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/ec-world-reit" target="_blank" data-smartkarma-citation="entities:22842" rel="noopener">EC World Reit (ECWREIT SP)</a> renews second major lease in Hengde Logistics (BUY; TP S$0.80/unit)</h3>ECWREIT has renewed a second major lease of some 74,057sqm in relation to Hengde Logistics with China Tobacco Zhejiang Industrial. The second major lease (Phase 2 renewal) came after a successful renewal of 152,752sqm of space in Oct20 (Phase 1 renewal). During the Phase 2 renewal, China Tobacco committed to a lease term of 2.65 years to coincide with the expiry of the Phase 1 renewal. Both leases with China Tobacco will expire on 31Dec23. Although the renewal rental rate contracted for the Phase 2 renewal is 8.8% lower than the existing rental rate, the effective blended rental rate of Phase 1 renewal and Phase 2 renewal is 2.2% lower than the effective blended rental rate of the expiring China Tobacco leases at Hengde Logistics Phase 1 and Phase 2. Similar to the Phase 1 Renewal, China Tobacco informed that they will no longer require the warehouse management services for the Phase 2 Renewal due to their internal restructuring. ECWREIT expects the Phase 2 Renewal to reduce ECWREIT’s revenue by 0.8%.Comments: The Phase 2 renewal rate at -8.8% came as a surprise with a high single-digit negative reversion, compared the positive reversion of +1.1% in its Phase 1 renewal. This also deviates from mgmt.’s earlier guidance of “similar renewal terms as Phase 1”, which we expect should be “flattish”. While pending further information on the rationale behind such renewal, on a “all-in” basis, we expect a ~3% decrease from FY20 Gross Revenue following its two renewals. We currently have a BUY rating and TP of S$0.80/unit, and will review our recommendations upon results release tomorrow.<h3><a href="https://www.smartkarma.com/entities/eagle-hospitality-trust" target="_blank" data-smartkarma-citation="entities:28059" rel="noopener">Eagle Hospitality Trust (EAGLEHT SP)</a> Dallas hotel sale falls through after missed deposit deadline</h3>EAGLEHT will not be going ahead with the planned sale of its property in Texas, as the buyer missed the deadline for a deposit. The sale and purchase agreement for Crowne Plaza Dallas Near Galleria-Addison (CPDG) was thus terminated on 4May. EAGLEHT’s wholly-owned subsidiary will hold on to initial deposits of US$1.45m in the aborted US$18.5m deal with buyer Lockwood Development Partners. Numerous EHT entities had filed for Chapter 11 bankruptcy in a Delaware court in 2021. But CPDG is not directly owned by a Chapter 11 entity, so it does not enjoy bankruptcy protection under Section 363 of the United States Bankruptcy Code. Amid the Chapter 11 entities’ limited ability to support CPDG, the decision was made to sell off CPDG, in the face of potential difficulty fetching a higher price in an auction, and the risk that a lender would foreclose on the property after mortgage loan defaults. But the EAGLEHT unit involved in the sale axed the agreement as the buyer did not meet the 3May deadline for an extra deposit of US$1.05m.<h3>One Bernam records 80 units sales (23% take-up rate) on its opening weekend</h3>MCC Group and Hao Yuan Investment said that over 80 units or 80% of the first phase of 100 units released at their JV project, One Bernam, were sold. This means ~23% out of a total of the 351units in the 99-year leasehold, mixed-use development, has been sold at ~S$2,650psf ASP. More than 90% of the units that were taken up were one- and two-bedroom units sized from 441-872sqft, priced upwards of S$1.017m. Most of the buyers are said to be Singapore citizens and Permanent Residents. In addition to the 351 residential units, One Bernam contains a two-storey retail podium of 15,726sqft, and one floor of serviced apartments with 13 keys. While one- and two-bedroom units make up 91% of the residences in the project, there are 29 three-bedroom apartments of 1,421sqft. There are also two units of three-bedroom penthouses with sizes of 1,744-1,948sqft, while the largest penthouse is 4,306sqft in size and contains five bedrooms. <h3>Biggest penthouse at Park Nova sold at S$5,838psf, a record for Orchard Boulevard area</h3>Park Nova, Shun Tak Holdings’ luxury condo in Singapore’s Orchard Boulevard-Tomlinson area, has recorded five units sales for well over $100m. The two biggest five-bedroom penthouses in the 54-unit luxury condo at 18 Tomlinson Road fetched S$34.438m and S$26.026m, respectively. The biggest penthouse of 5,899sqft garnered interest from more than one party and almost had to be sold via balloting. However, one party prevailed and emerged the eventual buyer at S$34.438m or S$5,838psf. The transaction price of S$26.026m for the second biggest penthouse of 4,499sqft, worked out to S$5,785psf. The third and smallest penthouse of 3,229sqft is also believed to have been sold for above S$17m.

SingaporeEC World Reit (ECWREIT SP) renews second major lease in Hengde Logistics (BUY; TP S$0.80/unit)ECWREIT has renewed a second major lease of some 74,057sqm in relation to Hengde Logistics with China Tobacco Zhejiang Industrial. The second major lease (Phase 2 renewal) came after a successful renewal of 152,752sqm of space in Oct20 (Phase 1 renewal). During the Phase 2 renewal, China Tobacco committed to a lease term of 2.65 years to coincide with the expiry of the Phase 1 renewal. Both leases with China Tobacco will expire on 31Dec23. Although the renewal rental rate contracted for the Phase 2 renewal is 8.8% lower than the existing rental rate, the effective blended rental rate of Phase 1 renewal and Phase 2 renewal is 2.2% lower than the effective blended rental rate of the expiring China Tobacco leases at Hengde Logistics Phase 1 and Phase 2. Similar to the Phase 1 Renewal, China Tobacco informed that they will no longer require the warehouse management services for the Phase 2 Renewal due to their internal restructuring. ECWREIT expects the Phase 2 Renewal to reduce ECWREIT’s revenue by 0.8%.Comments: The Phase 2 renewal rate at -8.8% came as a surprise with a high single-digit negative reversion, compared the positive reversion of +1.1% in its Phase 1 renewal. This also deviates from mgmt.’s earlier guidance of “similar renewal terms as Phase 1”, which we expect should be “flattish”. While pending further information on the rationale behind such renewal, on a “all-in” basis, we expect a ~3% decrease from FY20 Gross Revenue following its two renewals. We currently have a BUY rating and TP of S$0.80/unit, and will review our recommendations upon results release tomorrow.Eagle Hospitality Trust (EAGLEHT SP) Dallas hotel sale falls through after missed deposit deadlineEAGLEHT will not be going ahead with the planned sale of its property in Texas, as the buyer missed the deadline for a deposit. The sale and purchase agreement for Crowne Plaza Dallas Near Galleria-Addison (CPDG) was thus terminated on 4May. EAGLEHT’s wholly-owned subsidiary will hold on to initial deposits of US$1.45m in the aborted US$18.5m deal with buyer Lockwood Development Partners. Numerous EHT entities had filed for Chapter 11 bankruptcy in a Delaware court in 2021. But CPDG is not directly owned by a Chapter 11 entity, so it does not enjoy bankruptcy protection under Section 363 of the United States Bankruptcy Code. Amid the Chapter 11 entities’ limited ability to support CPDG, the decision was made to sell off CPDG, in the face of potential difficulty fetching a higher price in an auction, and the risk that a lender would foreclose on the property after mortgage loan defaults. But the EAGLEHT unit involved in the sale axed the agreement as the buyer did not meet the 3May deadline for an extra deposit of US$1.05m.One Bernam records 80 units sales (23% take-up rate) on its opening weekendMCC Group and Hao Yuan Investment said that over 80 units or 80% of the first phase of 100 units released at their JV project, One Bernam, were sold. This means ~23% out of a total of the 351units in the 99-year leasehold, mixed-use development, has been sold at ~S$2,650psf ASP. More than 90% of the units that were taken up were one- and two-bedroom units sized from 441-872sqft, priced upwards of S$1.017m. Most of the buyers are said to be Singapore citizens and Permanent Residents. In addition to the 351 residential units, One Bernam contains a two-storey retail podium of 15,726sqft, and one floor of serviced apartments with 13 keys. While one- and two-bedroom units make up 91% of the residences in the project, there are 29 three-bedroom apartments of 1,421sqft. There are also two units of three-bedroom penthouses with sizes of 1,744-1,948sqft, while the largest penthouse is 4,306sqft in size and contains five bedrooms. Biggest penthouse at Park Nova sold at S$5,838psf, a record for Orchard Boulevard areaPark Nova, Shun Tak Holdings’ luxury condo in Singapore’s Orchard Boulevard-Tomlinson area, has recorded five units sales for well over $100m. The two biggest five-bedroom penthouses in the 54-unit luxury condo at 18 Tomlinson Road fetched S$34.438m and S$26.026m, respectively. The biggest penthouse of 5,899sqft garnered interest from more than one party and almost had to be sold via balloting. However, one party prevailed and emerged the eventual buyer at S$34.438m or S$5,838psf. The transaction price of S$26.026m for the second biggest penthouse of 4,499sqft, worked out to S$5,785psf. The third and smallest penthouse of 3,229sqft is also believed to have been sold for above S$17m.

ASEAN Builder's Scoop (10May21) - ECWREIT renews major Hengde logistics lease

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

Singha Prime Office Leasehold REIT / Equity Bottom-Up

We keep our BUY recommendation on SPRIME, but slightly decrease our target price to Bt10.40 (previously Bt11.00), implying an upside of 21% from the current price. We derive our target price from a DCF-based valuation using a WACC of 6.7% and no terminal period.
Investment thesis:
<ul>
<li>Large tenants across various industries should make occupancy resilient</li>
<li>Addition of various Singha properties offers upside to our target price</li>
<li>Impact of COVID-19 is limited, enhancing the short-term outlook</li>
<li>Now paying cash dividends, expect 7% in 2021E</li>
</ul>
Interim: Revenue fell by 7.0% in 4Q20 YoY, but SPRIME has shown resilience in occupancy. With the recovery of rental rates and maintenance of high occupancy rates, we expect SPRIME to be well-equipped for the short run.
Risks: Conflict of interest risk due to the largest unitholder and property owners being within the same conglomerate, rising bond yields, and falling occupancy rate.

We keep our BUY recommendation on SPRIME, but slightly decrease our target price to Bt10.40 (previously Bt11.00), implying an upside of 21% from the current price. We derive our target price from a DCF-based valuation using a WACC of 6.7% and no terminal period.
Investment thesis:

Large tenants across various industries should make occupancy resilient
Addition of various Singha properties offers upside to our target price
Impact of COVID-19 is limited, enhancing the short-term outlook
Now paying cash dividends, expect 7% in 2021E

Interim: Revenue fell by 7.0% in 4Q20 YoY, but SPRIME has shown resilience in occupancy. With the recovery of rental rates and maintenance of high occupancy rates, we expect SPRIME to be well-equipped for the short run.
Risks: Conflict of interest risk due to the largest unitholder and property owners being within the same conglomerate, rising bond yields, and falling occupancy rate.

SPRIME: Resilient REIT Offers a Good Buy Opportunity

We keep our BUY recommendation on SPRIME with a target price of Bt11.00 (previously Bt11.20), implying an upside of 38% from the current price. We derive our target price from a DCF-based valuation using a WACC of 6.8% and no terminal period.
Investment thesis:
<ul>
<li>Large tenants across various industries should make occupancy resilient</li>
<li>Addition of various Singha properties offers upside to our target price</li>
<li>Downside from COVID-19 shutdown should be limited</li>
<li>Now paying cash dividends, expect 7% in 2021E</li>
</ul>
Interim: Revenue fell by 5.5% in 3Q20 YoY but was up 3.4% QoQ, showing resilience in occupancy. While we see a slightly lower revenue in 2020E, we expect a bit better margins from this year and going forward.
Risks: Conflict of interest risk due to the largest unitholder and property owners being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

We keep our BUY recommendation on SPRIME with a target price of Bt11.00 (previously Bt11.20), implying an upside of 38% from the current price. We derive our target price from a DCF-based valuation using a WACC of 6.8% and no terminal period.
Investment thesis:

Large tenants across various industries should make occupancy resilient
Addition of various Singha properties offers upside to our target price
Downside from COVID-19 shutdown should be limited
Now paying cash dividends, expect 7% in 2021E

Interim: Revenue fell by 5.5% in 3Q20 YoY but was up 3.4% QoQ, showing resilience in occupancy. While we see a slightly lower revenue in 2020E, we expect a bit better margins from this year and going forward.
Risks: Conflict of interest risk due to the largest unitholder and property owners being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

SPRIME: Depressed Price Offers a Good Opportunity to Accumulate

We initiate coverage on SPRIME with a BUY recommendation based on a target price of Bt11.20, implying an upside of 21% from the current share price*. We derive our target price from a DCF-based valuation using a WACC of 6.9% and no terminal period.
Investment thesis:
<ul>
<li>Large tenants across various industries should make occupancy resilient</li>
<li>Addition of various Singha properties offers upside to our target price</li>
<li>Downside from COVID-19 shutdown should be limited</li>
<li>Higher yield on NAV, but lower spread than peers</li>
</ul>
Interim: Revenue fell by 8% in 2Q20 YoY due to the pandemic shutdown, and rental discounts to help tenants. The increase in net assets from operations grew by 38% YoY.
Risks: Conflict of interest risk due to the largest unitholder and property owners being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

We initiate coverage on SPRIME with a BUY recommendation based on a target price of Bt11.20, implying an upside of 21% from the current share price*. We derive our target price from a DCF-based valuation using a WACC of 6.9% and no terminal period.
Investment thesis:

Large tenants across various industries should make occupancy resilient
Addition of various Singha properties offers upside to our target price
Downside from COVID-19 shutdown should be limited
Higher yield on NAV, but lower spread than peers

Interim: Revenue fell by 8% in 2Q20 YoY due to the pandemic shutdown, and rental discounts to help tenants. The increase in net assets from operations grew by 38% YoY.
Risks: Conflict of interest risk due to the largest unitholder and property owners being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

SPRIME: Good Point of Entry, Singha Connection Could Add Further Upside

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

With strong earnings from a equity income provide an attractive dividend yield at 6%-7%. Therefore, we maintain our BUY rating with a new target price of Bt2.4 (down from Bt2.6) based on 10xPE’21E which its a five-years average.<ul>
<li>The fall in 1Q20 earnings both YoY and QoQ was primarily pressured by weakening earnings from residential business which sunk 81%YoY to Bt80m. Meanwhile, equity income dropped only 5.6% YoY to Bt431m.</li>
<li>We expect 2Q20 earnings to soft down 25%YoY and 10%QoQ, given lower contribution from associated companies especially from HMPRO. Meanwhile, we expect residential transfer units to remain weak QoQ due to low visited rate, but likely to be the bottom quarter.</li>
<li>We maintain positive view in 2020-21E backed by stable equity income from associated companies (mostly from HMPRO) and several projects in pipeline worth over Bt48bn.</li>
</ul>

With strong earnings from a equity income provide an attractive dividend yield at 6%-7%. Therefore, we maintain our BUY rating with a new target price of Bt2.4 (down from Bt2.6) based on 10xPE’21E which its a five-years average.
The fall in 1Q20 earnings both YoY and QoQ was primarily pressured by weakening earnings from residential business which sunk 81%YoY to Bt80m. Meanwhile, equity income dropped only 5.6% YoY to Bt431m.
We expect 2Q20 earnings to soft down 25%YoY and 10%QoQ, given lower contribution from associated companies especially from HMPRO. Meanwhile, we expect residential transfer units to remain weak QoQ due to low visited rate, but likely to be the bottom quarter.
We maintain positive view in 2020-21E backed by stable equity income from associated companies (mostly from HMPRO) and several projects in pipeline worth over Bt48bn.


Thailand

Singha Estate PCL is a property developer specializing in residential projects in the Bangkok area.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Singha Estate (S TB)

ASEAN Builder's Scoop (10May21) - ECWREIT renews major Hengde logistics lease

ECWREIT renews major Hengde logistics lease; EAGLEHT Dallas hotel sales fell through; ALI recovering slowly but surely, RLC 1Q21 results weighed by...

SCCM Asia Research

SPRIME: Resilient REIT Offers a Good Buy Opportunity

We keep our BUY recommendation on SPRIME, but slightly decrease our target price to Bt10.40 (previously Bt11.00), implying an upside of 21% from...

A. Stotz Investment Research

SPRIME: Depressed Price Offers a Good Opportunity to Accumulate

We keep our BUY recommendation on SPRIME with a target price of Bt11.00, implying an upside of 38%. We derive our target price from a DCF-based...

A. Stotz Investment Research

SPRIME: Good Point of Entry, Singha Connection Could Add Further Upside

We initiate coverage on SPRIME with a BUY recommendation based on a target price of Bt11.20, implying an upside of 21% from the current share...

A. Stotz Investment Research

QH: Expect 2Q20 to Be the Bottom Quarter

With strong earnings from a equity income provide an attractive dividend yield at 6%-7%. Therefore, we maintain our BUY rating with a new target...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)