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>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3><table class="table table-striped"><tbody><tr><td style="width: 97.4pt;"> </td><td style="width: 97.4pt;">KDCREIT</td><td style="width: 97.45pt;">MAGIC</td><td style="width: 97.4pt;">ART</td><td style="width: 97.45pt;">KORE (US$)</td><td style="width: 97.4pt;">PREIT</td><td style="width: 97.45pt;">LMRT</td></tr><tr><td style="width: 97.4pt;">Period</td><td style="width: 97.4pt;">2Q21</td><td style="width: 97.45pt;">1Q22</td><td style="width: 97.4pt;">1H21</td><td style="width: 97.45pt;">1H21</td><td style="width: 97.4pt;">2Q21</td><td style="width: 97.45pt;">2Q21</td></tr><tr><td style="width: 97.4pt;">Gross Revenue (S$ m)</td><td style="width: 97.4pt;">68.5 (+7.5% YoY)</td><td style="width: 97.45pt;">103 (+10.0% YoY)</td><td style="width: 97.4pt;">185.0 (-11.2% YoY)</td><td style="width: 97.45pt;">68.38 (-3% YoY)</td><td style="width: 97.4pt;">29.6 (-2.3% YoY)</td><td style="width: 97.45pt;">49.65 (+81.3% YoY)</td></tr><tr><td style="width: 97.4pt;">NPI (S$ m)</td><td style="width: 97.4pt;">62.8 (+6.9% YoY)</td><td style="width: 97.45pt;">78.3 (+14.3% YoY)</td><td style="width: 97.4pt;">82.1 (-7.3% YoY)</td><td style="width: 97.45pt;">40.58 (-3.1% YoY)</td><td style="width: 97.4pt;">27.4 (-2.8% YoY)</td><td style="width: 97.45pt;">31.8 (+148% YoY)</td></tr><tr><td style="width: 97.4pt;">DPU (S$ c)</td><td style="width: 97.4pt;">2.462 (+7.5% YoY)</td><td style="width: 97.45pt;">Not Disclosed</td><td style="width: 97.4pt;">2.050 (+95.2% YoY)</td><td style="width: 97.45pt;">3.16 (+1.9% YoY)</td><td style="width: 97.4pt;">3.38 (+0.7% YoY)</td><td style="width: 97.45pt;">0.09 (-18.2% YoY)</td></tr><tr><td style="width: 97.4pt;">NAV per Unit (S$)</td><td style="width: 97.4pt;">1.21</td><td style="width: 97.45pt;">1.238</td><td style="width: 97.4pt;">1.19</td><td style="width: 97.45pt;">0.82</td><td style="width: 97.4pt;">1.98</td><td style="width: 97.45pt;">0.0955</td></tr><tr><td style="width: 97.4pt;">P/B (x)</td><td style="width: 97.4pt;">2.12</td><td style="width: 97.45pt;">0.83</td><td style="width: 97.4pt;">0.85</td><td style="width: 97.45pt;">0.95</td><td style="width: 97.4pt;">2.38</td><td style="width: 97.45pt;">0.64</td></tr><tr><td style="width: 97.4pt;">Occupancy (%)</td><td style="width: 97.4pt;">98.0</td><td style="width: 97.45pt;">99.8 (Festival Walk)92.9 (Gateway Plaza)99.7 (Sandhill Plaza)98.2 (Japan Properties)95.7 (The Pinnacle Gangnam)</td><td style="width: 97.4pt;">Mid-50</td><td style="width: 97.45pt;">90.5</td><td style="width: 97.4pt;">99.7</td><td style="width: 97.45pt;">83.4</td></tr><tr><td style="width: 97.4pt;">Reversion (%)</td><td style="width: 97.4pt;">NA</td><td style="width: 97.45pt;">-34 (Festival Walk)-27 (Gateway Plaza)-4 (Sandhill Plaza)+0.2 (Japan Properties)</td><td style="width: 97.4pt;">Portfolio RevPAU: S$60 (-14% YoY)</td><td style="width: 97.45pt;">+5.4</td><td style="width: 97.4pt;">Not Disclosed</td><td style="width: 97.45pt;">3.4</td></tr><tr><td style="width: 97.4pt;">Gearing (%)</td><td style="width: 97.4pt;">36.7</td><td style="width: 97.45pt;">41.8</td><td style="width: 97.4pt;">35.9</td><td style="width: 97.45pt;">37.1</td><td style="width: 97.4pt;">37</td><td style="width: 97.45pt;">42.5</td></tr><tr><td style="width: 97.4pt;">Cost of Debt (%)</td><td style="width: 97.4pt;">1.5</td><td style="width: 97.45pt;">1.87</td><td style="width: 97.4pt;">1.6</td><td style="width: 97.45pt;">2.82</td><td style="width: 97.4pt;">0.56</td><td style="width: 97.45pt;">6.47</td></tr><tr><td style="width: 97.4pt;">1 Yr Fwd Yield (%)</td><td style="width: 97.4pt;">3.91</td><td style="width: 97.45pt;">6.8</td><td style="width: 97.4pt;">4.16</td><td style="width: 97.45pt;">7.77</td><td style="width: 97.4pt;">2.97</td><td style="width: 97.45pt;">5.5 (annualized 1H21)</td></tr><tr><td style="width: 97.4pt;">Debt Hedged (%)</td><td style="width: 97.4pt;">67</td><td style="width: 97.45pt;">82</td><td style="width: 97.4pt;">50</td><td style="width: 97.45pt;">84.7</td><td style="width: 97.4pt;">82</td><td style="width: 97.45pt;">80.6</td></tr><tr><td style="width: 97.4pt;">Target Price</td><td style="width: 97.4pt;">NA</td><td style="width: 97.45pt;">N/A</td><td style="width: 97.4pt;">NA</td><td style="width: 97.45pt;">N/A</td><td style="width: 97.4pt;">N/A</td><td style="width: 97.45pt;">N/A</td></tr><tr><td style="width: 97.4pt;">Rating</td><td style="width: 97.4pt;">NA</td><td style="width: 97.45pt;">N/A</td><td style="width: 97.4pt;">NA</td><td style="width: 97.45pt;">N/A</td><td style="width: 97.4pt;">N/A</td><td style="width: 97.45pt;">N/A</td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) KDCREITMAGICARTKORE (US$)PREITLMRTPeriod2Q211Q221H211H212Q212Q21Gross Revenue (S$ m)68.5 (+7.5% YoY)103 (+10.0% YoY)185.0 (-11.2% YoY)68.38 (-3% YoY)29.6 (-2.3% YoY)49.65 (+81.3% YoY)NPI (S$ m)62.8 (+6.9% YoY)78.3 (+14.3% YoY)82.1 (-7.3% YoY)40.58 (-3.1% YoY)27.4 (-2.8% YoY)31.8 (+148% YoY)DPU (S$ c)2.462 (+7.5% YoY)Not Disclosed2.050 (+95.2% YoY)3.16 (+1.9% YoY)3.38 (+0.7% YoY)0.09 (-18.2% YoY)NAV per Unit (S$)1.211.2381.190.821.980.0955P/B (x)2.120.830.850.952.380.64Occupancy (%)98.099.8 (Festival Walk)92.9 (Gateway Plaza)99.7 (Sandhill Plaza)98.2 (Japan Properties)95.7 (The Pinnacle Gangnam)Mid-5090.599.783.4Reversion (%)NA-34 (Festival Walk)-27 (Gateway Plaza)-4 (Sandhill Plaza)+0.2 (Japan Properties)Portfolio RevPAU: S$60 (-14% YoY)+5.4Not Disclosed3.4Gearing (%)36.741.835.937.13742.5Cost of Debt (%)1.51.871.62.820.566.471 Yr Fwd Yield (%)3.916.84.167.772.975.5 (annualized 1H21)Debt Hedged (%)67825084.78280.6Target PriceNAN/ANAN/AN/AN/ARatingNAN/ANAN/AN/AN/A

ASEAN Builder's Scoop (27Jul21) - KDCREIT Maiden China Acq

Partner, River Valley Asset Management

River Valley Asset Management

Partner

Singapore-based boutique asset management firm

River Valley Asset Management is a Singapore-based boutique asset management firm. Our team at RVAM strongly believes in being a trusted steward of our clients' wealth across generations.

Each of our fund managers has years of rich portfolio management experience over multiple market cycles at world-class investment houses. We bring our clients the combined strength of our investment team to manage their financial portfolios and to provide bespoke guidance on all aspects of their financial health.

We offer multi-asset class expert investment advice to accredited investors who are family offices, high net worth individuals and institutional investors to preserve and grow our clients' wealth.

The fund management team of the company includes Homiyar Vasania, Anand Ramachandran and Jamshed Desai.

As a mature economy with stable businesses, Singapore's equity benchmarks are dominated by Banks &amp; Government Linked Companies (GLC's) which have grown large over time. The large listed companies in Singapore (private as well as GLC’s) are now facing headwinds from tight labour markets resulting in rising costs and, in the absence of growth, the need to focus on raising productivity.  It is therefore not surprising that the Singapore markets do not excite the average investor. However, within this space we have been finding many hidden gems which have consistently delivered and increasingly fit the needs of a Singaporean investor looking for stable returns in a low growth environment: the REIT marketplace. Over the last seven years the REIT index has delivered over 10% p.a. annualized return which stands in stark contrast to the meagre 4% returns from benchmark STI index.

As a mature economy with stable businesses, Singapore's equity benchmarks are dominated by Banks &amp; Government Linked Companies (GLC's) which have grown large over time. The large listed companies in Singapore (private as well as GLC’s) are now facing headwinds from tight labour markets resulting in rising costs and, in the absence of growth, the need to focus on raising productivity.   It is therefore not surprising that the Singapore markets do not excite the average investor. However, within this space we have been finding many hidden gems which have consistently delivered and increasingly fit the needs of a Singaporean investor looking for stable returns in a low growth environment: the REIT marketplace. Over the last seven years the REIT index has delivered over 10% p.a. annualized return which stands in stark contrast to the meagre 4% returns from benchmark STI index.

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

10 in 10 with CDL Hospitality Trusts - Taking a Long-Term View on Singapore

SIA Engineering Company / Equity Bottom-Up

<ul><li>Singapore received over 9 million tourist arrivals from the start of 2023 to end August, a 204.5% year-on-year increase.</li><li>The 10 most actively traded stocks in the tourism and hospitality sectors have booked net institutional inflows of S$2 million, and returned an average 2.3% total returns in the year-to-date ending 21 Sep.</li><li>International visitor arrivals to Singapore in August dipped slightly to 31 million in August, due to seasonality and after school holidays.</li></ul>

Singapore received over 9 million tourist arrivals from the start of 2023 to end August, a 204.5% year-on-year increase.The 10 most actively traded stocks in the tourism and hospitality sectors have booked net institutional inflows of S$2 million, and returned an average 2.3% total returns in the year-to-date ending 21 Sep.International visitor arrivals to Singapore in August dipped slightly to 31 million in August, due to seasonality and after school holidays.

Tourism & Hospitality stocks poised to benefit from F1 and large scale events in coming months

<ul><li>5 S-Reits with year-on-year improvements in H1 2023 DPU Among them, 10 S-Reits reported higher year-on-year (yoy) net property income (NPI) for the half-year period ended Jun 30, 2023.</li><li>CDL Hospitality Trusts’ H1 2023 NPI increased by 23.3 per cent yoy, largely attributed to Singapore, Japan, Australia, Europe and UK markets.</li></ul>

5 S-Reits with year-on-year improvements in H1 2023 DPU Among them, 10 S-Reits reported higher year-on-year (yoy) net property income (NPI) for the half-year period ended Jun 30, 2023.CDL Hospitality Trusts’ H1 2023 NPI increased by 23.3 per cent yoy, largely attributed to Singapore, Japan, Australia, Europe and UK markets.

REIT Watch - Hospitality trusts report higher DPU for H1 2023

Singapore

CDL Hospitality Trusts is a stapled group that invests in a diversified global portfolio of income-producing real estate for hospitality, hospitality-related, and other accommodation purposes, including hotels, resorts, student accommodation, and build-to-rent apartments. Its portfolio includes 22 properties across eight countries. The company is headquartered in Singapore and was founded in 2006.

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CDL Hospitality (CDREIT SP)

ASEAN Builder's Scoop (27Jul21) - KDCREIT Maiden China Acq

KDCREIT maiden China acq; MAGIC improvements seen at FW; ART recovery momentum continues; KORE occupancy weakness; PLIFE flattish quarter; LMRT...

SCCM Asia Research

Singapore - The Hidden Gems

As a mature economy with stable businesses, Singapore's equity benchmarks are dominated by Banks & Government Linked Companies (GLC's) which...

River Valley Asset Management

10 in 10 with CDL Hospitality Trusts - Taking a Long-Term View on Singapore

10 in 10 with CDL Hospitality Trusts - Taking a Long-Term View on Singapore

Singapore Exchange Ltd (SGX)

Tourism & Hospitality stocks poised to benefit from F1 and large scale events in coming months

Singapore received over 9 million tourist arrivals from the start of 2023 to end August, a 204.5% year-on-year increase. The 10 most actively...

Singapore Exchange Ltd (SGX)

REIT Watch - Hospitality trusts report higher DPU for H1 2023

5 S-Reits with year-on-year improvements in H1 2023 DPU Among them, 10 S-Reits reported higher year-on-year (yoy) net property income (NPI) for...

Singapore Exchange Ltd (SGX)

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