Pan-Asia Equity Bottom-up, Wickhams Hill

Lloyd Moffatt

Pan-Asia Equity Bottom-up

Equity Bottom-Up

<ul>
<li>mm2 Asia Ltd (MM2 SP), which we flagged in our inaugural issue last week, received<br>an unsolicited bid for their Singapore and Malaysian cinema business. The offer made would imply a share price of about SGD 16.2cents, +140% from today’s close.</li>
<li>We uncover a massive buyback program underway at Alliance Global Group (AGI<br>PM), Emperador (EMP PM) and Megaworld (MEG PM).</li>
<li>The US$1.5bn IPO of Indonesian online flea market Bukalapak (BUKA IJ) is planned for next week. While another Asia focused SPAC files for US listing.</li>
</ul>


mm2 Asia Ltd (MM2 SP), which we flagged in our inaugural issue last week, received an unsolicited bid for their Singapore and Malaysian cinema business. The offer made would imply a share price of about SGD 16.2cents, +140% from today’s close.
We uncover a massive buyback program underway at Alliance Global Group (AGI PM), Emperador (EMP PM) and Megaworld (MEG PM).
The US$1.5bn IPO of Indonesian online flea market Bukalapak (BUKA IJ) is planned for next week. While another Asia focused SPAC files for US listing.


Wickhams Hill Research | Under-The-Radar Issue 2

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><a href="https://www.smartkarma.com/entities/cromwell-european-real-estate" target="_blank" data-smartkarma-citation="entities:25889" rel="noopener">Cromwell European REIT (CERT SP)</a> divests a non-core asset in France at 21% premium to latest valuation</h3><ul><li>CERT has entered into a promissory deed with an affiliate of one of Europe’s leading boutique real estate investment funds, to divest the Parc de Popey asset located at 5 Chemin de Popey in Bar-le-Duc, France. The French Asset consists of a single large warehouse building with ancillary office accommodation totalling 15,724sqm, built in 1995. Currently occupied by a major postal service and logistics company, which is largely owned by the French government, the asset is used as an industrial sorting parcel platform</li><li>CERT will sell the French Asset for a sale consideration of EUR5.8m (~S$9.3m), which would be satisfied fully in cash. It is 53% higher than the IPO purchase price and 21% higher than its most recent valuation. A divestment fee of EUR29,000 (being 0.5% of the sale consideration) is payable to the Manager. The divestment is expected to be completed in 3Q21 and has no material effect on CERT’s NTA.</li></ul>

SingaporeCromwell European REIT (CERT SP) divests a non-core asset in France at 21% premium to latest valuationCERT has entered into a promissory deed with an affiliate of one of Europe’s leading boutique real estate investment funds, to divest the Parc de Popey asset located at 5 Chemin de Popey in Bar-le-Duc, France. The French Asset consists of a single large warehouse building with ancillary office accommodation totalling 15,724sqm, built in 1995. Currently occupied by a major postal service and logistics company, which is largely owned by the French government, the asset is used as an industrial sorting parcel platformCERT will sell the French Asset for a sale consideration of EUR5.8m (~S$9.3m), which would be satisfied fully in cash. It is 53% higher than the IPO purchase price and 21% higher than its most recent valuation. A divestment fee of EUR29,000 (being 0.5% of the sale consideration) is payable to the Manager. The divestment is expected to be completed in 3Q21 and has no material effect on CERT’s NTA.

ASEAN Builder's Scoop (22Jun21) - CERT Divests a Non-Core France Asset

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151" rel="noopener">Suntec REIT (SUN SP)</a> divests 30% of 9 Penang Road; Booked 30% development gain</h3><ul><li>SUN has sold its 30% interest in 9 Penang Road, formerly known as Park Mall, to Haiyi Holdings at an agreed property value of S$295.5m or S$2,468psf based on the property’s NLA. Haiyi Holdings, which redeveloped the site together with SUN and SingHaiyi Group (SHG SP), already held a 35% stake in the JV before buying out SUN's interest. The agreed property value represents a 5.7% premium over the latest valuation of S$931.8m and 30.3% higher than the total development cost of S$756.0m</li><li>The ten-storey development consists of two office towers and ancillary retail with a NLA of ~399,000sqft. The committed occupancy was 98.7% as at 31Mar21 with the two office towers fully leased to UBS AG</li><li>After taking into account the divestment related expenses (including the divestment fee payable to the Manager), the net proceeds from the divestment would be ~S$88.2m, resulting in an estimated net gain of ~S$66.5m. This represents a 305% return on investment if calculating net divestment profit as a percentage of cost of investment. The net proceeds of the divestment may be used to pare down bank borrowings and/or fund future acquisitions</li><li>Post divestment, SUN continues to be anchored by resilient office segment, which will contribute more than 80% to the REIT’s total income contribution with Singapore properties constituting ~75% of total AUM</li><li>On a stabilized basis, the NPI yield is 3.3% for this divestment. On a FY20 pro-forma basis, the acquisitions are expected to be +0.15% NAV accretive to unitholders. DPU will remain flattish at S$7.402c. Gearing will decrease to 42.9% from 44.4% as at 31Mar21 on a pro-forma basis. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/614/original/image015.png?1623894864" class="editor-image img-responsive" data-smartkarma-image-id="213614"></figure></section></li></ul>

SingaporeSuntec REIT (SUN SP) divests 30% of 9 Penang Road; Booked 30% development gainSUN has sold its 30% interest in 9 Penang Road, formerly known as Park Mall, to Haiyi Holdings at an agreed property value of S$295.5m or S$2,468psf based on the property’s NLA. Haiyi Holdings, which redeveloped the site together with SUN and SingHaiyi Group (SHG SP), already held a 35% stake in the JV before buying out SUN's interest. The agreed property value represents a 5.7% premium over the latest valuation of S$931.8m and 30.3% higher than the total development cost of S$756.0mThe ten-storey development consists of two office towers and ancillary retail with a NLA of ~399,000sqft. The committed occupancy was 98.7% as at 31Mar21 with the two office towers fully leased to UBS AGAfter taking into account the divestment related expenses (including the divestment fee payable to the Manager), the net proceeds from the divestment would be ~S$88.2m, resulting in an estimated net gain of ~S$66.5m. This represents a 305% return on investment if calculating net divestment profit as a percentage of cost of investment. The net proceeds of the divestment may be used to pare down bank borrowings and/or fund future acquisitionsPost divestment, SUN continues to be anchored by resilient office segment, which will contribute more than 80% to the REIT’s total income contribution with Singapore properties constituting ~75% of total AUMOn a stabilized basis, the NPI yield is 3.3% for this divestment. On a FY20 pro-forma basis, the acquisitions are expected to be +0.15% NAV accretive to unitholders. DPU will remain flattish at S$7.402c. Gearing will decrease to 42.9% from 44.4% as at 31Mar21 on a pro-forma basis. 

ASEAN Builder's Scoop (17Jun21) - SUN Booked 30% Devt Gain on 9 Penang Rd Sale

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/ascott-residence-trust" target="_blank" data-smartkarma-citation="entities:6560" rel="noopener">Ascott Residence Trust (ART SP)</a> and The Ascott Limited to jointly develop student accommodation property in the US</h3><ul><li>The Ascott Limited and its hospitality trust, ART, will jointly invest and develop a freehold student accommodation asset located in South Carolina, USA for an expected total amount of US$109.9m (S$146.2m). The 678-bed student accommodation will serve over 35,000 undergraduate and graduate students from the nearby University of South Carolina (USC). Construction of the student accommodation asset is scheduled to start in 3Q21 and complete in 2Q23. At the initial stage, Ascott and ART will jointly invest in the asset to own 45% stake each. A third-party partner, which is a joint venture between one of the largest student housing developers in the USA and a large national real estate developer and contractor based in the USA, will own the remaining 10% stake for alignment of interest</li><li>When the property’s performance stabilises, Ascott and ART will acquire the remaining share from the third-party partner. Ascott has separately formed a partnership with the student housing developer to invest and develop more student accommodation properties in the USA. These properties could become a potential pipeline for ART from its sponsor. The accretive investment in this maiden asset in South Carolina, is expected to increase ART’s pro forma FY20 DPS by about 2.1%. Upon stabilisation, the EBITDA yield is expected to be approximately 6.2%. Gearing will rise to 37.1% post-completion of the development. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/297/original/image003+%282%29.png?1623806610" class="editor-image img-responsive" data-smartkarma-image-id="213297"></figure></section></li></ul>

SingaporeAscott Residence Trust (ART SP) and The Ascott Limited to jointly develop student accommodation property in the USThe Ascott Limited and its hospitality trust, ART, will jointly invest and develop a freehold student accommodation asset located in South Carolina, USA for an expected total amount of US$109.9m (S$146.2m). The 678-bed student accommodation will serve over 35,000 undergraduate and graduate students from the nearby University of South Carolina (USC). Construction of the student accommodation asset is scheduled to start in 3Q21 and complete in 2Q23. At the initial stage, Ascott and ART will jointly invest in the asset to own 45% stake each. A third-party partner, which is a joint venture between one of the largest student housing developers in the USA and a large national real estate developer and contractor based in the USA, will own the remaining 10% stake for alignment of interestWhen the property’s performance stabilises, Ascott and ART will acquire the remaining share from the third-party partner. Ascott has separately formed a partnership with the student housing developer to invest and develop more student accommodation properties in the USA. These properties could become a potential pipeline for ART from its sponsor. The accretive investment in this maiden asset in South Carolina, is expected to increase ART’s pro forma FY20 DPS by about 2.1%. Upon stabilisation, the EBITDA yield is expected to be approximately 6.2%. Gearing will rise to 37.1% post-completion of the development. 

ASEAN Builder's Scoop (16Jun21) - ART to Jointly Develop US Student Accommodation

<h2>Singapore</h2><h3>Strong leasing interest for part of Standard Chartered Bank’s vacating space in MBFC T1</h3><p>The asset manager of the Marina Bay Financial Centre (MBFC) has received strong interest from potential tenants for about 200,000sqft office space in Tower 1. This is part of the roughly 400,000sqft currently leased to Standard Chartered (StanChart) in the tower. The profiles of occupiers that have shown the strongest interest are tech firms from the United States, China and Singapore, as well as companies in media and financial services. It added that rents of between S$11-12psf a month are expected to be achieved. The final amount of space that StanChart will give up remains uncertain. In all, the London-headquartered bank currently leases 18.5 levels in the 33-storey Tower 1, which has office floor plates ranging from 18,000-22,000sqft. StanChart’s lease expires in late-Oct22, with an option for renewal. StanChart also has its own premises in Changi Business Park.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/859/original/image003.png?1622683137" class="editor-image img-responsive" data-smartkarma-image-id="210859"></figure></section>

SingaporeStrong leasing interest for part of Standard Chartered Bank’s vacating space in MBFC T1The asset manager of the Marina Bay Financial Centre (MBFC) has received strong interest from potential tenants for about 200,000sqft office space in Tower 1. This is part of the roughly 400,000sqft currently leased to Standard Chartered (StanChart) in the tower. The profiles of occupiers that have shown the strongest interest are tech firms from the United States, China and Singapore, as well as companies in media and financial services. It added that rents of between S$11-12psf a month are expected to be achieved. The final amount of space that StanChart will give up remains uncertain. In all, the London-headquartered bank currently leases 18.5 levels in the 33-storey Tower 1, which has office floor plates ranging from 18,000-22,000sqft. StanChart’s lease expires in late-Oct22, with an option for renewal. StanChart also has its own premises in Changi Business Park.

ASEAN Builder's Scoop (3Jun21) - Standchart Space at MBFC T1 Drew Strong Interest

Philippines

Megaworld Corporation, through its subsidiaries, operates in the real estate and hotel businesses as well as provides marketing services. The Company provides a wide array of product from condominiums to subdivisions developments.

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Megaworld Corp (MEG PM)

Wickhams Hill Research | Under-The-Radar Issue 2

mm2 Asia Ltd (MM2 SP), which we flagged in our inaugural issue last week, receivedan unsolicited bid for their Singapore and Malaysian cinema business

Lloyd Moffatt

ASEAN Builder's Scoop (22Jun21) - CERT Divests a Non-Core France Asset

CERT divests a non-core France asset; CBD Grade-A office rents reversing up in 2Q21; China REITs solid IPO debut; MEG sees resi sales uptick; HVN...

SCCM Asia Research

ASEAN Builder's Scoop (17Jun21) - SUN Booked 30% Devt Gain on 9 Penang Rd Sale

SUN booked 30% devt gain on 9 Penang Rd sale; Rising online F&B sales could benefit industrial prop vs prime malls; MEG details REIT plans; PH...

SCCM Asia Research

ASEAN Builder's Scoop (16Jun21) - ART to Jointly Develop US Student Accommodation

ART to jointly develop US student accommodation; May21 new home sales down 30% MoM, take-up remains elevated; MEG board approves REIT listing;...

SCCM Asia Research

ASEAN Builder's Scoop (3Jun21) - Standchart Space at MBFC T1 Drew Strong Interest

Standchart space at MBFC T1 drew strong interest; Mapletree FY21 earnings +4% YoY; SSREIT appoints Charlie Chan as Non-ED; MEG no mega profits just...

SCCM Asia Research

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