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: 242.047px;"> </td><td style="width: 241.969px;">FCT</td><td style="width: 241.984px;">EREIT</td></tr><tr><td style="width: 242.047px;">Period</td><td style="width: 241.969px;">3Q21</td><td style="width: 241.984px;">2Q21</td></tr><tr><td style="width: 242.047px;">Gross Revenue (S$ m)</td><td style="width: 241.969px;">Not Disclosed</td><td style="width: 241.984px;">59.5 (+6.25% YoY)</td></tr><tr><td style="width: 242.047px;">NPI (S$ m)</td><td style="width: 241.969px;">Not Disclosed</td><td style="width: 241.984px;">42.9 (+9.4% YoY)</td></tr><tr><td style="width: 242.047px;">DPU (S$ c)</td><td style="width: 241.969px;">Not Disclosed</td><td style="width: 241.984px;">0.754 (13.9% YoY)</td></tr><tr><td style="width: 242.047px;">NAV per Unit (S$)</td><td style="width: 241.969px;">2.31 (Based on 1H21 NAV)</td><td style="width: 241.984px;">0.398</td></tr><tr><td style="width: 242.047px;">P/B (x)</td><td style="width: 241.969px;">1.04 (Based on 1H21 NAV)</td><td style="width: 241.984px;">1.1</td></tr><tr><td style="width: 242.047px;">Occupancy (%)</td><td style="width: 241.969px;">96.4</td><td style="width: 241.984px;">91.7</td></tr><tr><td style="width: 242.047px;">Reversion (%)</td><td style="width: 241.969px;">Not Disclosed</td><td style="width: 241.984px;">-0.2</td></tr><tr><td style="width: 242.047px;">Gearing (%)</td><td style="width: 241.969px;">33.9</td><td style="width: 241.984px;">42.9</td></tr><tr><td style="width: 242.047px;">Cost of Debt (%)</td><td style="width: 241.969px;">2.2</td><td style="width: 241.984px;">3.24</td></tr><tr><td style="width: 242.047px;">1 Yr Fwd Yield (%)</td><td style="width: 241.969px;">5.02</td><td style="width: 241.984px;">7.05</td></tr><tr><td style="width: 242.047px;">Debt Hedged (%)</td><td style="width: 241.969px;">59</td><td style="width: 241.984px;">75</td></tr><tr><td style="width: 242.047px;">Target Price</td><td style="width: 241.969px;">S$2.89</td><td style="width: 241.984px;">N/A</td></tr><tr><td style="width: 242.047px;">Rating</td><td style="width: 241.969px;">BUY</td><td style="width: 241.984px;">Under Review</td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) FCTEREITPeriod3Q212Q21Gross Revenue (S$ m)Not Disclosed59.5 (+6.25% YoY)NPI (S$ m)Not Disclosed42.9 (+9.4% YoY)DPU (S$ c)Not Disclosed0.754 (13.9% YoY)NAV per Unit (S$)2.31 (Based on 1H21 NAV)0.398P/B (x)1.04 (Based on 1H21 NAV)1.1Occupancy (%)96.491.7Reversion (%)Not Disclosed-0.2Gearing (%)33.942.9Cost of Debt (%)2.23.241 Yr Fwd Yield (%)5.027.05Debt Hedged (%)5975Target PriceS$2.89N/ARatingBUYUnder Review

ASEAN Builder's Scoop (23Jul21) - FCT Resilient Amidst Phase-2 Setback

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

Sabana Industrial REIT / Equity Bottom-Up

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
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Singapore Company Update
<h2>Sabana Shari'ah Compliant REIT</h2>
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<h3>Raising TP as NTP+ shines</h3>
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<h3>Investment Thesis</h3>
NTP+ completion to deliver boost to FY21F and FY22F earnings. The completion of NTP+ could add c.S$3.5m to Sabana REIT’s revenue and boost occupancies and rental reversions at the REIT’s “Crown Jewel”. We are hence forecasting for FY21F and FY22F net property income to rise 18.4% and 5.3% y-o-y respectively, helped by NTP+.
Targeted asset enhancements to drive growth. Rejuvenation works at 23 Serangoon North Ave 5, 8 Commonwealth Lane and 10 Changi South Street 2 have supported tenant acquisition efforts. Studies are now being conducted on possible and further enhancements at 1 Tuas Ave 4, 10 Changi South Street 2, and 151 Lorong Chuan Phase 3.
Conversion to unsecured borrowings to raise debt headroom. New unsecured credit facility of up to S$225.0m could free up an estimated c.S$700m in investment properties from encumberment and raise Sabana’s debt headroom to pursue accretive asset enhancements or acquisitions.
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



Singapore Company Update
Sabana Shari'ah Compliant REIT



Raising TP as NTP+ shines



Investment Thesis
NTP+ completion to deliver boost to FY21F and FY22F earnings. The completion of NTP+ could add c.S$3.5m to Sabana REIT’s revenue and boost occupancies and rental reversions at the REIT’s “Crown Jewel”. We are hence forecasting for FY21F and FY22F net property income to rise 18.4% and 5.3% y-o-y respectively, helped by NTP+.
Targeted asset enhancements to drive growth. Rejuvenation works at 23 Serangoon North Ave 5, 8 Commonwealth Lane and 10 Changi South Street 2 have supported tenant acquisition efforts. Studies are now being conducted on possible and further enhancements at 1 Tuas Ave 4, 10 Changi South Street 2, and 151 Lorong Chuan Phase 3.
Conversion to unsecured borrowings to raise debt headroom. New unsecured credit facility of up to S$225.0m could free up an estimated c.S$700m in investment properties from encumberment and raise Sabana’s debt headroom to pursue accretive asset enhancements or acquisitions.










(Non-SGX Report)  Sabana Shari'ah Compliant REIT: Raising TP as NTP+ Shines

<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: 221.25px;"> </td><td style="width: 170.797px;">SUN</td><td style="width: 166.969px;">ALLT</td><td style="width: 166.984px;">SSREIT</td></tr><tr><td style="width: 221.25px;">Period</td><td style="width: 170.797px;">1H21</td><td style="width: 166.969px;">2Q21</td><td style="width: 166.984px;">1H21</td></tr><tr><td style="width: 221.25px;">Gross Revenue (S$ m)</td><td style="width: 170.797px;">166.8 (+11.6% YoY)</td><td style="width: 166.969px;">35.4 (+22.1% YoY)</td><td style="width: 166.984px;">39.1 (+14.1% YoY)</td></tr><tr><td style="width: 221.25px;">NPI (S$ m)</td><td style="width: 170.797px;">112.6 (+23.9% YoY)</td><td style="width: 166.969px;">30.5 (+39.2% YoY)</td><td style="width: 166.984px;">25.7 (+23.2% YoY)</td></tr><tr><td style="width: 221.25px;">DPU (S$ c)</td><td style="width: 170.797px;">4.154 (+26.1% YoY)</td><td style="width: 166.969px;">1.217 (-8.2% YoY)</td><td style="width: 166.984px;">1.48 (+214.9% YoY)</td></tr><tr><td style="width: 221.25px;">NAV per Unit (S$)</td><td style="width: 170.797px;">2.062</td><td style="width: 166.969px;">0.67</td><td style="width: 166.984px;">0.52</td></tr><tr><td style="width: 221.25px;">P/B (x)</td><td style="width: 170.797px;">0.71</td><td style="width: 166.969px;">1.30</td><td style="width: 166.984px;">0.82</td></tr><tr><td style="width: 221.25px;">Occupancy (%)</td><td style="width: 170.797px;">2Q21:93.8 (SG Retail)92.1 (SG Office)93.9 (AU Office)100 (UK Office)</td><td style="width: 166.969px;">2Q21:98.2</td><td style="width: 166.984px;">1H21:83.4</td></tr><tr><td style="width: 221.25px;">Reversion (%)</td><td style="width: 170.797px;">2Q21:+2.1 (Suntec City Office)-7.2 (Suntec City Mall)</td><td style="width: 166.969px;">1H21:+2.4</td><td style="width: 166.984px;">1H21:+11.8</td></tr><tr><td style="width: 221.25px;">Gearing (%)</td><td style="width: 170.797px;">43.1</td><td style="width: 166.969px;">39.5</td><td style="width: 166.984px;">34.9</td></tr><tr><td style="width: 221.25px;">Cost of Debt (%)</td><td style="width: 170.797px;">2.41</td><td style="width: 166.969px;">2.92</td><td style="width: 166.984px;">3.4</td></tr><tr><td style="width: 221.25px;">1 Yr Fwd Yield (%)</td><td style="width: 170.797px;">5.85</td><td style="width: 166.969px;">5.98</td><td style="width: 166.984px;">6.74</td></tr><tr><td style="width: 221.25px;">Debt Hedged (%)</td><td style="width: 170.797px;">64</td><td style="width: 166.969px;">65.8</td><td style="width: 166.984px;">60.4</td></tr><tr><td style="width: 221.25px;">Target Price</td><td style="width: 170.797px;">N/A</td><td style="width: 166.969px;">N/A</td><td style="width: 166.984px;">N/A</td></tr><tr><td style="width: 221.25px;">Rating</td><td style="width: 170.797px;">N/A</td><td style="width: 166.969px;">N/A</td><td style="width: 166.984px;">N/A</td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) SUNALLTSSREITPeriod1H212Q211H21Gross Revenue (S$ m)166.8 (+11.6% YoY)35.4 (+22.1% YoY)39.1 (+14.1% YoY)NPI (S$ m)112.6 (+23.9% YoY)30.5 (+39.2% YoY)25.7 (+23.2% YoY)DPU (S$ c)4.154 (+26.1% YoY)1.217 (-8.2% YoY)1.48 (+214.9% YoY)NAV per Unit (S$)2.0620.670.52P/B (x)0.711.300.82Occupancy (%)2Q21:93.8 (SG Retail)92.1 (SG Office)93.9 (AU Office)100 (UK Office)2Q21:98.21H21:83.4Reversion (%)2Q21:+2.1 (Suntec City Office)-7.2 (Suntec City Mall)1H21:+2.41H21:+11.8Gearing (%)43.139.534.9Cost of Debt (%)2.412.923.41 Yr Fwd Yield (%)5.855.986.74Debt Hedged (%)6465.860.4Target PriceN/AN/AN/ARatingN/AN/AN/A

ASEAN Builder's Scoop (22Jul21) - SUN Office Portfolio Offset Retail Weakness

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 <div class='content-caption'>Top 10 best performing S REITs</div>
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The first half of 2021 saw vaccination progress provide some support for the global economy, amid continued Covid-19 infections. Within S-Reits, the 40 actively traded S-Reits &amp; property trusts listed in Singapore generated total returns of 8.9 per cent in H1 2021. While this is slightly lower than the Straits Times Index's (STI) 11.9 per cent total returns for the same period, there were 14 trusts which generated returns that beat the STI.

In fact, the 10 best-performing trusts in H1 2021 were led by mid-cap S-Reits which averaged 25.2 per cent total returns and are a mix across industrial, health care, hospitality, retail and office sub-segments.

Across the sector in H1 2021, almost all sub-segments generated positive returns with the exception of specialised Reits.

Keppel DC Reit, the only listed specialised Reit, was the sector's least strongest in the year-to-date with -10 per cent total return, which followed on from its 38 per cent total return in 2020. Progress towards social and economic normalisation has put less demands on cloud, digital and online services. Nonetheless, digitalisation remains a key theme as digital economies continue to grow. 
On the other hand, healthcare and industrial sub-segments continued to shine in resilience with 22 and 16 per cent average total returns respectively. Office, retail, diversified and hospitality sub-segments have also started to see some recovery in the first six months of the year, generating total returns ranging from 4 to 12 per cent, as Singapore moves back to Phase 3 (Heightened Alert) of its reopening in June 2021. 
Some key drivers for S-Reits in the second half of 2021 will continue to be the roll-out of vaccinations and the expectation of leisure travel by year end which could be a beneficiary for the hospitality and retail sub-segments.

At a recent interview with The Straits Times, Health Minister Ong Ye Kung shared that the government could be looking at easing dining-in rules from July 12 and shares Singaporeans' aspirations for leisure travel to return by end of 2021.

One other recent development for the sector is the change to ground rules of the FTSE EPRA Nareit Index Series. The investable market cap threshold for the Developed Asia series has been reduced from 0.3 to 0.1 per cent. Based on the FTSE EPRA Nareit Developed Asia Index's May 2021 factsheet, the index market cap was at US$411 billion and a 0.1 per cent threshold would assume a free-float market cap criterion of around US$411 million versus US$1.2 billion previously. The next index review is in September 2021.

With the change, more mid-cap S-Reits could potentially qualify for the index, subject to fulfilling other index requirements. Several past entrants to the index series have cited more visibility to the international investment community and passive funds tracking the index.  REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/mid-cap-s-reits-continue-to-lead-sector-in-h1-2021">read</a> the original version.
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    Top 10 best performing S REITs


The first half of 2021 saw vaccination progress provide some support for the global economy, amid continued Covid-19 infections. Within S-Reits, the 40 actively traded S-Reits &amp; property trusts listed in Singapore generated total returns of 8.9 per cent in H1 2021. While this is slightly lower than the Straits Times Index's (STI) 11.9 per cent total returns for the same period, there were 14 trusts which generated returns that beat the STI.

In fact, the 10 best-performing trusts in H1 2021 were led by mid-cap S-Reits which averaged 25.2 per cent total returns and are a mix across industrial, health care, hospitality, retail and office sub-segments.

Across the sector in H1 2021, almost all sub-segments generated positive returns with the exception of specialised Reits.

Keppel DC Reit, the only listed specialised Reit, was the sector's least strongest in the year-to-date with -10 per cent total return, which followed on from its 38 per cent total return in 2020. Progress towards social and economic normalisation has put less demands on cloud, digital and online services. Nonetheless, digitalisation remains a key theme as digital economies continue to grow.  
On the other hand, healthcare and industrial sub-segments continued to shine in resilience with 22 and 16 per cent average total returns respectively. Office, retail, diversified and hospitality sub-segments have also started to see some recovery in the first six months of the year, generating total returns ranging from 4 to 12 per cent, as Singapore moves back to Phase 3 (Heightened Alert) of its reopening in June 2021.  
Some key drivers for S-Reits in the second half of 2021 will continue to be the roll-out of vaccinations and the expectation of leisure travel by year end which could be a beneficiary for the hospitality and retail sub-segments.

At a recent interview with The Straits Times, Health Minister Ong Ye Kung shared that the government could be looking at easing dining-in rules from July 12 and shares Singaporeans' aspirations for leisure travel to return by end of 2021.

One other recent development for the sector is the change to ground rules of the FTSE EPRA Nareit Index Series. The investable market cap threshold for the Developed Asia series has been reduced from 0.3 to 0.1 per cent. Based on the FTSE EPRA Nareit Developed Asia Index's May 2021 factsheet, the index market cap was at US$411 billion and a 0.1 per cent threshold would assume a free-float market cap criterion of around US$411 million versus US$1.2 billion previously. The next index review is in September 2021.

With the change, more mid-cap S-Reits could potentially qualify for the index, subject to fulfilling other index requirements. Several past entrants to the index series have cited more visibility to the international investment community and passive funds tracking the index.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Mid-Cap S-Reits continue to lead sector in H1 2021

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/yanlord-land-group-ltd" target="_blank" data-smartkarma-citation="entities:14152" rel="noopener">Yanlord Land (YLLG SP)</a> enters into a JV agreement with Ho Bee Land (HOBEE SP) to develop a residential site in Tianjin</h3>YLLG together with Ho Bee Land  (HOBEE SP) jointly entered into a co-operation agreement to develop a residential site located in Hongqiao District, Tianjin, the PRC.  The land parcel with a total site area of ~53,200sqm, located at XiangDongNan Road in Hongqiao District, Tianjin, was acquired by YLLG through public land auction for a total consideration of ~RMB1.5bn. Upon completion of the transaction, YLLG and HOBEE shall hold 51% and 49% effective interest in the development, respectively. YLLG and HOBEE plan to jointly develop the site and transform it into a new high-end residential development with ancillary community retail space and educational facilities with a total GFA of ~117,100sqm.

SingaporeYanlord Land (YLLG SP) enters into a JV agreement with Ho Bee Land (HOBEE SP) to develop a residential site in TianjinYLLG together with Ho Bee Land  (HOBEE SP) jointly entered into a co-operation agreement to develop a residential site located in Hongqiao District, Tianjin, the PRC.  The land parcel with a total site area of ~53,200sqm, located at XiangDongNan Road in Hongqiao District, Tianjin, was acquired by YLLG through public land auction for a total consideration of ~RMB1.5bn. Upon completion of the transaction, YLLG and HOBEE shall hold 51% and 49% effective interest in the development, respectively. YLLG and HOBEE plan to jointly develop the site and transform it into a new high-end residential development with ancillary community retail space and educational facilities with a total GFA of ~117,100sqm.

ASEAN Builder's Scoop (29Jun21) - YLLG/HOBEE in JV for Tianjin Project

Singapore

Sabana Industrial Real Estate Investment Trust is a real estate investment trust. The Trust focuses on investments in income-producing real estate used for industrial purposes in Asia, as well as real estate-related assets, in line with Sabana investment principles.

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Sabana Industrial REIT (SSREIT SP)

ASEAN Builder's Scoop (23Jul21) - FCT Resilient Amidst Phase-2 Setback

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SCCM Asia Research

(Non-SGX Report) Sabana Shari'ah Compliant REIT: Raising TP as NTP+ Shines

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (22Jul21) - SUN Office Portfolio Offset Retail Weakness

SUN office portfolio offset retail weakness; ALLT boosted by AUS acquisitions; SSREIT robust operational metrics; CIT extends tenant support; FILRT...

SCCM Asia Research

REIT Watch - Mid-Cap S-Reits continue to lead sector in H1 2021

The first half of 2021 saw vaccination progress provide some support for the global economy, amid continued Covid-19...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (29Jun21) - YLLG/HOBEE in JV for Tianjin Project

YLLG/HOBEE in JV for Tianjin project; Developers get 6mo relief extension; SSREIT rejects EGM request to remove a Director; EAGLEHT close to...

SCCM Asia Research

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