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Singapore Strategy - Singapore Budget 2018

Shared By Stock Fanatic on Tuesday, February 20, 2018 | 20.2.18

We think the Singapore Budget 2018 is an extension of the themes from previous budgets, which are mainly to save and invest for the country’s future.

More details on the Budget will be elaborated by our economist, Michelle Chia.

On equity, we see some impact on property, healthcare, construction, and REITS.

Economics Update - Budget FY2018: Playing the long game

■ A widely anticipated GST hike is likely to occur sometime in 2021-25, which would lift the rate by 2% pt, from 7% currently to 9%, yielding revenue of 0.7% of GDP.

■ Other tax changes include GST on imported services, carbon taxes of S$5/tonne, 1% hike in the top rate for homebuyer stamp duty and a 10% rise in tobacco excise duty.

■ Additional social safety net enhancements offered to households to cope with higher living costs, elderly, healthcare, education, as well as a one-off S$100-300 ‘hongbao’.

■ The juggling act between phased-in tax hikes and rising government spending keeps fiscal sustainability intact with an overall deficit target of 0.1% of GDP.

2018 Singapore Budget - Expecting a Positive “Post Budget” Market Reaction

With the exception of the BSD increase for residential property transactions, Budget 2018 was positive for all business sectors. The carbon tax implementation should translate into higher capex for the corporates and support strong loans growth for domestic banks. The tax removal on the distribution of specified income by REIT ETFs is likely to be positive for the REITs sector. And, with concerns of an impending GST hike now behind us, we expect consumer sentiment to remain buoyant in 2018. We remain upbeat on Singapore’s growth outlook, and continue to prefer exposure to the consumer, real estate, REITs and banking sectors.

Budget 2018 - SG Bonus from bumper surplus

■ Bumper budget surplus of S$9.6b for 2017

■ Higher buyers’ stamp duty on residential properties

■ GST increase deferred till 2021 or beyond, positive for consumer sector – Buy Genting Singapore

■ Reiterate positive stance on STI. Favour banks, oil and gas, consumer plays

Singapore REITs - Take the leap of faith

■ Correction on interest rate fears largely done; stronger property fundamentals

■ Attractive valuations with yield spreads and P/Bk now close to historical averages ahead of multi-year upturn

■ Office and hotels remain our preferred sectors

■ Top picks – AREIT, CCT, MLT, Suntec, CDREIT, FCT and FCOT

Keppel KBS US REIT - Room to grow

Shared By Stock Fanatic on Monday, February 19, 2018 | 19.2.18

Diversified across the US. Keppel-KBS US REIT (KORE) holds an initial portfolio of 11 freehold US offices across seven markets in the US—Seattle (32% of cash rental income), Sacramento (6%), Denver (15%), Austin (12%), Houston (21%), Atlanta (7%), and Orlando (7%). Overall, the portfolio is largely Class A, with Class A suburban assets accounting for 37% of the portfolio by cash rental income, followed by Class A CBD assets at 32% and Class B/B+ suburban assets at 31%. The structure of KORE will be similar to other US Asset Singapore REITs which allows for minimal tax exposure.

Sembcorp Industries - Strategic Review Next Week?

■ Delaying results announcement by several hours to the morning of 23 February

■ Hint that it will be releasing outcome of its Strategic Review alongside results?

■ Hopeful of a meaningful review

Reiterate BUY; TP S$4.50

Midas Holdings - Midas flags out several irregularities in the course of audit

Shared By Stock Fanatic on Monday, February 12, 2018 | 12.2.18

■ Irregularities in the course of audit

■ Board is taking active steps to ascertain overall impact to the group

■ Concerns on how larget the assets are at risk and potential corporate governance lapses will be an overhang.

■ Ceasing Coverage on the stock.
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