Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Just under three months ago, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> which is a mini-conglomerate of major Singaporean media interests, an investment fund, and a diverse collection of development and leasing assets in the real estate business, announced that it would restructure, hiving off the media assets into a SPINCO, granting it a pile of cash and assets designed to allow it to work through its problems to stand on its own, then it would be REMAINCO for the real estate and investment assets. This was discussed in <a href="https://www.smartkarma.com/insights/singapore-press-own-time-own-target-restructuring-lor-come-i-clap-for-you" target="_blank" data-smartkarma-citation="insights:51141" rel="noopener">Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You)</a>. The shares dropped on the announcement because SPH was giving away cash to the media business. It was costing them money to throw it away. At the time, I suggested that the pre-announcement price of S$1.79/share was reasonably full when looking at the future SPH REMAINCO at something like 0.84x Adjusted Post-Deal P/NAV. Since then, as real estate in Singapore has rallied, SPH shares have rallied from the low S$1.50s where they fell to Friday's S$1.88/share.<h3>The NEW News</h3>This morning we get news that after a period of further review, SPH has decided to accept (<a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Joint%20Announcement.ashx?App=Announcement&amp;FileID=676909" target="_blank" rel="noopener">announcement</a>, <a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Media%20Release.ashx?App=Announcement&amp;FileID=676910" target="_blank" rel="noopener">press release</a>, <a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Presentation.ashx?App=Announcement&amp;FileID=676911" target="_blank" rel="noopener">presentation</a>) being taken over by <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> based on a Scheme which will deliver to SPH holders S$0.668 in cash, 0.596 units of Keppel REIT, and 0.782 units of SPH REIT through a distribution of 45.4% of SPH's stake in the REIT.Based on the closing prices of 30 July 2021, that would be S$2.099/share or an 11.6% premium to the close. Any dividend that SPH would declare for the fiscal year ending 31 August 2021 would be additive (consensus estimates currently imply ~S$0.02-0.03/share (details in the footnote at the bottom of <a href="https://links.sgx.com/FileOpen/Proposed%20Privatisation%20of%20SPH%20by%20Keppel%20-%20Joint%20Announcement.ashx?App=Announcement&amp;FileID=676909" target="_blank" rel="noopener">p3</a>).There are a fair number of conditions. Approval of the Media Business Restructuring at the SPH EGM later this month or September is a sine qua non - if that doesn't pass SPH shareholders, the thing is off. Then there is another EGM at end-Oct early Nov to approve the resulting deal.  The CEO of Keppel made a presentation on the deal, and his speech is <a href="https://links.sgx.com/FileOpen/GCAT_Speech%20by%20CEO%20Keppel%20Corporation%20on%20proposed%20acquisition%20of%20SPH%20ex-Media.ashx?App=Announcement&amp;FileID=676925" target="_blank" rel="noopener">here</a>. He clearly says the SPH assets are a good deal for Keppel and go some ways to helping Keppel aim at its Vision 2030 goals through enhancing the value of the SPH assets. I note, however, that SPH shareholders get to sell their shares at below book to receive assets that Keppel is liquidating (and mentioning it as a good thing). <div class="content-highlight">SPH holders may be start to ask themselves "Hey Keppel, why you bo jio me?!"</div>There are more complications besides so they are discussed below.

Just under three months ago, Singapore Press Holdings (SPH SP) which is a mini-conglomerate of major Singaporean media interests, an investment fund, and a diverse collection of development and leasing assets in the real estate business, announced that it would restructure, hiving off the media assets into a SPINCO, granting it a pile of cash and assets designed to allow it to work through its problems to stand on its own, then it would be REMAINCO for the real estate and investment assets. This was discussed in Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You). The shares dropped on the announcement because SPH was giving away cash to the media business. It was costing them money to throw it away. At the time, I suggested that the pre-announcement price of S$1.79/share was reasonably full when looking at the future SPH REMAINCO at something like 0.84x Adjusted Post-Deal P/NAV. Since then, as real estate in Singapore has rallied, SPH shares have rallied from the low S$1.50s where they fell to Friday's S$1.88/share.The NEW NewsThis morning we get news that after a period of further review, SPH has decided to accept (announcement, press release, presentation) being taken over by Keppel Corp (KEP SP) based on a Scheme which will deliver to SPH holders S$0.668 in cash, 0.596 units of Keppel REIT, and 0.782 units of SPH REIT through a distribution of 45.4% of SPH's stake in the REIT.Based on the closing prices of 30 July 2021, that would be S$2.099/share or an 11.6% premium to the close. Any dividend that SPH would declare for the fiscal year ending 31 August 2021 would be additive (consensus estimates currently imply ~S$0.02-0.03/share (details in the footnote at the bottom of p3).There are a fair number of conditions. Approval of the Media Business Restructuring at the SPH EGM later this month or September is a sine qua non - if that doesn't pass SPH shareholders, the thing is off. Then there is another EGM at end-Oct early Nov to approve the resulting deal.  The CEO of Keppel made a presentation on the deal, and his speech is here. He clearly says the SPH assets are a good deal for Keppel and go some ways to helping Keppel aim at its Vision 2030 goals through enhancing the value of the SPH assets. I note, however, that SPH shareholders get to sell their shares at below book to receive assets that Keppel is liquidating (and mentioning it as a good thing). SPH holders may be start to ask themselves "Hey Keppel, why you bo jio me?!"There are more complications besides so they are discussed below. 

Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders

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

Yoma Strategic Holdings / Equity Bottom-Up

Key Singapore Market Moves and Flows in July

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: 147.562px;">
 
</td>
<td style="width: 144.797px;">
AAREIT
</td>
<td style="width: 144.328px;">
CICT
</td>
<td style="width: 142.125px;">
KREIT
</td>
<td style="width: 147.188px;">
MINT
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Period
</td>
<td style="width: 144.797px;">
1Q22
</td>
<td style="width: 144.328px;">
1H21
</td>
<td style="width: 142.125px;">
1H21
</td>
<td style="width: 147.188px;">
1Q22
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Gross Revenue (S$ m)
</td>
<td style="width: 144.797px;">
31.8 (+16.8% YoY)
</td>
<td style="width: 144.328px;">
645.7 (+102.8% YoY)
</td>
<td style="width: 142.125px;">
105.8 (+40.2% YoY)
</td>
<td style="width: 147.188px;">
128.1 (29.2% YoY)
</td>
</tr>
<tr>
<td style="width: 147.562px;">
NPI (S$ m)
</td>
<td style="width: 144.797px;">
23.1 (+23.9% YoY)
</td>
<td style="width: 144.328px;">
472.2 (+118% YoY)
</td>
<td style="width: 142.125px;">
84.4 (+43.1% YoY)
</td>
<td style="width: 147.188px;">
104.7 (33.1% YoY)
</td>
</tr>
<tr>
<td style="width: 147.562px;">
DPU (S$ c)
</td>
<td style="width: 144.797px;">
2.25 (+12.5% YoY)
</td>
<td style="width: 144.328px;">
5.18 (+75% YoY)
</td>
<td style="width: 142.125px;">
2.94 (+5.0% YoY)
</td>
<td style="width: 147.188px;">
3.35 (+16.7% YoY)
</td>
</tr>
<tr>
<td style="width: 147.562px;">
NAV per Unit (S$)
</td>
<td style="width: 144.797px;">
1.35
</td>
<td style="width: 144.328px;">
2.05
</td>
<td style="width: 142.125px;">
1.29
</td>
<td style="width: 147.188px;">
1.75
</td>
</tr>
<tr>
<td style="width: 147.562px;">
P/B (x)
</td>
<td style="width: 144.797px;">
1.15
</td>
<td style="width: 144.328px;">
1.02
</td>
<td style="width: 142.125px;">
0.93
</td>
<td style="width: 147.188px;">
1.65
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Occupancy (%)
</td>
<td style="width: 144.797px;">
95.7
</td>
<td style="width: 144.328px;">
94.9
</td>
<td style="width: 142.125px;">
96.7
</td>
<td style="width: 147.188px;">
94.3 (Overall)
97.8 (North American Portfolio)
93.4 (Singapore Portfolio)
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Reversion (%)
</td>
<td style="width: 144.797px;">
Not disclosed
</td>
<td style="width: 144.328px;">
-9.1 (retail)
</td>
<td style="width: 142.125px;">
6.91
</td>
<td style="width: 147.188px;">
Not Disclosed
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Gearing (%)
</td>
<td style="width: 144.797px;">
34.3
</td>
<td style="width: 144.328px;">
40.5
</td>
<td style="width: 142.125px;">
38.9
</td>
<td style="width: 147.188px;">
31.0
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Cost of Debt (%)
</td>
<td style="width: 144.797px;">
2.8
</td>
<td style="width: 144.328px;">
2.4
</td>
<td style="width: 142.125px;">
1.97
</td>
<td style="width: 147.188px;">
2.7
</td>
</tr>
<tr>
<td style="width: 147.562px;">
1 Yr Fwd Yield (%)
</td>
<td style="width: 144.797px;">
6.1
</td>
<td style="width: 144.328px;">
5.19
</td>
<td style="width: 142.125px;">
4.92
</td>
<td style="width: 147.188px;">
1.51
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Debt Hedged (%)
</td>
<td style="width: 144.797px;">
77.2
</td>
<td style="width: 144.328px;">
85
</td>
<td style="width: 142.125px;">
68
</td>
<td style="width: 147.188px;">
95.8
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Target Price
</td>
<td style="width: 144.797px;">
Under Review
</td>
<td style="width: 144.328px;">
N/A
</td>
<td style="width: 142.125px;">
N/A
</td>
<td style="width: 147.188px;">
N/A
</td>
</tr>
<tr>
<td style="width: 147.562px;">
Rating
</td>
<td style="width: 144.797px;">
Under Review
</td>
<td style="width: 144.328px;">
N/A
</td>
<td style="width: 142.125px;">
N/A
</td>
<td style="width: 147.188px;">
N/A
</td>
</tr>
</tbody>
</table>

Singapore
SREITs results in a glance (see detailed spreadsheet and calendar attached)




 


AAREIT


CICT


KREIT


MINT




Period


1Q22


1H21


1H21


1Q22




Gross Revenue (S$ m)


31.8 (+16.8% YoY)


645.7 (+102.8% YoY)


105.8 (+40.2% YoY)


128.1 (29.2% YoY)




NPI (S$ m)


23.1 (+23.9% YoY)


472.2 (+118% YoY)


84.4 (+43.1% YoY)


104.7 (33.1% YoY)




DPU (S$ c)


2.25 (+12.5% YoY)


5.18 (+75% YoY)


2.94 (+5.0% YoY)


3.35 (+16.7% YoY)




NAV per Unit (S$)


1.35


2.05


1.29


1.75




P/B (x)


1.15


1.02


0.93


1.65




Occupancy (%)


95.7


94.9


96.7


94.3 (Overall)
97.8 (North American Portfolio)
93.4 (Singapore Portfolio)




Reversion (%)


Not disclosed


-9.1 (retail)


6.91


Not Disclosed




Gearing (%)


34.3


40.5


38.9


31.0




Cost of Debt (%)


2.8


2.4


1.97


2.7




1 Yr Fwd Yield (%)


6.1


5.19


4.92


1.51




Debt Hedged (%)


77.2


85


68


95.8




Target Price


Under Review


N/A


N/A


N/A




Rating


Under Review


N/A


N/A


N/A





ASEAN Builder's Scoop (28Jul21) - AAREIT Stable Performance

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><a href="https://www.smartkarma.com/entities/filinvest-reit" target="_blank" data-smartkarma-citation="entities:33764:1" rel="noopener">Filinvest Reit (FILRT PM)</a> (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by <a href="https://www.smartkarma.com/entities/filinvest-land-inc" target="_blank" data-smartkarma-citation="entities:23026:1" rel="noopener">Filinvest Land (FLI PM)</a>. </div><div>FREIT’s initial property portfolio consists of 16 office towers located in Northgate Cyberzone, Alabang, and one office tower in Cebu City with an aggregate office space GLA of 299,158 sqm and 2,204 sqm of retail GLA. The portfolio will have a weighted average lease expiry (WALE) of 3.8 years with an occupancy of 89.7% as of Mar 2021. The Properties were valued at PHP48,547.4m (US$965m).</div><div>Given the recent restructuring of the REITs assets, its past financials aren’t of much use. However, looking at the operational data of its existing portfolio, FREIT doesn’t appear to have had a very good FY20 and even FY21 doesn’t appear to be shaping up well.</div><div>
We looked at the background of the REIT in our earlier note, <a href="https://www.smartkarma.com/insights/filinvest-reit-ipo-almost-like-a-single-asset-reit-covid-hasn-t-been-kind" target="_blank" rel="noopener">Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind</a>.
In this note, we will comment on valuation and run the deal through our ECM framework.
 
</div>

Filinvest Reit (FILRT PM) (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by Filinvest Land (FLI PM). FREIT’s initial property portfolio consists of 16 office towers located in Northgate Cyberzone, Alabang, and one office tower in Cebu City with an aggregate office space GLA of 299,158 sqm and 2,204 sqm of retail GLA. The portfolio will have a weighted average lease expiry (WALE) of 3.8 years with an occupancy of 89.7% as of Mar 2021. The Properties were valued at PHP48,547.4m (US$965m).Given the recent restructuring of the REITs assets, its past financials aren’t of much use. However, looking at the operational data of its existing portfolio, FREIT doesn’t appear to have had a very good FY20 and even FY21 doesn’t appear to be shaping up well.
We looked at the background of the REIT in our earlier note, Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind.
In this note, we will comment on valuation and run the deal through our ECM framework.
  


Filinvest REIT IPO - Hard to Get Excited, Despite the Yield

<a href="https://www.smartkarma.com/entities/filinvest-reit" target="_blank" data-smartkarma-citation="entities:33764:1" rel="noopener">Filinvest Reit (FILRT PM)</a> (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by <a href="https://www.smartkarma.com/entities/filinvest-land-inc" target="_blank" data-smartkarma-citation="entities:23026:1" rel="noopener">Filinvest Land (FLI PM)</a>. FREIT’s initial property portfolio consists of 16 office towers located in Northgate Cyberzone, Alabang, and one office tower in Cebu City with an aggregate office space GLA of 299,158 sqm and 2,204 sqm of retail GLA. The portfolio will have a weighted average lease expiry (WALE) of 3.8 years with an occupancy of 89.7% as of Mar 2021. The Properties were valued at PHP48,547.4m (US$965m).Given the recent restructuring of the REITs assets, its past financials aren’t of much use. However, looking at the operational data of its existing portfolio, FREIT doesn’t appear to have had a very good FY20 and even FY21 doesn’t appear to be shaping up well.Having said that, the REIT does have a strong sponsor with a rich pipeline of ROFR assets.

Filinvest Reit (FILRT PM) (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by Filinvest Land (FLI PM). FREIT’s initial property portfolio consists of 16 office towers located in Northgate Cyberzone, Alabang, and one office tower in Cebu City with an aggregate office space GLA of 299,158 sqm and 2,204 sqm of retail GLA. The portfolio will have a weighted average lease expiry (WALE) of 3.8 years with an occupancy of 89.7% as of Mar 2021. The Properties were valued at PHP48,547.4m (US$965m).Given the recent restructuring of the REITs assets, its past financials aren’t of much use. However, looking at the operational data of its existing portfolio, FREIT doesn’t appear to have had a very good FY20 and even FY21 doesn’t appear to be shaping up well.Having said that, the REIT does have a strong sponsor with a rich pipeline of ROFR assets.

Filinvest REIT IPO - Almost like a Single Asset REIT, COVID Hasn't Been Kind

Singapore

Keppel REIT operates as a commercial real estate investment trust. The Trust owns and invests in a portfolio of income-producing office buildings and related real estate assets. Keppel REIT offers its services in Asia and Australia.

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Keppel REIT (KREIT SP)

Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders

SPH and Keppel have a deal. Keppel will take over SPH post-Media spinoff, paying cash and shares in two REITs. It's a bit cheap, a bit ugly. But...

Travis Lundy

Key Singapore Market Moves and Flows in July

The STI’s 1.2% gain in July brought its price gain over the first seven months to 11.4%, with dividends boosting the total return to 13.2%,...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (28Jul21) - AAREIT Stable Performance

AAREIT stable performance; CICT office outshines retail; KREIT cautiously optimistic; MINT acq-driven growth; KORE expands with 2 new US acq; CPG...

SCCM Asia Research

Filinvest REIT IPO - Hard to Get Excited, Despite the Yield

Filinvest Reit (FILRT PM) (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored...

Sumeet Singh

Filinvest REIT IPO - Almost like a Single Asset REIT, COVID Hasn't Been Kind

Filinvest Reit (FILRT PM) (FREIT), a subsidiary of Filinvest, aims to raise up to US$240m in its Philippines listing. The REIT is sponsored by...

Sumeet Singh

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