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: 141.25pt;"> </td><td style="width: 141.2pt;">MCT</td></tr><tr><td style="width: 141.25pt;">Period</td><td style="width: 141.2pt;">1Q22</td></tr><tr><td style="width: 141.25pt;">Gross Revenue (S$ m)</td><td style="width: 141.2pt;">124.1 (+23.7% YoY)</td></tr><tr><td style="width: 141.25pt;">NPI (S$ m)</td><td style="width: 141.2pt;">96.9 (+22.9% YoY)</td></tr><tr><td style="width: 141.25pt;">DPU (S$ c)</td><td style="width: 141.2pt;">Not Disclosed</td></tr><tr><td style="width: 141.25pt;">NAV per Unit (S$)</td><td style="width: 141.2pt;">1.72 (Based on 2H21 NAV)</td></tr><tr><td style="width: 141.25pt;">P/B (x)</td><td style="width: 141.2pt;">1.24 (Based on 2H21 NAV)</td></tr><tr><td style="width: 141.25pt;">Occupancy (%)</td><td style="width: 141.2pt;">Portfolio: 95.4VivoCity: 99.4</td></tr><tr><td style="width: 141.25pt;">Reversion (%)</td><td style="width: 141.2pt;">Not Disclosed</td></tr><tr><td style="width: 141.25pt;">Gearing (%)</td><td style="width: 141.2pt;">34.2</td></tr><tr><td style="width: 141.25pt;">Cost of Debt (%)</td><td style="width: 141.2pt;">2.44</td></tr><tr><td style="width: 141.25pt;">1 Yr Fwd Yield (%)</td><td style="width: 141.2pt;">4.49</td></tr><tr><td style="width: 141.25pt;">Debt Hedged (%)</td><td style="width: 141.2pt;">75.7%</td></tr><tr><td style="width: 141.25pt;">Target Price</td><td style="width: 141.2pt;">N/A</td></tr><tr><td style="width: 141.25pt;">Rating</td><td style="width: 141.2pt;">N/A</td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) MCTPeriod1Q22Gross Revenue (S$ m)124.1 (+23.7% YoY)NPI (S$ m)96.9 (+22.9% YoY)DPU (S$ c)Not DisclosedNAV per Unit (S$)1.72 (Based on 2H21 NAV)P/B (x)1.24 (Based on 2H21 NAV)Occupancy (%)Portfolio: 95.4VivoCity: 99.4Reversion (%)Not DisclosedGearing (%)34.2Cost of Debt (%)2.441 Yr Fwd Yield (%)4.49Debt Hedged (%)75.7%Target PriceN/ARatingN/A

ASEAN Builder's Scoop (26Jul21) - MCT expects more rebates in 2Q22

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> to provide more tenant support amid stricter Covid-19 measures</h3>MCT said it is committed to providing the necessary rental and operating assistance to its retail tenants as Singapore tightens its Covid-19 measures till 13Jun. Since the start of the pandemic, MCT has implemented support packages comprising more than S$70m of rental rebates to help eligible retail tenants offset, on average, more than four months of fixed rent. This includes the passing on of property tax rebates, cash grants from the government and other mandated grants to qualifying tenants. MCT's properties have implemented health and safety protocols.Comments: Rental rebates are likely returning as F&amp;B tenants grapple with no-dining-in restrictions for ~1mo. We understand few tenants at Paragon have already requested for assistance but SPHREIT is still reviewing. We will keep track for every landlord’s decision and report accordingly.

SingaporeMapletree Commercial Trust (MCT SP) to provide more tenant support amid stricter Covid-19 measuresMCT said it is committed to providing the necessary rental and operating assistance to its retail tenants as Singapore tightens its Covid-19 measures till 13Jun. Since the start of the pandemic, MCT has implemented support packages comprising more than S$70m of rental rebates to help eligible retail tenants offset, on average, more than four months of fixed rent. This includes the passing on of property tax rebates, cash grants from the government and other mandated grants to qualifying tenants. MCT's properties have implemented health and safety protocols.Comments: Rental rebates are likely returning as F&amp;B tenants grapple with no-dining-in restrictions for ~1mo. We understand few tenants at Paragon have already requested for assistance but SPHREIT is still reviewing. We will keep track for every landlord’s decision and report accordingly.

ASEAN Builder's Scoop (17May21) - MCT to provide more tenant supports

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

<ul><li>REIT Watch - Performance of S-Reits within the STI On Thursday night (Oct 12), the US Consumer Price Index (CPI) came in slightly higher than markets had anticipated, leading to higher expectations that the Federal Reserve will likely implement one more interest rate hike before the year ends.</li><li>The three S-Reits with the lowest gearing ratios are: Sasseur Reit (26.2 per cent), Frasers Logistics & Commercial Trust (28.6 per cent) and Paragon Reit (29.8 per cent).</li></ul>

REIT Watch - Performance of S-Reits within the STI On Thursday night (Oct 12), the US Consumer Price Index (CPI) came in slightly higher than markets had anticipated, leading to higher expectations that the Federal Reserve will likely implement one more interest rate hike before the year ends.The three S-Reits with the lowest gearing ratios are: Sasseur Reit (26.2 per cent), Frasers Logistics & Commercial Trust (28.6 per cent) and Paragon Reit (29.8 per cent).

REIT Watch - S-Reits among top gainers in STI for week starting Oct 9

<ul><li>Singapore Grade A office rent and core CBD Occupancy According to CBRE Research’s latest Singapore Occupier Sentiment Survey, office utilisation in Asia-Pacific outpaced that in Europe and the US.</li><li>Similarly, MPACT saw positive rental reversions in its latest Q2FY23 update, with Mapletree Business Centre at 7.1 per cent and the rest of Singapore office properties and business parks at 8.9 per cent.</li><li>Looking ahead, MPACT expects rents for business parks to remain flat or stable with minimal growth in 2023 despite the expected rise in vacancy, as new and good-quality business parks will command higher rental rates.</li></ul>

Singapore Grade A office rent and core CBD Occupancy According to CBRE Research’s latest Singapore Occupier Sentiment Survey, office utilisation in Asia-Pacific outpaced that in Europe and the US.Similarly, MPACT saw positive rental reversions in its latest Q2FY23 update, with Mapletree Business Centre at 7.1 per cent and the rest of Singapore office properties and business parks at 8.9 per cent.Looking ahead, MPACT expects rents for business parks to remain flat or stable with minimal growth in 2023 despite the expected rise in vacancy, as new and good-quality business parks will command higher rental rates.

REIT Watch - Positive rent reversions recorded across Singapore office market

Singapore

Mapletree Pan Asia Commercial Trust is a real estate investment trust (REIT) that invests in a diversified portfolio of income-producing office and retail properties across key Asian gateway markets. Its portfolio includes commercial properties in Singapore, Hong Kong, China, Japan, and South Korea. The trust is headquartered in Singapore and was formed in 2022.

Mapletree Pan Asia Commercial Trust (MPACT SP)

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Mapletree Pan Asia Commercial Trust (MPACT SP)

ASEAN Builder's Scoop (26Jul21) - MCT expects more rebates in 2Q22

MCT expects more rebates in 2Q22; Pick suburban malls+industrial SREITs amid Phase 2; GUOL sets GLS record bid; 2Q21 office rents rising, retail...

SCCM Asia Research

ASEAN Builder's Scoop (17May21) - MCT to provide more tenant supports

MCT to provide more tenant supports; ARA increases stake in Kenedix; Provence Residence healthy 53% take-up rate; AREIT 1Q21 driven by inorganic...

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

REIT Watch - S-Reits among top gainers in STI for week starting Oct 9

REIT Watch - Performance of S-Reits within the STI On Thursday night (Oct 12), the US Consumer Price Index (CPI) came in slightly higher than...

Singapore Exchange Ltd (SGX)

REIT Watch - Positive rent reversions recorded across Singapore office market

Singapore Grade A office rent and core CBD Occupancy According to CBRE Research’s latest Singapore Occupier Sentiment Survey, office utilisation...

Singapore Exchange Ltd (SGX)

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52-week Range

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