-Reits

The iEdge S-Reit Index recovered 2.5 per cent in total returns over the past 5 sessions (Feb 25, 2022 through to Mar 3, 2022), after a 2 per...

Singapore Exchange Ltd (SGX)