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>REIT Watch - Singapore-based office S-Reits see growth in occupancy and rent reversions S-Reits with Singapore based office assets reported growth in rental reversions and improvements in occupancy rates.</li><li>Its Singapore offices recorded a 7.9 per cent growth in rent reversion in 9M 2022 while portfolio occupancy increased from 92.9 per cent in Q2 2022 to the current 96 per cent.</li></ul>

REIT Watch - Singapore-based office S-Reits see growth in occupancy and rent reversions S-Reits with Singapore based office assets reported growth in rental reversions and improvements in occupancy rates.Its Singapore offices recorded a 7.9 per cent growth in rent reversion in 9M 2022 while portfolio occupancy increased from 92.9 per cent in Q2 2022 to the current 96 per cent.

REIT Watch - Singapore-based office S-Reits see growth in occupancy and rent reversions

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/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

<ul><li>Singapore’s 30 most traded stocks outside of the STI have seen ~S$670 million in net fund outflows in the 2022 YTD, with declines in October, bringing their average 2022 YTD decline in total return of the stocks to 5%.</li><li>Total returns of the five stocks over the 43 weeks varied from -10% for Riverstone to +202% for Golden Energy & Res.</li><li>Similarly, as energy stocks have led the global stock market this year, the four energy stocks tabled below have averaged 57% total returns over the past 43 weeks (with the median gain at 26%).</li></ul>

Singapore’s 30 most traded stocks outside of the STI have seen ~S$670 million in net fund outflows in the 2022 YTD, with declines in October, bringing their average 2022 YTD decline in total return of the stocks to 5%.Total returns of the five stocks over the 43 weeks varied from -10% for Riverstone to +202% for Golden Energy & Res.Similarly, as energy stocks have led the global stock market this year, the four energy stocks tabled below have averaged 57% total returns over the past 43 weeks (with the median gain at 26%).

Mixed Oct Returns for Singapore's Most Traded Non-STI stocks

<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

Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<ul><li>Property cooling measures finally here – Higher interest rates floor and tighter LTV (for HDB) to moderate demand</li><li><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934" rel="noopener">ESR-LOGOS REIT (EREIT SP)</a> continues to divest non-core asset; 2 Jalan Kilang Barat for S$35.3m</li><li><a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848" rel="noopener">First REIT (FIRT SP)</a> bagged ~S$17m social loan to fund its acquisition of 2 nursing homes in Japan</li></ul>

Property cooling measures finally here – Higher interest rates floor and tighter LTV (for HDB) to moderate demandESR-LOGOS REIT (EREIT SP) continues to divest non-core asset; 2 Jalan Kilang Barat for S$35.3mFirst REIT (FIRT SP) bagged ~S$17m social loan to fund its acquisition of 2 nursing homes in Japan

ASEAN Builder's Scoop (30Sep22) - Higher IR Floor and Tighter LTV to Moderate Housing Demand

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)

REIT Watch - Singapore-based office S-Reits see growth in occupancy and rent reversions

REIT Watch - Singapore-based office S-Reits see growth in occupancy and rent reversions S-Reits with Singapore based office assets reported growth...

Singapore Exchange Ltd (SGX)

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

Mixed Oct Returns for Singapore's Most Traded Non-STI stocks

Singapore’s 30 most traded stocks outside of the STI have seen ~S$670 million in net fund outflows in the 2022 YTD, with declines in October,...

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

ASEAN Builder's Scoop (30Sep22) - Higher IR Floor and Tighter LTV to Moderate Housing Demand

EREIT divests 2 JKB at 22% premium; CLI sees strong take-up in 1st Luzon project; Thai land appraisal price to rise by ~8%; Property cooling...

SCCM Asia Research

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