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>As we move into this reporting season, 32 S-Reits and property trusts have released dates of their financial results or business updates for their respective periods ended Mar 31, 2023.</li><li>Of the 32 trusts, four have already released business updates for Q1 2023 – Keppel Reit, Keppel DC Reit, Keppel Pacific Oak US Reit, and Sabana Industrial Reit.</li><li>Keppel Reit reported Q1 2023 net property income was 3 per cent higher year on year (yoy) due to higher rentals achieved on leases committed in 2022 and higher portfolio occupancy of 96.3 per cent (versus 95.1 per cent for the same period last year).</li></ul>

As we move into this reporting season, 32 S-Reits and property trusts have released dates of their financial results or business updates for their respective periods ended Mar 31, 2023.Of the 32 trusts, four have already released business updates for Q1 2023 – Keppel Reit, Keppel DC Reit, Keppel Pacific Oak US Reit, and Sabana Industrial Reit.Keppel Reit reported Q1 2023 net property income was 3 per cent higher year on year (yoy) due to higher rentals achieved on leases committed in 2022 and higher portfolio occupancy of 96.3 per cent (versus 95.1 per cent for the same period last year).

REIT Watch - 32 S-REITs release schedule for this reporting season

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> shareholders voted overwhelmingly for the merger between Keppel O&amp;M and Sembcorp Marine. The transaction is expected to close by 28 February.  </li>
<li>The divestment of Keppel O&amp;M will further move <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> towards a more asset-light and recurring earnings model, providing a helpful tailwind to hit its 15% ROE target.</li>
<li>Pre-Dividend in specie distribution, our Keppel SoTP valuation based on Sembcorp Marine’s reference issue price (S$0.122) and last close (S$0.136) is S$8.49 and S$8.72 per share, respectively. </li>
</ul>



Sembcorp Marine (SMM SP) shareholders voted overwhelmingly for the merger between Keppel O&amp;M and Sembcorp Marine. The transaction is expected to close by 28 February.  
The divestment of Keppel O&amp;M will further move Keppel Corp (KEP SP) towards a more asset-light and recurring earnings model, providing a helpful tailwind to hit its 15% ROE target.
Pre-Dividend in specie distribution, our Keppel SoTP valuation based on Sembcorp Marine’s reference issue price (S$0.122) and last close (S$0.136) is S$8.49 and S$8.72 per share, respectively. 


Keppel (KEP SP): Keppel O&M/Sembcorp Marine Transaction Moves Towards Completion

<ul>
<li>
<a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>’s EGM on 8 December requires majority shareholder approval of two ordinary resolutions. The IFA notes that the transaction terms are “<em>not prejudicial</em>” to minorities.</li>
<li>Keppel shareholders will be supportive due to attractive terms. The other key conditions precedent is <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> shareholders and regulatory approvals (SGX-ST and Maritime Port Authority of Singapore). </li>
<li>The deal is expected to close by the end of the year. Our Keppel SoTP valuation is S$8.30 per share, which is 12% above the last close.</li>
</ul>



Keppel Corp (KEP SP)’s EGM on 8 December requires majority shareholder approval of two ordinary resolutions. The IFA notes that the transaction terms are “not prejudicial” to minorities.
Keppel shareholders will be supportive due to attractive terms. The other key conditions precedent is Sembcorp Marine (SMM SP) shareholders and regulatory approvals (SGX-ST and Maritime Port Authority of Singapore). 
The deal is expected to close by the end of the year. Our Keppel SoTP valuation is S$8.30 per share, which is 12% above the last close.


Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec

CDL Hospitality Trusts / Equity Bottom-Up

<ul><li>REIT Watch - S-Reits rebound amid less hawkish rates expectations The FTSE EPRA Nareit Developed Index gained close to 4 per cent last week while Singapore’s iEdge S-Reit Index booked its strongest week this year with 6 per cent returns.</li><li>Outperforming S-Reits for the week include Manulife US Reit, Keppel DC Reit, Aims Apac Reit, Keppel Pacific Oak US Reit, and CDL Hospitality Trusts.</li></ul>

REIT Watch - S-Reits rebound amid less hawkish rates expectations The FTSE EPRA Nareit Developed Index gained close to 4 per cent last week while Singapore’s iEdge S-Reit Index booked its strongest week this year with 6 per cent returns.Outperforming S-Reits for the week include Manulife US Reit, Keppel DC Reit, Aims Apac Reit, Keppel Pacific Oak US Reit, and CDL Hospitality Trusts.

REIT Watch - S-REITs rebound amidst less hawkish rates expectations

<ul>
<li>The agreed equity value exchange ratio between Keppel O&amp;M and <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> was revised from 56%:44% to 54%:46%. </li>
<li>For <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> shareholders, the revised terms will lower the overall value but in a shorter deal completion, higher EPS accretion and higher in-specie distribution of SMM shares.</li>
<li>The deal is expected to close by the end of the year. Our revised Keppel SoTP valuation is S$8.17 per share, which is 23% above the last close.</li>
</ul>


The agreed equity value exchange ratio between Keppel O&amp;M and Sembcorp Marine (SMM SP) was revised from 56%:44% to 54%:46%. 
For Keppel Corp (KEP SP) shareholders, the revised terms will lower the overall value but in a shorter deal completion, higher EPS accretion and higher in-specie distribution of SMM shares.
The deal is expected to close by the end of the year. Our revised Keppel SoTP valuation is S$8.17 per share, which is 23% above the last close.


Keppel: Keppel O&M and Sembcorp Marine’s Revised Terms

Singapore

BHG Retail REIT is a real estate investment trust (REIT) in Singapore.

EC World Real Estate Investment Trust (EC World REIT) is the first Chinese specialised logistics and e-commerce logistics REIT listed on SGX-ST. 

It has a portfolio of quality properties located predominantly in one of the largest e-commerce clusters in the Yangtze River Delta which offers investors unique exposure to the logistics and e-commerce sectors in Hangzhou and Wuhan, China.
  
EC World REIT’s investment strategy is to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate which is used primarily for e-commerce, supply-chain management and logistics purposes, as well as real estate-related assets, with an initial geographical focus on the PRC. 

EC World REIT is listed in several indices. These include the FTSE ASEAN All-Share Index, FTSE ST All-Share Index, FTSE ST China Index and FTSE ST Singapore Shariah Index. For more information, please visit: http://www.ecwreit.com/ 

EC World REIT is managed by EC World Asset Management Pte. Ltd., which is an indirect wholly-owned subsidiary of the Sponsor – Forchn Holdings Group Co., Ltd.

Manulife US REIT is a Singapore listed REIT established with the investment strategy principally to invest, directly or indirectly, in a portfolio of income-producing office real estate in key markets in the United States, as well as real estate-related assets.

Lippo Malls Indonesia Retail Trust is a real estate investment trust that invests in malls and other retail locations.

Lippo Malls Indonesia Retail Trust (LMRT SP)

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.

IREIT Global is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets.

IREIT Global’s current portfolio comprises 5 freehold office properties in Germany, 5 freehold office properties in Spain and 27 freehold retail properties in France, with a total lettable area of approximately 384,000 sqm and a portfolio valuation of approximately €974.9 million.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited ("CDL"). Tikehau Capital is a global alternative asset management group listed in France, while CDL is a leading global real estate company listed in Singapore.

First Real Estate Investment Trust is a healthcare real estate investment trust. The Trust invests in and owns a diversified portfolio of healthcare and healthcare-related real-estate assets in Asia.

Frasers Hospitality Trust operates as a real estate investment trust. The Trust owns, operates and invests in hotels and serviced residences.

AIMS APAC REIT is a real estate investment trust. The Trust's principal investment objective is owning and investing in a diversified portfolio of income-producing industrial real estate assets throughout Asia Pacific, including warehousing and logistics, manufacturing, business parks and hi-tech spaces.

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

Sentral REIT is a real estate investment trust. The trust invests in office and retail buildings, business and technology parks, data processing centers, and car parking facilities primarily in Malaysia.

UOA Real Estate Investment Trust is a real estate investment trust. The trust invests in and owns commercial real estate and real estate related assets.

Future Park Leasehold Property Fund is a closed-end property fund incorporated in Thailand. The Fund will invest in the long-term leasehold rights in the Leased Assets, certain of Future Park Rangsit Project Building in Bangkok.

Future Park Leasehold Prop F (FUTUREPF TB)

Franklin Street Properties Corp. operates an investment firm. The Company focuses on investments in commercial properties, mainly institutional quality office assets in the United States. FSP also provides real estate operations including property acquisitions and dispositions, short-term financing, leasing, development and asset management.

Societe de la Tour Eiffel invests and manages business and office spaces in Paris and in the French provinces.  The Company opted for the SIIC legal status in 2004.

Capital & Regional plc operates as a real estate investment company. The Company owns, operates, and develops shopping centers. Capital & Regional serves customers in the United Kingdom.

Garda Property Group operates as an asset management company. The Company invests in commercial offices and industrial facilities, as well as provides fund management and real estate advisory services. Garda Property Group serves customers in Australia.

China Merchants Commercial Real Estate Investment Trust operates as a Hong Kong collective investment scheme. The Company invests primarilyin income-generating properties and uses the income to provide stable returns to itsunitholders. China Merchants Commercial Real Estate Investment Trust provides services in Hong Kong.

China Merchants Commercial REIT (1503 HK)

CP Tower Growth Leasehold Property Fund operates as a closed-end, real estate, investment fund. The Company invests in office space and commercial buildings.

CP Tower Growth Leasehold Property Fund (CPTGF TB)

LH Shopping Centers Leasehold Real Estate Investment Trust operates as a Real Estate Investment Trust out of Bangkok, Thailand.

Keppel Pacific Oak US REIT operates as a real estate investment trust with properties located in the United States. The Company invests in a diversified portfolio of income-producing commercial and real estate assets in key growth markets of the US.

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Keppel Pacific Oak US REIT (KORE SP)

REIT Watch - 32 S-REITs release schedule for this reporting season

As we move into this reporting season, 32 S-Reits and property trusts have released dates of their financial results or business updates for their...

Singapore Exchange Ltd (SGX)

Keppel (KEP SP): Keppel O&M/Sembcorp Marine Transaction Moves Towards Completion

The divestment of Keppel O&M will further move Keppel towards a more asset-light and recurring earnings model, providing a helpful tailwind to hit...

Arun George

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec

The transaction is a win-win for both sets of shareholders. The vote requires majority shareholder approval. Our Keppel SoTP valuation is S$8.30...

Arun George

REIT Watch - S-REITs rebound amidst less hawkish rates expectations

REIT Watch - S-Reits rebound amid less hawkish rates expectations The FTSE EPRA Nareit Developed Index gained close to 4 per cent last week while...

Singapore Exchange Ltd (SGX)

Keppel: Keppel O&M and Sembcorp Marine’s Revised Terms

Revised terms are an acceptable compromise for KEP shareholders - lower the overall value but result in a shorter deal completion, higher EPS...

Arun George

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