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

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55" rel="noopener">Capitaland (CAPL SP)</a> shareholders vote in favour of restructuring plans</h3><ul><li>CAPL shareholders have voted in favour to privatise CAPL’s development arm and to list its fund-management and property-investment business. From Sep21, CAPL will operate as two distinct entities, the new, listed unit CapitaLand Investments (CLI) and the privatised CapitaLand Development. CLI shares are expected to list on 16Sep and 3Sept is expected to be the last day of trade for the shares of CapitaLand Limited</li><li>Over 3,400 shareholders voted by proxy at a virtual extraordinary general meeting and a scheme meeting, among which 99.6% backed the resolution to approve the capital reduction and distribution in specie. The scheme of arrangement received approval from 97.6% of the number of shareholders holding approximately 99.8% in value of the total number of shares voted</li><li>CLI is expected to become a leading listed real estate investment manager globally, with pro forma total real estate AUM of ~S$115bn as at 31Dec20. On a pro forma basis, it had ~S$78bn of real estate funds under management held via its managed listed funds and unlisted funds across the Asia-Pacific, Europe and the USA. CLI aims to achieve S$100bn in funds under management by 2024 and grow its lodging business to 160,000 units under management by 2023.</li></ul>

SingaporeCapitaland (CAPL SP) shareholders vote in favour of restructuring plansCAPL shareholders have voted in favour to privatise CAPL’s development arm and to list its fund-management and property-investment business. From Sep21, CAPL will operate as two distinct entities, the new, listed unit CapitaLand Investments (CLI) and the privatised CapitaLand Development. CLI shares are expected to list on 16Sep and 3Sept is expected to be the last day of trade for the shares of CapitaLand LimitedOver 3,400 shareholders voted by proxy at a virtual extraordinary general meeting and a scheme meeting, among which 99.6% backed the resolution to approve the capital reduction and distribution in specie. The scheme of arrangement received approval from 97.6% of the number of shareholders holding approximately 99.8% in value of the total number of shares votedCLI is expected to become a leading listed real estate investment manager globally, with pro forma total real estate AUM of ~S$115bn as at 31Dec20. On a pro forma basis, it had ~S$78bn of real estate funds under management held via its managed listed funds and unlisted funds across the Asia-Pacific, Europe and the USA. CLI aims to achieve S$100bn in funds under management by 2024 and grow its lodging business to 160,000 units under management by 2023.

ASEAN Builder's Scoop (11Aug21) - CAPL Gets Nod for Restructuring Plan

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55" rel="noopener">Capitaland (CAPL SP)</a> restructuring plan is deemed 'fair and reasonable'</h3><ul><li>CAPL proposed to split its business into a privately held real estate development arm, CapitaLand Investment (CLI), which would become the largest real estate investment manager (REIM) on the Singapore bourse, with pro forma real estate AUM of ~S$115bn as at 31De20. Under the planned scheme, shareholders would effectively own a direct stake in a company with lower leverage, as the pro forma net debt-to-equity ratio of 0.56 times for CLI, against CAPL’s net debt to equity of 0.68 times as at 31Dec20</li><li>Evercore Asia, the IFA, has called the value of the deal fair and reasonable from a financial point of view, as of the latest practicable date and shareholders can also choose to sell their shares on the open market, if they can get a higher price</li><li>The implied consideration represents a premium over the volume-weighted average price up to date of the restructuring announcement. The implied value in the deal includes both a consideration of S$4.102/share and the FY20 dividend for those who held shares by 4May21. CAPL will hold an EGM and a scheme meeting on 10Aug21 for shareholders to decide on the planned transaction.</li></ul>

SingaporeCapitaland (CAPL SP) restructuring plan is deemed 'fair and reasonable'CAPL proposed to split its business into a privately held real estate development arm, CapitaLand Investment (CLI), which would become the largest real estate investment manager (REIM) on the Singapore bourse, with pro forma real estate AUM of ~S$115bn as at 31De20. Under the planned scheme, shareholders would effectively own a direct stake in a company with lower leverage, as the pro forma net debt-to-equity ratio of 0.56 times for CLI, against CAPL’s net debt to equity of 0.68 times as at 31Dec20Evercore Asia, the IFA, has called the value of the deal fair and reasonable from a financial point of view, as of the latest practicable date and shareholders can also choose to sell their shares on the open market, if they can get a higher priceThe implied consideration represents a premium over the volume-weighted average price up to date of the restructuring announcement. The implied value in the deal includes both a consideration of S$4.102/share and the FY20 dividend for those who held shares by 4May21. CAPL will hold an EGM and a scheme meeting on 10Aug21 for shareholders to decide on the planned transaction.

ASEAN Builder's Scoop (19Jul21) - CAPL Restructuring Plan Fair and Reasonable

<h2>Singapore</h2>
<h3>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 141.25pt;">
<p> </p>
</td>
<td style="width: 141.2pt;">
<p>SPHREIT</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Period</p>
</td>
<td style="width: 141.2pt;">
<p>3Q21</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Gross Revenue (S$ m)</p>
</td>
<td style="width: 141.2pt;">
<p>69.6 (+82.8% YoY)</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>NPI (S$ m)</p>
</td>
<td style="width: 141.2pt;">
<p>Not Disclosed</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>DPU (S$ c)</p>
</td>
<td style="width: 141.2pt;">
<p>1.38 (+176.0% YoY)</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>NAV per Unit (S$)</p>
</td>
<td style="width: 141.2pt;">
<p>Not Disclosed</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>P/B (x)</p>
</td>
<td style="width: 141.2pt;">
<p>1.02 (Based on 2Q21 NAV)</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Occupancy (%)</p>
</td>
<td style="width: 141.2pt;">
<p>98.4</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Reversion (%)</p>
</td>
<td style="width: 141.2pt;">
<p>Not Disclosed</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Gearing (%)</p>
</td>
<td style="width: 141.2pt;">
<p>Not Disclosed</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Cost of Debt (%)</p>
</td>
<td style="width: 141.2pt;">
<p>1.86</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>1 Yr Fwd Yield (%)</p>
</td>
<td style="width: 141.2pt;">
<p>5.62</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Debt Hedged (%)</p>
</td>
<td style="width: 141.2pt;">
<p>58</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Target Price</p>
</td>
<td style="width: 141.2pt;">
<p>NA</p>
</td>
</tr>
<tr>
<td style="width: 141.25pt;">
<p>Rating</p>
</td>
<td style="width: 141.2pt;">
<p>NA</p>
</td>
</tr>
</tbody>
</table>

Singapore
SREITs results in a glance (see detailed spreadsheet and calendar attached)




 


SPHREIT




Period


3Q21




Gross Revenue (S$ m)


69.6 (+82.8% YoY)




NPI (S$ m)


Not Disclosed




DPU (S$ c)


1.38 (+176.0% YoY)




NAV per Unit (S$)


Not Disclosed




P/B (x)


1.02 (Based on 2Q21 NAV)




Occupancy (%)


98.4




Reversion (%)


Not Disclosed




Gearing (%)


Not Disclosed




Cost of Debt (%)


1.86




1 Yr Fwd Yield (%)


5.62




Debt Hedged (%)


58




Target Price


NA




Rating


NA





ASEAN Builder's Scoop (13Jul21) - SPHREIT No Mention of Rebates

<h2>Singapore</h2>
<h3>SREITs – Reflation is working in SREIT’s favour (BUY FCT DASIN AAREIT AREIT ECWREIT)</h3>
<p>With Singapore moving into Phase 3, economic recovery should regain momentum, albeit uneven across sectors. The accelerated timetable for US interest rate hikes has triggered yield spread compression, but also signaled a stronger and sustainable economic growth, which bodes well for trade-dependent Singapore. We reinitiate the SREIT sector with BUY. Top picks are FCT, DASIN, AAREIT and AREIT. SGREIT offers a good entry point for midterm recovery play; while ECWREIT could see a DPU boost from deferred DI.</p>
<ul>
<li>Economy recovery provides strong tailwind for yield, albeit uneven across sectors. Following a setback from a month-long partial lockdown in Phase 2, Singapore has resume gradual reopening on 14Jun, thus setting economy back on track to recovery. However, we should see some deviation from initial expected timeline and recovery pace across sectors. In particular, tourism-related sectors are set to see further delays in recovery given the slower lifting of global travel curbs and the recent cut in capacity limits at local attractions. On the other hand, domestic-driven expenditures and outward-oriented sectors, such as retail and manufacturing, are expected to benefit from the pick-up in demand</li>
<li>We prefer Retail and Commercial subsectors, which should recover on stronger pace and offer attractive yields within the SREIT sector, while trading at c.1.0x forward P/B. Industrial subsector offers mixed picture, where we are positive on warehouse space, but neutral on other property types. Continued M&amp;A activities within the Industrial subsector should boost future DPU growth in addition to organic growth</li>
<li>We underweight both Hospitality and Healthcare subsectors. Outlook for Hospitality subsector remains cloudy in near term. Nonetheless, we remain upbeat on the longer-term prospect of the subsector in anticipation of international border reopening. On the other hand, the robust valuations of Healthcare subsector and low cash-flow growth realizations could indicate over optimism in investors’ expectations</li>
<li>Our top picks: FCT (Buy; S$2.89) for its faster recovery in near term. DASIN (Buy; S$0.81) for China-focused retail play with its Greater Bay Area (GBA) exposure. We favour AAREIT (Buy; S$1.60) and AREIT (Buy; S$3.55) for their strong balance sheet, which allows them financial flexibility in pursuing new acquisitions, or embarking on development/ redevelopment/ AEI projects. Tactical investment into ECWREIT (Buy; S$0.82) on potential DPU boost from deferred DI.
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/247/original/image003+%283%29.png?1625105065" class="editor-image img-responsive" data-smartkarma-image-id="216247"></figure>
</section>
</li>
</ul>

Singapore
SREITs – Reflation is working in SREIT’s favour (BUY FCT DASIN AAREIT AREIT ECWREIT)
With Singapore moving into Phase 3, economic recovery should regain momentum, albeit uneven across sectors. The accelerated timetable for US interest rate hikes has triggered yield spread compression, but also signaled a stronger and sustainable economic growth, which bodes well for trade-dependent Singapore. We reinitiate the SREIT sector with BUY. Top picks are FCT, DASIN, AAREIT and AREIT. SGREIT offers a good entry point for midterm recovery play; while ECWREIT could see a DPU boost from deferred DI.

Economy recovery provides strong tailwind for yield, albeit uneven across sectors. Following a setback from a month-long partial lockdown in Phase 2, Singapore has resume gradual reopening on 14Jun, thus setting economy back on track to recovery. However, we should see some deviation from initial expected timeline and recovery pace across sectors. In particular, tourism-related sectors are set to see further delays in recovery given the slower lifting of global travel curbs and the recent cut in capacity limits at local attractions. On the other hand, domestic-driven expenditures and outward-oriented sectors, such as retail and manufacturing, are expected to benefit from the pick-up in demand
We prefer Retail and Commercial subsectors, which should recover on stronger pace and offer attractive yields within the SREIT sector, while trading at c.1.0x forward P/B. Industrial subsector offers mixed picture, where we are positive on warehouse space, but neutral on other property types. Continued M&amp;A activities within the Industrial subsector should boost future DPU growth in addition to organic growth
We underweight both Hospitality and Healthcare subsectors. Outlook for Hospitality subsector remains cloudy in near term. Nonetheless, we remain upbeat on the longer-term prospect of the subsector in anticipation of international border reopening. On the other hand, the robust valuations of Healthcare subsector and low cash-flow growth realizations could indicate over optimism in investors’ expectations
Our top picks: FCT (Buy; S$2.89) for its faster recovery in near term. DASIN (Buy; S$0.81) for China-focused retail play with its Greater Bay Area (GBA) exposure. We favour AAREIT (Buy; S$1.60) and AREIT (Buy; S$3.55) for their strong balance sheet, which allows them financial flexibility in pursuing new acquisitions, or embarking on development/ redevelopment/ AEI projects. Tactical investment into ECWREIT (Buy; S$0.82) on potential DPU boost from deferred DI.






ASEAN Builder's Scoop (1Jul21) - SREITs Reflation Is Working in Its Favour

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55" rel="noopener">Capitaland (CAPL SP)</a> divests partial stakes in six Raffles City developments in China; Exceeded divestment target by ~3x for FY21</h3><ul><li>CAPL has entered into conditional agreements to divest partial stakes in six Raffles City (RC) developments in China to Ping An Life Insurance Company. Ping An will acquire 70.0% onshore stake in RC Beijing, RC Chengdu, RC Ningbo, RC Hangzhou and RC Changning; and 60.0% onshore stake in RC Shanghai</li><li>Post-transaction, CAPL will retain an effective stake of 12.6-30% in each development. Under its signature Raffles City trademarks, CAPL will also continue to provide asset management services for these developments and earn fee income. The agreed value for the portfolio is RMB46.7bn (~S$9.6bn), a 6.7% premium to valuation. Targeted for completion in 3Q21, the transaction is expected to generate net proceeds of more than S$2bn. The transaction is set to bring the total capital recycled across the Group to ~S$11.2bn YTD. This is more than three times the set annual target of S$3bn. Concurrently, its Funds Under Management (“FUM”) grows to S$79.2bn</li><li>Part of the unlocked capital will be used to support the Group’s investment pivot to new economy assets such as business parks, logistics and data centres. CapitaLand plans to grow its China exposure in this sector to S$5bn over the next few years, from the S$1.5bn as at end 2020. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/215/586/original/image004.png?1624844847" class="editor-image img-responsive" data-smartkarma-image-id="215586"></figure></section></li></ul>

SingaporeCapitaland (CAPL SP) divests partial stakes in six Raffles City developments in China; Exceeded divestment target by ~3x for FY21CAPL has entered into conditional agreements to divest partial stakes in six Raffles City (RC) developments in China to Ping An Life Insurance Company. Ping An will acquire 70.0% onshore stake in RC Beijing, RC Chengdu, RC Ningbo, RC Hangzhou and RC Changning; and 60.0% onshore stake in RC ShanghaiPost-transaction, CAPL will retain an effective stake of 12.6-30% in each development. Under its signature Raffles City trademarks, CAPL will also continue to provide asset management services for these developments and earn fee income. The agreed value for the portfolio is RMB46.7bn (~S$9.6bn), a 6.7% premium to valuation. Targeted for completion in 3Q21, the transaction is expected to generate net proceeds of more than S$2bn. The transaction is set to bring the total capital recycled across the Group to ~S$11.2bn YTD. This is more than three times the set annual target of S$3bn. Concurrently, its Funds Under Management (“FUM”) grows to S$79.2bnPart of the unlocked capital will be used to support the Group’s investment pivot to new economy assets such as business parks, logistics and data centres. CapitaLand plans to grow its China exposure in this sector to S$5bn over the next few years, from the S$1.5bn as at end 2020. 

ASEAN Builder's Scoop (28Jun21) - CAPL Divesting 6 RC China Stakes

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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Capitaland (CAPL SP)

ASEAN Builder's Scoop (11Aug21) - CAPL Gets Nod for Restructuring Plan

CAPL gets nod for restructuring plan; PROP robust earnings. pure-play on rising volume; Jul21 condo resale price, volume rising MoM; SG/Phils GDP...

SCCM Asia Research

ASEAN Builder's Scoop (19Jul21) - CAPL Restructuring Plan Fair and Reasonable

CAPL restructuring plan fair and reasonable; MPI restructures logistics biz; AWC to invest THB100bn in mixed-use developments; Indo extends tax...

SCCM Asia Research

ASEAN Builder's Scoop (13Jul21) - SPHREIT No Mention of Rebates

SPHREIT no mention of rebates; CAPL opens RC the Bund Shanghai; LMRT extends mall closure in Medan; SLI plans for 3bn shares follow-on offer; 2Q21...

SCCM Asia Research

ASEAN Builder's Scoop (1Jul21) - SREITs Reflation Is Working in Its Favour

SREITs reflation is working in its favour; 2Q21 resi prices up 0.9% QoQ; CAPL exits malls, expands into logistics in Japan; KREIT divests Brisbane...

SCCM Asia Research

ASEAN Builder's Scoop (28Jun21) - CAPL Divesting 6 RC China Stakes

CAPL divesting 6 RC China stakes, exceeded target by 3x; ART issues forfeiture notice to Park Hotel CQ; Hmlet SG new project launch; Manila 1Q21...

SCCM Asia Research

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