B-WORK: Good Dividend Yield Makes an Attractive Investment
We have a BUY recommendation on B-WORK and slightly increase the target price to Bt13.90 from Bt12.80, implying an upside of 20% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.1% and no terminal period.
Investment thesis:
- Group affiliation assures a high occupancy rate and stable revenue
- Impact from COVID-19 should be limited
- Addition of new assets offer upside to our target price
- Pays higher dividend yield than Thai peers
Interim: The 2Q20 results were in line with our expectations. The high occupancy rate ensures a fast recovery as soon as rental rates are back to normal.
Risks: Conflict of interest risk due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.
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