■ Results in-line; growth was mainly driven by contribution
from latest acquisition. DPU growth still expected.
■ Expectations tempered by weak visitor arrivals, FX volatility.
■ Maintain BUY with TP of SGD0.96 from SGD0.97.
2Q’s results were in-line, revenue was SGD51.8m (+8.2% QoQ,
+6.9% YoY), NPI was SGD41.3m (+6.3% QoQ, +5.5% YoY), DPU was
1.29cts (+2.4% QoQ, +3.3% YoY). The half-year forms 48%, 48.4%,
and 49.3% of our full-year forecasts. Growth was mainly driven by
1.5mths contribution by latest acquisition, Myer Centre Adelaide.
As Myer will contribute fully in the second half of the year, we
expect our forecasts to be met. Aussie contributions soared: NPI
was SGD6m (+53.2% YoY) due to Myer, partially offset by a weak
Singapore assets Wisma and Ngee Ann contributed decently
with NPI at SGD26.7m (+4.3% YoY). Considering poor visitor arrivals
and a softening office market, occupancy was stable at 99.3% (1Q:
99.4%), and tenant sales stabilised (+3.5% QoQ, -6.7% YoY). Retail
rental reversions were however, markedly lower at 3.9% (1Q:
13.3%), while office reversions were 4.5% (1Q: 6%). Malaysian
properties’ NPI dipped 4.4% YoY to SGD6.7m, due to MYR
depreciation. China remains competitive with NPI at SGD887k, but
stabilising (+7% QoQ, -41.5% YoY). Japan’s NPI was stable at
SGD883k (+7.7% QoQ) but down 11.3% YoY due to a weak JPY.
What’s Our View
We continue to expect DPU growth to be powered by Myer, Ngee
Ann’s rent review (Jun16), and Malaysian assets’ rent step-ups
. However, we temper our rent reversion expectations for
Wisma from 12% to 6% and further adjust for AUD/MYR/JPY
currency depreciation which reduces our FY15-17 DPU expectations
marginally from 5.2-5.8cts to 5.1-5.7cts. Maintain BUY with TP
SGD0.96 (DDM, CoE 8.5%, LTG 2%), with 6.0-6.7% forward yields
comparing favourably to retail sector’s 5.5%
. (Read Report)
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Source : Maybank Kim Eng Research
Labels: S-REITs, Starhill Global