Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Challenging Result: Oversea Chinese Banking Corp. (OCBC.SP) [OCBC] reported 3Q21 net profit of SGD 1.2 bn, a SGD 64 mn (5.5%) increase on a linked quarter basis. OCBC’s bottom-line improvement was primarily attributable to a decrease in loss provisions, as credit risk remains elevated; a tax rate decline; and stronger insurer earnings; and*Credit Breaking Down Again: By our calculation, we find that net new NPL growth has increased again to SGD 448 mn or 44.9% on an annualized basis. Given the increase in net new NPLs, reserve would appear to now be wanting by SGD 2.0 bn plus or just under two quarters of bottom-line results.

*Challenging Result: Oversea Chinese Banking Corp. (OCBC.SP) [OCBC] reported 3Q21 net profit of SGD 1.2 bn, a SGD 64 mn (5.5%) increase on a linked quarter basis. OCBC’s bottom-line improvement was primarily attributable to a decrease in loss provisions, as credit risk remains elevated; a tax rate decline; and stronger insurer earnings; and*Credit Breaking Down Again: By our calculation, we find that net new NPL growth has increased again to SGD 448 mn or 44.9% on an annualized basis. Given the increase in net new NPLs, reserve would appear to now be wanting by SGD 2.0 bn plus or just under two quarters of bottom-line results.

Oversea Chinese Banking Corp.- Negative Jaws & Weaker Credit

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)

Thematic (Sector/Industry)

<h2>Singapore</h2>
<h3>Cuscaden Peak minimum chain offer price for each <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994" rel="noopener">SPH REIT (SPHREIT SP)</a> unit stands at S$96.4c</h3>
<ul>
<li>The minimum chain offer price, which consortium Cuscaden Peak will have to offer for each SPHREIT if its acquisition bid for Singapore Press Holdings (SPH SP) succeeds is S$96.4c, fully in cash. The consortium had made a surprise rival bid to privatise SPH, following an earlier offer from Keppel Corp (KEP SP). Such an acquisition would take place by way of a scheme of arrangement. Subject to the finalisation of the terms of such a scheme, the completion of Cuscaden's proposed cash acquisition would result in an obligation for it to undertake a chain offer for all SPHREIT units as well, in accordance with the Singapore Code on Take-overs and Mergers</li>
<li>The minimum chain offer price shall be the simple average of the daily volume-weighted average traded prices of SPHREIT units, on either the latest 20 trading days, or whatever number of trading days there were within 30 calendar days before the announcement of the possible offer. The chain offer will not be made unless and until the possible scheme becomes effective in accordance with its terms, or – if Cuscaden undertakes the proposed acquisition in another method – is declared effective or unconditional, and/or is completed. Cuscaden's offer for SPH is S$2.10 per share in cash. Cuscaden comprises Hotel Properties, businessman Ong Beng Seng and two Temasek-linked entities – CLA Real Estate Holdings and Mapletree. Its proposal still needs to be accepted by the board of SPH.</li>
</ul>

Singapore
Cuscaden Peak minimum chain offer price for each SPH REIT (SPHREIT SP) unit stands at S$96.4c

The minimum chain offer price, which consortium Cuscaden Peak will have to offer for each SPHREIT if its acquisition bid for Singapore Press Holdings (SPH SP) succeeds is S$96.4c, fully in cash. The consortium had made a surprise rival bid to privatise SPH, following an earlier offer from Keppel Corp (KEP SP). Such an acquisition would take place by way of a scheme of arrangement. Subject to the finalisation of the terms of such a scheme, the completion of Cuscaden's proposed cash acquisition would result in an obligation for it to undertake a chain offer for all SPHREIT units as well, in accordance with the Singapore Code on Take-overs and Mergers
The minimum chain offer price shall be the simple average of the daily volume-weighted average traded prices of SPHREIT units, on either the latest 20 trading days, or whatever number of trading days there were within 30 calendar days before the announcement of the possible offer. The chain offer will not be made unless and until the possible scheme becomes effective in accordance with its terms, or – if Cuscaden undertakes the proposed acquisition in another method – is declared effective or unconditional, and/or is completed. Cuscaden's offer for SPH is S$2.10 per share in cash. Cuscaden comprises Hotel Properties, businessman Ong Beng Seng and two Temasek-linked entities – CLA Real Estate Holdings and Mapletree. Its proposal still needs to be accepted by the board of SPH.


ASEAN Builder's Scoop (2Nov21) - Cuscaden Peak Chain Offer for SPHREIT

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.

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 <img src='https://api2.sgx.com/sites/default/files/2021-10/Capture%201.PNG' alt='SREIT that have kicked off the reporting season' />
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 <div class='content-caption'>SREIT that have kicked off the reporting season</div>
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Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business updates, before the market opened last Friday. The five are SPH REIT, AIMS APAC REIT, Ascendas REIT, Sabana REIT, Suntec REIT. 
These five S-Reits have reported increased distributions per unit (DPU) and improved operating metrics amid a cautiously optimistic outlook for the year end.

SPH Reit kicks off with improved full-year results led by gradual market recovery in both of its markets in Singapore and Australia. It noted that tenant sales in its Australia portfolio have recovered to pre-Covid levels despite a seven-day lockdown in July. 
It announced fiscal 2021 DPU at 5.4 cents, increasing 98 per cent year on year and 3.6 per cent away from its previous fiscal year 2019 DPU (pre-Covid).

AIMS Apac Reit announced 4.75 cents in DPU to be distributed for first half FY2022, an 18.8 per cent increase from a year ago, buoyed by higher net property income which rose 19.4 per cent to S$47.7 million year on year.

The Reit recently announced its proposed acquisition of Woolworths Headquarters in New South Wales, Australia, which will be its largest asset across its entire portfolio. 
Ascendas Reit in its business update observed improved portfolio occupancy rates of 91.7 per cent and positive rental reversions, with the completion of Grab's headquarters at one-north, Singapore.

It noted improved occupancy levels across its Singapore and Australia properties while lower to flat levels in its United States and United Kingdom/Europe properties.

Last Friday, Ascendas Reit announced the proposed acquisition of 11 last mile logistics properties in Kansas City, US for S$207.8 million, marking its first entry into the US logistics market and complementing the Reit's existing portfolio.

The Kansas portfolio is 92.6 per cent occupied by 27 customers from industries including third-party logistics, wholesale distribution, manufacturing and healthcare.

The 11 properties were reported to have strong retention rates, with current tenants in place for an average of 12.5 years.

Sabana Reit's business updates reported improved portfolio occupancy rates of 85.3 per cent, its highest level since early 2018 when the Reit's refreshed strategy was first announced.

The Reit also updated that it has renewed leases with positive rental reversion of 7.8 per cent, which is the sixth time it has achieved positive reversion over the past seven quarters.

The removal of its syariah compliance was completed on Oct 21.

Suntec Reit inked 22 per cent higher distributable income from operations and announced 2.232 cents in third quarter 2021 DPU to unitholders which is 20.8 per cent higher year on year.

The Reit expects the return of Singapore's workforce to increase over time and positive rent reversion for its office portfolio for full year 2021.

In its local retail portfolio, it observed improved footfall during the first two weeks of Covid 'Stabilisation Phase' in October compared to earlier periods and expects mall occupancy to be on track to remain around 95 per cent by end 2021. REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/improved-operating-metrics-and-dpus-as-s-reits-kick-off-reporting"> read </a>the original version.
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    SREIT that have kicked off the reporting season


Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business updates, before the market opened last Friday. The five are SPH REIT, AIMS APAC REIT, Ascendas REIT, Sabana REIT, Suntec REIT.  
These five S-Reits have reported increased distributions per unit (DPU) and improved operating metrics amid a cautiously optimistic outlook for the year end.

SPH Reit kicks off with improved full-year results led by gradual market recovery in both of its markets in Singapore and Australia. It noted that tenant sales in its Australia portfolio have recovered to pre-Covid levels despite a seven-day lockdown in July.  
It announced fiscal 2021 DPU at 5.4 cents, increasing 98 per cent year on year and 3.6 per cent away from its previous fiscal year 2019 DPU (pre-Covid).

AIMS Apac Reit announced 4.75 cents in DPU to be distributed for first half FY2022, an 18.8 per cent increase from a year ago, buoyed by higher net property income which rose 19.4 per cent to S$47.7 million year on year.

The Reit recently announced its proposed acquisition of Woolworths Headquarters in New South Wales, Australia, which will be its largest asset across its entire portfolio.  
Ascendas Reit in its business update observed improved portfolio occupancy rates of 91.7 per cent and positive rental reversions, with the completion of Grab's headquarters at one-north, Singapore.

It noted improved occupancy levels across its Singapore and Australia properties while lower to flat levels in its United States and United Kingdom/Europe properties.

Last Friday, Ascendas Reit announced the proposed acquisition of 11 last mile logistics properties in Kansas City, US for S$207.8 million, marking its first entry into the US logistics market and complementing the Reit's existing portfolio.

The Kansas portfolio is 92.6 per cent occupied by 27 customers from industries including third-party logistics, wholesale distribution, manufacturing and healthcare.

The 11 properties were reported to have strong retention rates, with current tenants in place for an average of 12.5 years.

Sabana Reit's business updates reported improved portfolio occupancy rates of 85.3 per cent, its highest level since early 2018 when the Reit's refreshed strategy was first announced.

The Reit also updated that it has renewed leases with positive rental reversion of 7.8 per cent, which is the sixth time it has achieved positive reversion over the past seven quarters.

The removal of its syariah compliance was completed on Oct 21.

Suntec Reit inked 22 per cent higher distributable income from operations and announced 2.232 cents in third quarter 2021 DPU to unitholders which is 20.8 per cent higher year on year.

The Reit expects the return of Singapore's workforce to increase over time and positive rent reversion for its office portfolio for full year 2021.

In its local retail portfolio, it observed improved footfall during the first two weeks of Covid 'Stabilisation Phase' in October compared to earlier periods and expects mall occupancy to be on track to remain around 95 per cent by end 2021.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Improved operating metrics and DPUs as S-Reits kick off reporting

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

<a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151:1" rel="noopener">Suntec REIT (SUN SP)</a> reported its 3Q21 business updates pre-market on 22 Oct 21. In this note, we will analyze its performance for the period, current capital management, and share our thoughts on its outlook.

Suntec REIT (SUN SP) reported its 3Q21 business updates pre-market on 22 Oct 21. In this note, we will analyze its performance for the period, current capital management, and share our thoughts on its outlook.

Suntec REIT 3Q21 - Higher Topline and Gearing, Only Difference Is the Former Was One-Off

<h2>Singapore</h2>SREITs results in a glance (see detailed spreadsheet and calendar attached)<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/273/original/image_54776601321634694560432.png?1634694565" class="editor-image img-responsive" data-smartkarma-image-id="236273"></figure><ul><li><h3></h3><a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a> 3Q21 Business Updates; Robust reversions while on virtuous cycle of inorganic growth (BUY; TP S$3.55/unit)</li><li>3Q21 revenue, NPI and DPU were undisclosed. AREIT has completed the development of the Grab Headquarters, with a total development cost of S$184.6m. Divestment of two Australian logistics properties has also been completed at a price of S$104.5m (AUD101.6m)</li></ul>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached)Ascendas Real Estate Investment Trust (AREIT SP) 3Q21 Business Updates; Robust reversions while on virtuous cycle of inorganic growth (BUY; TP S$3.55/unit)3Q21 revenue, NPI and DPU were undisclosed. AREIT has completed the development of the Grab Headquarters, with a total development cost of S$184.6m. Divestment of two Australian logistics properties has also been completed at a price of S$104.5m (AUD101.6m)

Singapore

CapitaLand Ascendas REIT is an industrial real estate investment trust. The Trust invests in business and science park properties, integrated development, amenities, and retail (IDAR) properties, high-specifications industrial properties and data centers, light industrial and flatted factories, and logistics and distribution centers.

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CapitaLand Ascendas REIT (CLAR SP)

Oversea Chinese Banking Corp.- Negative Jaws & Weaker Credit

OCBC: OCBC reported a QOQ 3Q21 net profit increase of 5.5%, as it pulled on numerous levers. Net new NPL growth increased 44.9% annualized, and...

Thomas J. Monaco

ASEAN Builder's Scoop (2Nov21) - Cuscaden Peak Chain Offer for SPHREIT

Cuscaden Peak chain offer for SPHREIT; URA rejects International Plaza's redevelopment plan; DD riding on hospitality tailwinds; DILD 9M21 mktg...

SCCM Asia Research

REIT Watch - Improved operating metrics and DPUs as S-Reits kick off reporting

Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business...

Singapore Exchange Ltd (SGX)

Suntec REIT 3Q21 - Higher Topline and Gearing, Only Difference Is the Former Was One-Off

Suntec REIT (SUN SP) reported its 3Q21 business updates pre-market on 22 Oct 21. In this note, we will analyze its performance, current capital...

Clarence Chu

ASEAN Builder's Scoop (20Oct21)

AREIT robust reversions, on virtuous growth cycle; IWG opens 16th Co-working centre; Ann Siang House pivots to rental business; SWB revised FY21...

SCCM Asia Research

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