B-WORK: Stable Tenants and Good Dividend Yield Give Low Risk
We keep our BUY recommendation on B-WORK and slightly decrease the target price to Bt13.60 from Bt13.90, implying an upside of 21% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.0% 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, expect 7% in 2021-2022E
Interim: The 3Q20 results were slightly better than we expected as revenue grew QoQ . The high occupancy rate ensures stable revenue for the REIT.
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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