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2 April 2018, 8.15am/11.15am Morning Call/Webinar
Sector Updates
Singapore REITs
Singapore Coal Sector Monthly
Singapore Banking Sector Monthly
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer
The information contained in this presentation has been obtained from public sources which Phillip Securities Research Pte Ltd (“PSR”) has no reason to believe are unreliable
and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this presentation are based on such information and are
expressions of belief only. PSR has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate,
complete or verified or should be relied upon as such. Any such information or Research contained in this presentation is subject to change, and PSR shall not have any
responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSR be liable
for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of
the possibility of such damages.
This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any
particular person.
You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or
particular needs, before making a commitment to invest in such products.
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 2S-REITs
First rate hike in 2018 and the implications for S-REITs
Tan Dehong
Phillip Securities Research Pte Ltd
2 April 2018
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.First Rate Hike in 2018 – implications and outlook
First Rate hike in 2018. Expectations were for three hikes this year before that, as previously
guided by the Fed.
FTSE S-REIT index pricing in macro headwinds, underperforming STI YTD.
30
Sector Performance Comparison 26.8
25 21.7
20 17.8
15
9.0
10 6.9
4.6
5
0.0 0.8 0.1
0
-5 -2.9 -2.5 -2.0
-5.4
-10
-10.4
-15 -14.2
-20
2014 2015 2016 2017 YTD
STI FTSE REIT Index FTSE Real Estate Developer
Source: Bloomberg, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 4Dovish comments from Fed Chairman tapered rate hike expectations
Market expectations of 4 rate hikes or more this year fell after last week’s rate hike.
Fed Chairman Powell’s comments re-affirming gradual rate hikes.
Concerns of Trump administration’s trade policies a concern for businesses.
Raised GDP outlook while keeping inflation forecast intact.
Probability of FED rate hikes in 2018 (%) Median
50 Variable (%)
2018 2019 2020 Longer run
40 Change in real GDP 2.7 2.4 2.0 1.8
3 rate hikes December projection 2.5 2.1 2.0 1.8
30
Unemployment rate 3.8 3.6 3.6 4.5
20 December projection 3.9 3.9 4 4.6
10
PCE inflation 1.9 2.0 2.1 2.0
4+ rate hikes December projection 1.9 2.0 2.0 2.0
0
Core PCE inflation 1.9 2.1 2.1 -
December projection 1.9 2.0 2.0 -
Source: Bloomberg, PSR Federal funds rate 2.1 2.9 3.4 2.9
December projection 2.1 2.7 3.1 2.8
Source: Fed, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 5What else is happening this year that could move interest rates?
Macro/interest rate headwinds
Existing pressure points: Fed rate hikes, Fed Balance sheet tapering
What’s new? (Sell off reasons in Jan/Feb 2018)
Interest rate hike pressures – Rising commodity prices, weak USD, strong wage growth in Jan 2018
(highest since 2009) stoked inflationary concerns. US inflation expectations now at 4y highs
Political comments from Treasury Secretary supporting a weak USD
Trump tax cuts to fuel further growth and possibly accelerate inflation
Trump’s US$1.5t unfunded infrastructure spending. Growing deficit could drive up US borrowing costs.
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 6Impact on DPU from rising financing costs
c.80% of S-REITs have at least 70% of debt hedged on fixed rates.
For every 100bps increase in interest rates, negative impact on DPU:
Based on current hedging status: -1% to -3%.
Under zero hedging situation: -8% to -12%.
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 7What is the outlook for each S-REIT sector?
Other than retail, all other sectors – office, industrial and hotels generally face a positive scenario
of tapering supply
Easing of supply in 2018 should build a base for rentals to start climbing with demand expected
to improve as global economies recover
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 8Retail (Neutral) – Operating environment remains challenging
E-commerce remains a challenge, Tenant sales at malls deteriorating over the years.
Entrance of Amazon into Singapore in 2017.
Malls need to restructure to improve “experiential shopping”.
Small improvements in retail sales expected with improved sentiment. We expect bottom in retail
rents only in 2018.
Retail Space Demand/Supply 125 Retail Space Rental Index and Occupancy 96
250 120 95
115
200 94
110
150 105 92.6 93
'000 sqm
100 100 92%
50 95
91
90 We expect retail rents to bottom only in 2H2018, in
0 view of the intense competition from e-commerce 90
12/2012 12/2013 12/2014 12/2015 12/2016 12/2017 2018F 2019F 85
-50 80 89
Net Annual Supply Net Annual Demand
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Historical Annual Supply (2012-17) Historical Annual Demand (2012-17)
Source: URA, REALIS, PSR Source: CEIC, PSR Retail Rent Index Retail Occupancy (RHS)
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 9Notable upcoming mall openings – Significant supply in Eastern region
Notable upcoming retail space launches
Project Location Estimated NLA (sq ft) Completion
Paya Lebar Quarter Paya Lebar 340,000 2018
Northpoint City Yishun 330,000 2018
TripleOne Somerset Podium Somerset 70,000 2018
Raffles Hotel A/A City Hall 219,000 2018
Wisteria Mall Yishun 58,000 2018
Jewel Changi Airport Changi Airport 576,000 2019
Funan North Bridge Road 324,000 2019
City Gate Beach Road 76,000 2019
Source: URA, JLL, CBRE, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 10Office (Neutral): Bottom in Grade A office rents in 3Q17…
12 4%
Grade A office rents and YoY % change Bottoming of office rents in 2017 after 9 consecutive
11.4 3%
10
11.3
10.9
3.30%
quarters of drop (22% from peak in 1Q15)
10.4 1.7% 2%
9.9
1.8% 9.5 9.3 9.1 8.95 8.95 9.1
9.4
1% Negative rental reversions still expected for 2018, but
8
0% rebounding rents could lessen impact
0.0%
6 -1%
-0.9%
-1.6% -2%
4 -2.1% -2.2%
-3%
-3.5% -4%
2
-4.0%
-4.6% -4.8% -5%
0 -6%
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Monthly Rent (S$/sqft) % Change
Source: Company, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 11…Led by improvements in take-up for office space and peak in supply
2016: 5th consecutive year of falling net demand.
Improvement in demand in 2017 led by improved global economies. Huge supply in 2017
gradually absorbed.
Narrowing gap between CBD and suburban rents to support demand for prime CBD offices
250
Office Space Demand/Supply 200 Office Space Rental Index and Occupancy 92
Upcoming supply below 10y historical 190
200
net demand of 110k sqm
91
180
150 90
170 163
'000 sqm
100 160 Office rents are bottoming and likely to
89
stablise/rebound from 4Q/2017
150 %
50 88
140 87.4
- 87
130
(50) 120 86
Net Annual Supply Net Annual Demand 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(100) Historical Ann Demand (2010-2017) Historical Ann Supply (2010-2017)
Source: CEIC, PSR
Office Rental Index Occupancy Rate (RHS)
Source: REALIS, CEIC, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 12Upcoming Supply
Notable Office launches 2018-2021
Office Project NLA (sq ft) Location Expected launch
18 Robinson 145,000 Robinson Road 2018
Frasers Tower 663,000 Shenton Way 2018
Redevelpoment of Funan DigitaLife Mall 204,000 City Hall 2019
Park Mall Redevelopment 352,000 Orchard Road 2019
79 Robinson Road 500,000 Robinson Road 2020
Hub Synergy Point Redevelopment 128,000 Anson Road 2020
Afra-Asia Building Redevelopment 154,000 Shenton Way 2020
Redevelopment of Golden Shoe Car Park 635,000 Raffles Place 2021
Source: JLL, CBRE, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 13Industrials (Neutral): Tapering of supply post 2017 should build a
base for rentals to start climbing
Generally tapering supply after 2017 for all 3 industrial sectors
Easing of supply in 2018 should build a base for rentals to start climbing with demand expected to
improve as global economies recover
1,000 Warehouse Space Demand/Supply
110 96
Industrial Rental Index/Occupancy 900
105
94 800
100
700
95
92 600
'000 sq m
90
500
85 90 %
400
80
88 300
75
Oversupply situation abating, and we
200
70
86 100
65 believe rents will bottom by end 2018
-
60 84
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F
Industrial Rental Index Factory Occupancy Rate (RHS) Warehouse Occupancy Rate (RHS)
Source: CEIC, PSR
Net Annual Supply Net Annual demand
Historical Annual demand (2010-2017) Historical Annual Supply (2010-2017)
Source: REALIS, CEIC, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 14Industrials (Neutral): Tapering of supply post 2017 should build a
base for rentals to start climbing
250 Business Park Demand/Supply
200
150
'000 sq m
100
50
Factory Space Demand/Supply
- 1,400
2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 1,200
Net Supply Net Demand 1,000
Historical Annual Supply (2010-2017) Historical Annual demand (2010-2017)
800
'000 sqm
Source: CEIC, URA, PSR
600
400
200
-
2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F
Net Annual Supply Net Annual Demand
Historical Annual Supply (2010-2017) Historical Annual demand (2010-2017)
Source: REALIS, CEIC, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 15Strategic top-down view
Maintain exposure to Business and Science Park properties and Hi-Tech/Hi Specs buildings.
SG evolving towards higher value-added manufacturing; Smart Nation initiative.
Would like to see occupancy improve, in order to upgrade our sector view for industrial REITs
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 16Hospitality (Overweight): Recovery in tourist arrivals and Hotel
RevPARs
Recovery in tourist arrivals in 2017, up 4%.
RevPAR turned positive after 4 years in negative territory. Industry RevPar at 2 year high
Return of biennial events in SG such as Singapore Air Show.
40
SG Tourist Arrivals/Hotel RevPAR YoY %
30
20
10
0
-10
Visitors Arrival Hotel RevPAR Hotel RevPAR (Luxury)
-20
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: CEIC, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 17Hotel Supply tapering off from 2018
SG New Hotel Supply
2014-2017 CAGR: 5.3% 3 year CAGR 1.4%
70,000 392 (0.6%) 69543
69,000 1664 (2.5%)
68,000 769 (1.2%)
67,000 2868 (4.5%)
66,000
65,000
64,000 63850
63,000
62,000
61,000
End 2016 2017 2018 2019 2020 End 2020
Existing Hotel Supply New Supply
Source: JLL, STB, CDLHT, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 18Most of supply in 2018 in midscale/upscale sector
Notable Hotel openings 2018-2020
Hotel Name No of Rooms Target Segment Location Expected launch
Swissotel The Stamford 97 Upscale/Luxury City Centre 2018
The Patina Capitol Singapore 157 Upscale/Luxury City Centre 2018
Duxton Terrace 109 Upscale/Luxury City Centre 2018
Raffles Hotel 111 Upscale/Luxury City Centre 2018
Dusit Thani Hotel and Resort 208 Upscale/Luxury Outside City Centre 2018
Aqueen Hotel Little India 81 Economy Outside City Centre 2018
Aqueen Hotel Lavendar 69 Economy Outside City Centre 2018
THE EDITION by Marriott 190 Upscale/Luxury City Centre 2019
Swissotel The Stamford 329 Upscale/Luxury City Centre 2019
Capri by Fraser @ China Street 306 Mid-tier City Centre 2019
Yotel Changi Jewel 130 Economy Outside City Centre 2019
Village Hotel Sentosa 620 Economy Outside City Centre 2019
The Outpost@Sentosa 193 Upscale/Luxury Sentosa 2019
Artillery Avenue Palawan@Sentosa 40 Upscale/Luxury Sentosa 2019
The Clan 292 Mid-tier City Centre 2020
Aqueen Hotel Geylang 100 Economy Outside City Centre 2020
Source: CDLHT, JLL, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 19S-REITs trading at -1s.d. historical (post GFC) valuations
Current: 2.9% (REIT yield 5.3% - Risk free 2.4%) vs 7 year average 3.7%
Only 2 periods of time when the yield spreads compressed below current levels: in 2010 (for a 2-month period) and
2013 (for an 8-month period).
5.5 FTSE Straits Times REIT Index Yield Spread
5
4.5
4
3.5 3.7
3
2.9
2.5
2
2010 2011 2012 2013 2014 2015 2016 2017 2018
Yield Spread Mean (From 2010) +/-1SD +/-1SD
Source: Bloomberg, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 20A-REITs trading at close to +1 S.D historical yield spreads
S&P/ASX 200 A-REIT Index Yield Spread
3.5
3
2.5
2.4
2
1.8
1.5
1
0.5
0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Yield Spread Mean (From 2010) +/-1SD +/-1SD
Source: Bloomberg, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 21US-REITs trading close to average historical yield spreads
3.5 MSCI US REIT Index Yield Spread
3
2.5
2
1.9
1.5 1.5
1
0.5
0
-0.5 2010 2011 2012 2013 2014 2015 2016 2017 2018
-1
Yield Spread Mean (From 2010) +/-1SD +/-1SD
Source: Bloomberg, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 22HK-REITs trading at close to -1 S.D historical yield spreads
5.5 Hang Seng REIT Index Yield Spread
5
4.5
4.3
4
3.5 3.7
3
2012 2013 2014 2015 2016 2017 2018
Yield Spread Mean (From 2012) +/-1SD +/-1SD
Source: Bloomberg, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 23J-REITs trading at close to average historical yield spreads
7 Tokyo Stock Exchange REIT Index Yield Spread
6
5
4 3.8
3.6
3
2
2010 2011 2012 2013 2014 2015 2016 2017 2018
Yield Spread Mean (From 2010) +/-1SD +/-1SD
Source: Bloomberg, PSR
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 24Regional REIT markets Snapshot
S-REITs trade at one of the highest absolute yields vs major REIT markets
6 5.7
5.3 5.3
5 4.8
3.7 3.9
4
% 3.8
2.9
3 2.4
1.9
2
1
S-REITs ASX REITs US REITs HK REITs Japan REITs
Source: Bloomberg, PSR
Absolute Yield Yield Spread
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 25S-REIT Comparison Table
Approximate Average % debt expiring
Mkt. Cap. PSR TARGET Trailing Total Returns ROE % debt expiring
Price (S$) PSR RATING P/NAV Gearing (%) % of debt on borrowing in 2018/current Year End
(S$mn) PRICE (S$) yield (%) YTD (%) (%) in 2019/next FY
fixed rate cost (%) FY
Healthcare
PARKWAYLIFE REAL ESTATE 1,706 2.82 1.60 4.7 -4.6 36.4 99.0 9.6 1.0 3.0 20.0 December
FIRST REAL ESTATE INVT TRUST 1,081 1.38 NEUTRAL 1.32 1.36 6.2 0.1 33.6 70.0 8.9 4.1 41.6 49.0 December
Average 1.48 5.47 -2.28 35.00 2.55 22.30
Hospitality
ASCOTT RESIDENCE TRUST 2,481 1.15 0.92 7.2 -2.9 36.2 81.0 6.2 2.4 13.0 5.0 December
CDL HOSPITALITY TRUSTS 2,027 1.69 1.10 5.5 2.9 32.6 59.1 7.6 2.1 0.0 51.3 December
FAR EAST HOSPITALITY TRUST 1,337 0.72 0.83 5.4 1.4 34.4 41.6 0.9 2.5 14.6 12.5 December
OUE HOSPITALITY TRUST 1,544 0.85 1.12 6.0 2.0 38.8 71.0 5.5 2.5 0.0 0.0 December
FRASERS HOSPITALITY TRUST 1,461 0.785 1.00 6.4 0.0 33.0 88.5 11.3 2.8 15.0 55.4 September
ASCENDAS HOSPITALITY TRUST 977 0.865 1.01 6.6 0.0 33.2 77.2 0.8 2.7 31.6 0.0 March
Average 1.00 6.20 0.57 34.70 2.50 12.37
Retail
CAPITALAND MALL TRUST 7,345 2.07 NETURAL 2.03 1.06 5.4 -2.0 34.2 97.0 9.7 3.2 15.9 11.7 December
MAPLETREE GREATER CHINA COMM 3,307 1.17 0.94 6.4 -5.7 39.3 75.0 11.1 2.7 0.0 3.0 March
SPH REIT 2,555 0.995 1.06 5.6 -4.0 25.4 85.3 6.6 2.8 37.6 14.7 September
FRASERS CENTREPOINT TRUST 2,037 2.2 NEUTRAL 2.14 1.09 5.5 -0.5 29.0 55.0 10.7 2.4 12.0 14.7 September
STARHILL GLOBAL REIT 1,592 0.73 0.79 6.5 -5.0 35.3 99.0 5.3 3.1 0.0 5.8 June
CAPITALAND RETAIL CHINA TRUST 1,552 1.6 NEUTRAL 1.66 1.00 6.3 -1.3 28.4 80.0 9.7 2.5 0.0 20.0 December
LIPPO MALLS INDONESIA RETAIL 1,104 0.39 1.21 8.8 -0.5 33.7 47.0 6.3 N.A. 38.8 0.0 December
BHG REIT 383 0.765 0.92 7.2 6.9 32.5 45.0 5.0 3.7 32.6 8.8 December
DASIN RETAIL TRUST 485 0.875 BUY1 0.98 0.57 8.2 4.2 31.5 NA NA 4.8 NA NA December
Average 0.96 6.63 -0.89 32.14 3.15 17.11
Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 26S-REIT Comparison Table
Approximate Average
Mkt. Cap. PSR TARGET Trailing Total Returns ROE % debt expiring in % debt expiring in
Price (S$) PSR RATING P/NAV Gearing (%) % of debt on borrowing cost Year End
(S$mn) PRICE (S$) yield (%) YTD (%) (%) 2018/current FY 2019/next FY
fixed rate (%)
Commercial
CAPITALAND COMMERCIAL TR 6,609 1.83 NEUTRAL 1.8 1.03 4.7 -3.1 33.9 80.0 9.9 2.7 4.0 36.0 December
SUNTEC REIT 5,136 1.93 0.91 5.2 -9.6 36.4 75.0 4.0 2.6 8.0 24.5 December
KEPPEL REIT 4,135 1.22 0.86 4.7 -1.3 38.7 77.0 3.6 2.6 0.0 22.0 December
MAPLETREE COMMERCIAL TR 4,608 1.6 1.16 5.1 -0.5 36.3 78.0 9.7 2.7 0.0 11.0 March
FRASERS COMMERCIAL TRUST 1,250 1.42 0.90 5.6 -2.6 34.8 81.0 8.4 3.0 24.2 21.1 September
OUE COMMERCIAL REIT 1,104 0.715 0.79 8.6 2.5 37.3 84.3 10.4 3.5 37.8 0.0 December
MANULIFE US REIT 958 0.925 1.12 6.0 5.1 33.7 100.0 8.3 2.8 0.0 23.5 December
KEPPEL-KBS US REIT 556 0.885 1.04 6.8 -2.2 36.0 NA 2.3 3.4 0.0 0.0 December
Average 0.97 5.69 -1.36 35.89 2.92 9.25
Industrial
ASCENDAS REAL ESTATE INV TR 7,710 2.67 ACCUMULATE 2.89 1.29 6.0 -1.1 35.2 70.5 7.2 2.9 23.8 13.5 March
MAPLETREE INDUSTRIAL TRUST 3,808 2.02 NEUTRAL 2.15 1.43 5.8 1.4 33.8 60.7 11.0 2.9 10.9 12.8 March
MAPLETREE LOGISTICS TRUST 3,700 1.21 1.16 6.2 -6.9 37.8 78.0 8.0 2.3 0.0 11.0 March
KEPPEL DC REIT 1,601 1.42 NEUTRAL 1.47 1.47 5.0 1.7 32.1 86.0 6.0 2.2 0.0 23.8 December
AIMS AMP CAPITAL INDUSTRIAL 950 1.39 1.03 5.5 2.8 33.8 88.7 0.1 3.6 0.0 38.7 March
CACHE LOGISTICS TRUST 888 0.83 ACCUMULATE 0.93 1.16 8.0 -0.5 36.3 76.8 3.3 3.6 28.1 40.2 December
SOILBUILD BUSINESS SPACE REIT 694 0.66 1.04 8.7 0.5 40.6 70.1 -4.0 3.2 30.9 8.3 December
SABANA SHARIAH COMP IND REIT 442 0.42 0.77 7.9 8.5 38.2 76.2 -4.8 3.9 32.0 35.4 December
VIVA INDUSTRIAL TRUST 854 0.88 1.15 8.3 -4.0 39.8 84.4 5.2 3.9 19.0 0.0 December
ESR REIT 720 0.545 0.93 7.0 -0.1 39.6 69.2 0.1 3.6 23.1 15.9 December
EC WORLD REIT 585 0.745 0.81 8.1 -0.7 29.2 100.0 6.6 5.4 N.A. N.A. December
FRASERS LOGISTICS & INDUSTRIAL 1,657 1.09 1.22 6.4 -5.2 30.9 68.0 7.8 2.8 0.0 27.6 September
Average 1.12 6.90 -0.30 35.61 3.35 15.26
Source: Bloomberg (Updated 22 March 2018), Debt data from latest Company Results as of 31 Dec 2017, PSR
1
Covered by PSR on the SGX Stockfacts Scheme
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A deeply undervalued sector
Chen Guangzhi
Phillip Securities Research Pte Ltd
2 April 2018
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Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.What is the news?
China
In Mar-18, the authority announced the Government Work Report for 2018: (part of it)
• Cut down steel and coal capacity by 30mn tonnes and 150mn tonnes respectively in 2018
• Shut coal-fired plants with a capacity of less than 300k KW that fail to meet emission standards in 2018.
• Expect the demand for imported coal will continue to grow given the ongoing curtailment of domestic production will result
in a supply short
Indonesia
In Mar-18, the Minister of Energy and Mineral Resources (MEMR) announced a price cap of coal sales to
electricity sector for public interest:
• The price is fixed at US$70/tonne (on FOB basis), with standard specification of 6,322kcal/kg GAR, total moisture 8%, total
Sulphur 0.8% and ash 15%
• The lower of prevailing price or US$70/tonne
• Drive higher volume of exported coal moving forward. Furthermore, it could cool down the sentiment of investment in the
coal sector
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Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.Phillip Coal Tracker: Our snapshot of coal markets Figure 1: Monthly coal production in PRC slowing down Figure 2: Coal import from Indonesia by surged recently Source: National Bureau Statistics of PRC, PSR Source: General Administration of Customers of PRC, PSR Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 198803136N © PhillipCapital 2018. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Coal Tracker: Our snapshot of coal markets
Figure 3: China power demand continues to grow YoY Figure 4: Indonesia coal price reference (HBA) climbing up
Source: National Bureau Statistics of PRC, PSR Source: Coalspot.com, PSR
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Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.Phillip Coal Tracker: Our snapshot of coal markets
Figure 5: Qinghuangdao 5,500 GAR weekly FOB spot price Figure 6: Total port coal inventory declining
Source: Bloomberg, PSR, NDRC price zones (red/blue/green) *Source: Bloomberg, PSR
*The total port coal inventory includes coal stockpile at Qinghuangdao Port, Tianjin Port, Caofeidian Port, Guangzhou Port, Jingzhou Port, Lianyungang Port, Dandong Port, Jingtang Port, Yinkou Port, Qingdao Port, and
Huanghuagang Port.
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Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation.
Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.Coal counters monthly updates
Golden Energy and Resources (Target px: S$0.48 / BUY)
• FY17 production arrived at 15.6mn tonnes (+64.2% YoY)
• Secured 13 offtake agreements for 15mn tonnes of coal sales in FY18
• Sales target in FY18 will be 20mn tonnes
• Cash position reached US$189mn as of Mar-18
Geo Energy Resources (Target px: S$0.47/ BUY)
• FY17 production arrived at 7.7mn tonnes (+40% YoY)
• Secured an offtake agreement with ECTP for 7.5mn tonnes coal supply in FY18.
• Sales target in FY18 will be 11 to 12mn tonnes
• Cash position reached US$262mn as of Dec-17
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Upside in NIMs
Phillip Securities Research Pte Ltd
2 April 2018
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Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.Singapore: Volumes softer but margins robust
Figure 1: YTD loans growth 4.2% vs 2017 7.6% Figure 2: Huge upside in YoY NIMs
Source: CEIC, PSR
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Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.Hong Kong: Volume and margins healthy
Figure 3: Loans growth remain robust Figure 4: Upside in YoY NIMs
Source: CEIC, PSR
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Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 37Ask Questions!
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Analysts
https://www.stocksbnb.com/webinars/ Paul Chew, Head of Research
Pei Sai Teng, Macro
Jeremy Ng, Technical Analysis
Soh Lin Sin, Consumer | Healthcare
Richard Leow, Transport | REITs (Industrial)
Dehong Tan, REITs (Commercial, Retail, Healthcare) | Property
Tara Wong, REITs (Commercial, Retail, Healthcare) | Property
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Chen Guangzhi, Oil and Gas | Energy
Alvin Chia, Research Associate
By Phillip Securities Research
Mohamed Amiruddin, Operations Exec
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